The Finnish telecoms equipment maker does not seem to be benefiting as well from the 5G boom around the world. The French subsidiary, already under the blow of a restructuring plan, is not concerned.
Nokia on Tuesday announced a vast plan to cut 5,000 to 10,000 jobs over two years, or up to 11% of its workforce, as the group slashes costs and changes its strategy in the face of stiff competition from its rivals , notably the Swedish Ericsson and the Chinese Huawei.
At the end of this restructuring, Nokia expects to have “80,000 to 85,000 employees within 18 to 24 months, against about 90,000 today. The exact number will depend on the evolution of the market in the next two years”, writes the company in a press release.
After the takeover of its French-Canadian competitor Alcatel-Lucent in 2016, the group’s workforce, which in 2013 left its historical activity of manufacturing mobile phones, had risen above 100,000 people.
Up to 11% of the workforce concerned
Workforce reductions and major cuts in costs are already underway, especially in France, where Nokia is in the process of painfully cutting a thousand jobs inherited from Alcatel-Lucent.
This French component, the subject of a standoff with the government and which was mitigated by 250 job cuts in October, will not be weighed down, the headquarters and French management of Nokia assured Tuesday.
“France is excluded (from further job cuts) due to the previously announced restructuring,” a spokeswoman said.
As for the other countries concerned, “it is too early” to designate them “because we have just informed the staff representatives and plan to start the information process shortly,” she said.
Finland should be largely spared, according to Nokia. According to the Finnish media, social negotiations will start for 314 jobs in the Nordic country.
In Germany, the cuts are expected to cover 375 positions this year, or 12% of the workforce in the country, said a representative of the IG Metall union.
Harsh competition from Huawei
World number three in fifth generation 5G networks, the group led since August by Pekka Lundmark has struggled for years to stay in contact with its main competitors, the Swedish Ericsson and especially the Chinese Huawei, which became by far the world number one in the sector in the end. a meteoric breakthrough since the turn of the century.
According to analysts, the group has struggled to convert 4G contracts into new 5G agreements and suffers from poor price competitiveness compared to its competitors.
“Decisions that have a potential impact on our employees are never taken lightly. Ensuring that we have the right set-up and the right capabilities is a necessary step to deliver long-term sustainable performance,” pleaded the CEO. .
Since taking over from Rajeev Suri last summer – who was behind the Alcatel-Lucent buyout – Mr. Lundmark has made 5G Nokia’s top priority, saying he is ready to “invest everything it takes to win “in this area.
The plan announced Tuesday should lead to lower Nokia costs “of around 600 million euros by the end of 2023”, intended to finance investments in research and development and “future capacities” explains the Finnish group.
600 million euros in savings
Restructuring costs are expected to be around 600 to 700 million euros, again by 2023, according to Nokia.
The plan follows the already announced reorganization of the group into four branches of activity. Nokia, which suffered a heavy loss in 2020 linked to an exceptional load in Finland, warned last month that it expected “headwinds” in 2021, especially in 5G in North America.
Last year, Nokia notably lost an important contract with Verizon in the United States and struggled to gain a foothold in the Chinese market, the most important for 5G.
With a market capitalization barely exceeding 20 billion euros, Nokia is seen as a potential buyout target, despite many denials. Especially since the United States, engaged with allied countries in an anti-Huawei strategy, no longer has a major player in 5G.
The group, which maintained its forecasts for 2021 on Tuesday, must detail its strategy on Thursday.