Bloomberg News

Nokia Siemens to Cut 2,900 German Jobs in Profitability Push

February 01, 2012

(Updates with sites affected starting in second paragraph, analyst’s comments starting in fourth.)

Jan. 31 (Bloomberg) -- Nokia Siemens Networks, the wireless-equipment venture of Nokia Oyj and Siemens AG, will cut 2,900 jobs in Germany and 1,200 in Finland as it struggles to compete with more profitable manufacturers.

Nokia Siemens will concentrate German operations at five locations and close other sites including the country headquarters in Munich, the venture said in a statement today. The company employs 9,100 people at more than 75 locations in Germany, according to its website. Jobs will be cut at all but two sites in Finland, where it employs 6,900 people.

The company, whose main competitors are Ericsson AB and Huawei Technologies Co., said in November that it will eliminate 17,000 jobs worldwide, equivalent to about 23 percent of its workforce, by the end of 2013. The cutbacks are part of a strategy of reducing annual costs by 1 billion euros ($1.3 billion). Nokia Siemens also announced a target figure of 1,200 for Finnish job cuts ahead of union talks.

“I don’t think you can cut back Germany much more than this,” said Lars Soederfjell, a Stockholm-based analyst at Aalandsbanken. “Research in the areas outside of mobile broadband is being hit by this and it’s probably mainly the fixed networks that are being cut back right now.”

Continued Losses

Chief Executive Officer Rajeev Suri said in November that Nokia Siemens would scale back product lines to concentrate on mobile broadband networks and services to become profitable. The venture has posted losses in all but two quarters since it was set up in April 2007. The company sold three divisions last quarter as part of the reorganization.

Nokia rose as much as 2.9 percent to 3.87 euros and traded up 2.1 percent at 4:07 p.m. in Helsinki. Siemens gained 0.7 percent to 72.75 euros in Frankfurt.

Operations remaining open in Germany will include optical networks development in Berlin, customer service in Bonn and Dusseldorf, production and development in Bruchsal and long term evolution technology, or LTE, development in Ulm, Nokia Siemens said.

“We oppose this eradication, together with the employees,” said Michael Leppek, who’s responsible for the venture at the IG Metall labor union. “Our goal is to retain as many jobs as possible and to prevent the closure of the Munich site,” where unions plan protests tomorrow morning.

Finnish Locations

Among sites in Finland, only a plant in Oulu and a warehouse in Espoo will be spared job eliminations, Nokia Siemens said. The company employs 6,900 people in the country, chiefly in Espoo, Oulu, and Tampere.

Nokia Siemens’s workforce totaled 73,686 people as of Dec. 31, compared with 66,160 a year earlier, before it bought assets from Motorola Solutions Inc., according to Nokia’s 2011 financial report. The venture said in August that it would cut as many as 1,500 positions from the Motorola units after the takeover added workers.

The parent companies provided Nokia Siemens with a cash injection of 1 billion euros in September as Jesper Ovesen, a former chief financial officer at TDC A/S, was named to oversee the reorganization as executive chairman.

Disposals

Nokia Siemens sold its microwave unit to Canada’s DragonWave, the WiMax business to NewNet Communications in the U.S., and a fixed-line operation to Adtran in the U.S. in the fourth quarter. Further disposals are expected to follow.

“Getting back to positive cash flow and earnings is priority No. 1 if they want to remain a credible supplier for the longer term,” Aalandsbanken’s Soederfjell said. “The big risk right now for NSN is that you may start to lose orders because competitors can cast doubt on your long-term staying power.”

Siemens and Nokia abandoned talks in July on selling the venture to private-equity companies after the buyout firms failed to come up with a compelling offer. The manufacturers said in September that Nokia Siemens will “become a more independent entity.”

--Editors: Tom Lavell, Robert Valpuesta

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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