Nokia Siemens Networks says it wants 5 billion people to enjoy the benefits of being connected by 2015, but in the meantime it will be disconnecting about 9,000 employees.
The joint venture of Nokia and Siemens, officially launched in April, is sticking with its estimate last year that it would reduce its work force of about 60,000 by 10 percent to 15 percent over four years. The company announced more details Friday, saying it had begun sharing the plans with employees, as well as with employee representatives in Germany and Finland, where the parent companies are based. Some of the jobs will be shifted to business partners, the company said in a statement.
Nokia Siemens is a combination of the wired and wireless carrier infrastructure businesses of the two European powerhouses. Plans for the company came together last June but were delayed by a bribery scandal involving Siemens. The units that formed Nokia Siemens had combined revenue in 2005 of Euro 15.8 billion ($US19.9 billion).
Job cuts should save Euro 1.5 billion per year by the end of 2010, Nokia Siemens said. The company has to slash costs because its customers, the service providers, face intense competition and pricing pressure, according to the statement. Proposed changes to its product lineup is another factor, it said.
In recent years, the network gear industry has been consolidating along with its customers. A merger between Alcatel SA of France and Lucent Technologies of the U.S. was announced just a few months before the Nokia-Siemens deal. Carriers such as AT&T and Verizon Communications have gotten bigger by acquiring other service providers, leaving fewer potential customers for competing equipment makers. To reach a goal of connecting more people to communication networks, costs will need to come down, according to Nokia Siemens.
Nokia Siemens said it is about to begin required consultations with workers' representatives in Finland and Germany. In Finland, it expects to remove 700 positions in the initial consultation process and cut a total of 1,500 to 1,700 jobs by the end of 2010. The company has about 10,000 workers in the country now. In Germany, talks will begin soon on cutting between 2,800 and 2,900 employees by the end of 2010 from a base of about 13,000. It will also discuss further adjustments in which workers would be transferred to business partners. Nokia Siemens will give details of cuts in other countries as appropriate given local consultation processes.
The two home countries will remain major centres of employment for Nokia Siemens, the company said. More than 60 percent of its employees already work outside Finland and Germany.