Nokia Corporation (ADR) (NYSE:NOK) announced that it would start reducing its workforce globally as part of its synergy and transformation program. The Finish telecom equipment manufacturer is targeting to achieve €900 million of operating cost synergies from its acquisition of Alcatel-Lucent SA (ADR) (NYSE:ALU) by 2018.
Nokia is also taking steps to adapt to challenging market conditions and to shift resources to future-oriented technologies such as 5G, the Cloud and the Internet of Things. The company continues to implement saving measures in real estate, services, procurement, supply chain and manufacturing as part of its transformation program.
The stock price of Nokia is up 1.66% to $5.84 per share at the time of this writing around 1:37 in the afternoon in New York.
Nokia aims to remain a strong leader in the industry
In a statement, the company’s President and CEO Rajeev Suri said, “These actions are designed to ensure that Nokia remains a strong industry leader.”
“We also know that our actions will have real human consequences and, given this, we will proceed in a way that that is consistent with our company values and provide transition and other support to the impacted employees,” added Suri.
The company’s representatives are meeting with its two European Works Councils today to start the process of cutting jobs. It will also conduct similar meetings and consultations with employee representatives in 30 countries in the coming weeks.
Nokia to cuts jobs where there are overlap
According to Nokia, the job cuts will occur between now and late 2018, and would primarily impact area where there are overlap such as research and development, regional and sales organizations as well as corporate functions.
A related report from Reuters indicated that Nokia is planning to cut 1,400 jobs in Germany and 1,300 jobs in Finland.
Pertti Porokari, chairman of the Union of Professional Engineers in Finland, commented that the 1,300 is a “terrible figure” citing the fact that the employment situation in the country was difficult.
The company will cut 400 jobs in France, but it would also create 500 jobs in research and development as part of its agreement with the French government last year when it negotiated its acquisition of Alcatel.
Frédéric Aussedat, a representative of the CFE-CGC union in France, said, “The pledges made by Nokia when it bought Alcatel-Lucent have been kept.”
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