Nokia on Monday confirmed reports that it plans to cut about 1,233 jobs in France.
The telecom equipment vendor is doing so to “streamline” operations in the country as part of a previously announced global cost-savings initiative, a Nokia spokesperson said in a statement emailed to Fierce Wireless.
The cost-savings program, announced in October 2018, also led to an evaluation of its R&D efforts that resulted in “significant adjustments globally,” the Nokia spokesperson said via email, adding that implementation has already begun in some countries and is now impacting the Finnish vendor’s operations in France.
“The aim is to achieve a best-in-class operating model globally, increase R&D productivity and agility to strengthen the company’s competitive position and secure long-term performance,” the spokesperson continued.
The proposed job cuts target R&D and central functions at Nokia’s Paris-Saclay and Lannion sites in France, according the spokesperson, resulting in a "reduction of roughly 1,233 positions" there.
Nokia continues to work on strengthening its position competing against major rivals Ericsson and Huawei in the ongoing 5G ramp up. It’s suffered a set-back, due in part, to an earlier decision to rely on field programmable gate array (FPGA) silicon for 5G, which ended up being high-cost and cutting into Nokia’s 5G profit margins. Nokia’s since shifted to developing custom SoCs. Broadcom was just named as a new partner last week for Nokia’s Powered by ReefShark 5G portfolio, joining Marvell and Intel.
RELATED: Nokia taps Broadcom for 5G chipsets
In Q1 2020, Nokia’s net sales decreased 2% year over year and the vendor lowered its full year guidance, decreasing operating margin from 9.5% to 9.0%
Nokia presented its plan for layoffs to the European and French Works councils (ALU-I) today, which is still subject to consultations with the Works councils, as well as union representatives. That process needs to conclude before the final outcome is known, according to the spokesperson.
Three Nokia France affiliate companies, Radio Frequency Systems (RFS), Nokia Bell Labs France, and Alcatel Submarine Networks (ASN) are not included in the proposed employee reductions.
“Nokia is fully committed to supporting the impacted employees during the process. We will do our best to make sure that those affected are treated fairly and respectfully, and that they fully understand the options and support available to them. We intend to introduce support programs to help employees transition to new positions or careers as much as possible,” the Nokia spokesperson stated.
The proposed layoffs represent about one-third of the 3,640 Nokia employees in France who work for Alcatel-Lucent International unit, according to Reuters. Overall, Nokia employees 5,138 people in the country, the report stated.
Speaking on Nokia’s first-quarter earnings call in April, CFO Kristian Pullola, who is stepping down at the end of August, said the vendor’s cost savings initiative was on track to meet its year end target of €500 million in cost savings.
As of April, Nokia’s full year 2020 fixed costs estimates increased by approximately €130 million, because of net foreign exchange fluctuations since the initial 2018 announcement of the program
“This has created an additional headwind to achieve our planned savings. However, we remain confident that we will hit our targets,” Pullola said in April, according to a SeekingAlpha transcript.
Nokia finalized its acquisition of Alcatel-Lucent in 2016, and Reuters reported the CFE-CGC union in France is unhappy with new plan for job cuts, saying it goes against commitments the vendor made in arguing for its merger that it would preserve jobs and expand R&D in the country.