Nokia Corp. on Thursday announced a further 3,500 job cuts by 2012 as it strives to save costs and restructure while its global market share falls due to stiff competition in the smartphone sector.
The Finnish cellphone maker said it will close a manufacturing plant in Cluj, Romania, by the end of 2011 which will mean 2,200 job cuts, mostly at the plant, but will include personnel in supply chain operations throughout Europe.
Other changes in Nokia's location and commerce sector, which deals with navigational services, digital mapping and location platforms, will mean 1,300 job cuts worldwide. Nokia said it will also close the sector's operations in Bonn, Germany, and Malvern, Pennsylvania.
The planned layoffs are in addition to 7,000 worldwide job cuts _ which Nokia announced in April _ through layoffs and outsourcing.
Nokia shares closed up almost 2 percent at euro4.26 ($5.81) on the Helsinki Stock Exchange.
The company also said it had appointed Jesper Ovesen as executive chairman of the board of Nokia Siemens Networks to replace outgoing Olli-Pekka Kallasvuo, who served as non-executive chairman.
Ovesen, 54, has held a number of senior management positions in leading European companies, including at Danish telecommunications group TDC, toy manufacturer Lego and Danske Bank.
Nokia, the world's top cellphone maker, is trying to cut operating expenses by euro1 billion ($1.5 billion) by 2013 amid fierce competition in the top end smartphone market from Apple Inc., Research in Motion and Google Inc., as well as from numerous Asian handset makers that produce cheaper phones in emerging markets.
Nokia said it was closing the Romanian plant because its "high-volume Asian factories provide greater scale and proximity benefits" even as CEO Stephen Elop said that Europe would remain "core to Nokia's future."
Nokia opened the Cluj plant in 2008 after closing one in Bochum, Germany, saying that labor costs then were 10 times higher there than in Romania.
On Thursday, Nokia said it will also review its long-term manufacturing operations in Finland, Hungary and Mexico, with possible job cuts in 2012, but gave no figures.
Elop described the layoffs and other measures as "painful yet necessary" as the company strives to cut costs.
"We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger," Elop said.
In July, Nokia reported a euro368 million loss in the second quarter as it continues to give up ground to top rivals. For the first time the once-dominant cellphone maker slipped behind Apple's iPhone in terms of quantity of smartphones shipped to vendors. In the first quarter, Apple was already making more money on iPhone sales than Nokia was on its N8 and other smartphones.
Nokia linked up with Microsoft Corp. in February and hopes to regain momentum with the launch of Windows Phone 7 _ expected later this year _ with the Windows Phone operating system replacing its Symbian software that has been losing ground to Google's popular Android platform.
The Espoo-based company, near Helsinki, employs 132,500 people _ 7 percent more than a year ago.