Microsoft Corporation (NASDAQ:MSFT) is cutting 1100 jobs from its Nokia development unit plant located in the Finnish city of Salo. The latest move is a big disappointment for employment prospects and local economy in Salo, which is a town of 54,000 residents.
The software maker giant acquired Nokia’s mobile business in 2014, after it failed to compete with the rapidly growing likes of Samsung and Apple. Salo had high hopes at that time, as MSFT indicated that it would hire more employees in the plant. However, the company has its own problems, as Windows phones has a minor share of just 2 to 3 percent in the smartphone market and MSFT is struggling to make a deep impact with its handsets.
Finland is going through its third year of recessions as the country is making efforts to strengthen its IT industry after Nokia’s relegation from worldwide tech footprint. Additionally, the country is also experiencing a trade decline with Russia. The government has trimmed its growth estimate for this year to just 0.3 percent.
Nokia established its first factory in Salo way back in 1970s. Only a decade ago, it hired about 5000 employees and therefore the town became very much dependent on Nokia and it is now hard for the people to manage their financial conditions with the decline of the company.
Salo currently has an unemployment rate of just 15 percent, pretty high when compared to the total percentage in the country at 9.7 percent. The product development unit’s closure and MSFT’s latest announcement will increase the unemployment rate to 20 percent.
Microsoft stated in an email to Reuters that according to its new policy, the company would lower range of smartphones it offers and therefore it will no longer need three development sites located in Finland. The site in Salo has been closed, though the other two, in Espoo and Tampere, will keep functioning. MSFT will start talks in the next month with its employees in Finland, and it is expected that out of 3,200 workers the company holds in the country, only 900 will stay following negotiations.
