Nokia Corporation (ADR)(NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) might be planning to lay off employees at its Chennai plant in India. Nokia informed the employee union at the facility that some workforce reduction is required at the plant, according to a report from The Times of India (TOI).
A spokesperson for the Nokia India Employees Union said, “The management told us there must be reduction in workforce. We have categorically dismissed the idea.”
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Not much work at the Nokia plant
The spokesperson als, said that no union member would give his approval to the separation scheme, and the same has been conveyed to Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) management. He said that management is not happy with employees taking the step, but for them, job security is the prime concern.
At present, the Chennai plant has a workforce of over 5,000, out of which over 60% are women. Workers at the Chennai plant are concerned about the fate of their jobs and don’t know what will happen next. The spokesperson told the TOI that no one knows what the future holds for them and that they have no answers.
Union members say the work is being transferred to Vietnam or elsewhere and that production has declined to one-third of what it was before. They also say the number of non-production days has increased. There is hardly any work left in the factory, and the employee separation scheme is looming over employees.
The union is hoping to hold a meeting with state government officials to explore employment options.
Facility became obsolete with advent of iPhone
Microsoft has closed its $7.5 billion deal for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s devices segment, but the Chennai plant is at the center of a tax dispute, so it was left out of the deal.
The facility will be reduced to being that of a supplier, exclusively for Microsoft Corporation (NASDAQ:MSFT) under a service agreement for one year. That agreement can be renewed afterwards. And not just that particular facility, but other smaller facilities around the factory will also be hurt, as they supply the unit with parts and services.
The death of the facility started with the smartphone revolution when the iPhone made its appearance in 2007. With the advent of the iPhone, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) suffered the most, and soon the company was struggling to hold the market while Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) swayed the industry and customers. Another opportunity the Finnish company missed was the dual-Sim phone market in India.