On 4 May 2012, Nokia Siemens Networks said it planned to cut its workforce in Italy by half. The news was given to trade unions in Milan following the company’s decision to make a quarter of its total global workforce redundant. The telecommunications company employs more than 1,100 workers in Italy, 90% of them in the Milan area where its only Italian plant is located. Trade unions want the government to intervene and have organised industrial action in protest at the job losses.
Background
Nokia Siemens Networks is one of the leading global providers of telecommunications infrastructure hardware, software and services. It was founded in June 2006 through a joint venture between Nokia’s Network Business Group, a Finnish telecommunications hardware company, and the communications division of Siemens, a German company which is a world leader in electronics and electrical engineering. Nokia Siemens Networks has its headquarters in Espoo, Greater Helsinki, Finland.
The company’s April 2012 quarterly report (551Kb PDF), published on 31 March 2012, stated that 68,595 people were employed worldwide by Nokia Siemens Networks, 1,100 of them in Italy.
The telecommunications sector is going through a period of considerable change, and Nokia is no longer the market leader, its sales having been overtaken by the Korean company Samsung.
The crisis in Nokia is hitting Nokia Siemens Networks, which registered a drop in profits of 7% for the first quarter of 2012 compared to the same period in 2011, and a drop of 23% compared to the final quarter of 2011.
These figures were mirrored by falling sales figures worldwide in the same period, and the April 2012 quarterly report said that at European level in the final three months of 2011, there was an even more significant drop of 27% in sales.
The announcement of Nokia’s losses in the first three months of 2012 led to Fitch Ratings downgrading the group to a BBB- rating.
A quarter of the workforce to go
On 23 November 2011, Nokia Siemens Networks announced a global restructuring plan characterised by heavy redundancies. By the end of 2012, the company intends to make 17,000 employees redundant, roughly a quarter of its total workforce.
On 4 May 2012, it was announced that some redundancies would be in Italy. In a meeting with the trade unions at Milan’s Industrial Association of Lombardia (Assolombarda), the company announced it intended to make 580 of the 1,100 people working in Italy redundant.
Reaction
Trade unions have reacted negatively to the proposed cuts, going as far as to organise a strike on 7 May and a protest march in Rome on 23 May. They have asked the Minister of Economic Development, Corrado Passera, to set up a telecommunications negotiating table to tackle the employment crisis in the sector.
Sergio Bellavita, National Secretary of the Federation of Metallurgical Employees and Workers ( FIOM-CGIL), has accused the company of boycotting an agreement with the Canadian company DragonWave about the outsourcing of research activities. He said that, in his opinion, this indicates the ‘progressive detachment of the multinational from Italy’. Bellavita says it is ‘unacceptable’ that Nokia Siemens Networks has chosen to sack 580 workers and says trade unions will fight against this decision ‘in every way possible’.
Christian Gambarelli, Secretary of the Italian Federation of Metalworkers of Milan, FIM MILANO, said the 580 jobs were being cut too quickly, and claimed ‘softer measures can be found to avoid redundancies’. Gambarelli admits he expected the group to adopt an inflexible approach, but is convinced that ‘it is possible to reduce the social impact that will be provoked by these measures’.
Gambarelli also says the patents originating from the Italian site ‘are a part of our national heritage and that they cannot be simply given to a foreign competitor’. He says trade unions would like to launch what he calls ‘a strike of intelligence’, asking the researchers and technicians not to ‘transfer their knowledge outside the Italian perimeter of the company’.
Vittorio Sarti, Secretary of the Italian Metalworkers' Union of Milan (UILM MILANO) believes the situation is very serious and has said the problems concerning Nokia Siemens Network are also due to Italy’s lack of investment in the telecommunications industry.
Commentary
With the arrival of tablets, smartphones and new software, there has been a considerable modification of the market forces in the electronics industry. The changes have upset the equilibrium between the various groups, resulting in the rise of the Korean company Samsung, and leading to a decline in Nokia’s fortunes.
Nokia has two problems, a lack of innovation and difficulty in obtaining components. Samsung controls entire production chains while Nokia is often forced to buy components for its products directly from its competitors, and they have nothing to gain in selling Nokia the most modern components available. For Nokia, this means risking the quality and timing of the launch of new models.
Nokia’s attempt to improve its market share through an agreement in February last year with Microsoft for a new system of software, it seems, has yet to produce positive results.
Vilma Rinolfi, Cesos