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Nokia may be planning to shift production from Chennai to Vietnam plant.

 

nokia logo NPUNokia just suffered a setback in its legal tussle against India’s Income Tax department in Supreme Court. This ruling made Nokia counsel dare IT department to attach its assets and sell. Now, it seems Nokia may be already planning to move production from the Chennai plant to other plants and preferably Vietnam plant. Nokia management has already informed the workers in the factory that it may have to reduce headcount.

The Finnish mobile maker Nokia has told its workers at the Sriperumbudur factory, near Chennai, that it might have to reduce number of people in the factory, which the Union has strongly objected. The Union has said that they will take any steps to protect their employment of around 8,000 people, 50% of which are women, who are working in the factory.

On Wednesday, the Union and the management had an hour-long meeting in Chennai, to discuss the fate of the factory and the employees, which was supposed to get transferred to Microsoft before March 31 as part of the Euro 5.44 billion deal.

The internal Nokia sources confirm that Nokia has already reduced number of shifts to two, to balance operations with other manufacturing plants. So, it seems hostility that Nokia may be facing from Income Tax department in India may have contributed to this reduction in shifts and the job losses and Nokia may be shifting base to friendly countries like Vietnam.

Sources in the company confirmed that the number of shifts was reduced to two, but it was not related to slowdown it was more to balance the operations between the plants, across the World. During this time the company has started Vietnam plant so it is a question of balancing the production.

Nokia’s factory currently employees around 8,000 people directly and another 25000 indirectly. So far, since its inspection, the factory produced 800 million handsets.

This is something which needs to be highlighted. GOI needs to take immediate action and resolve this as soon as possible, as directly or indirectly thousands of workers and their families may get affected.

Thanks Tom for the tip. Cheers!

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Nayan
Nayan has more than 10 years of experience of covering Technology and innovations. He is a big Nokia fan and Tech disruptions aficionado. He loves to review new cool gadgets and writing about Android, iOS, Gadgets and general Technology stuff. He has been associated with other well-known Tech sites WinCentral and GadgetOx since long. He currently sports a Lumia 950 XL and Nexus 5X. Other interests include listening to Nu-Metal Hits and Kick-Boxing. Write to him at Email: [email protected]
http://www.nokiapoweruser.com
  • JLIT99

    To be honest, I don’t know if any Nokia factories are actually going to stay after Microsoft finishes the acquisition. Microsoft outsources Surface production to other manufacturers to save costs, they will probably sell the factories to a company like Pegatron to operate them on their behalf.

    I don’t see why the GOI should really be doing anything to help Nokia. As much as I am a Nokia fan, paying ‘brand royalties’ to your head company is a well-known tax avoidance scheme. In the UK, there was a lot of uproar last year when it emerged that Amazon had been using this technique to avoid paying thousands of pounds in tax.

    Nokia has (and continues to) have a huge following in India; it’s not like they are giving these jobs out of charity.

    • Kamal

      It isn’t about who does what kind of charity, but if it comes to reducing headcount, GOI has to act.

      Supreme court observed that sending royalties to parent company is Nokia India’ right and when the top court in the land says that, it has got some weight, right?

      • JLIT99

        The overwhelming conclusion by UK MPs was that sending “brand royalties” was not illegal, but definitely immoral. I think the same applies here.

    • There’s a reason why Nokia maintains its factories and why Samsung has its factories too. When you produce big and margins are low, you need to keep the work to yourself and save as much as you can so as to earn some profit on the low priced phones as well.
      Outsourcing surface was a need rather than an option. You can’t run your own factories when all you do is produce a small family of products. I strongly feel that the Nokia factories will stay and be self maintained, except for the locations (Europe? if they still have one) where the labor cost has risen over time.

      • JLIT99

        The thing is, Microsoft seems to want to use Apple’s business model for their devices and services. Apple doesn’t have any factories, so MS might see these as a liability and close them regardless.

        There is a Nokia plant here in Europe, in Komararom (Hungary). I think the Finnish and other European plants are closed now. Whether MS keeps Komararom open is another question.

        • But in that case why MS even bought the Nokia D&S? Just for the product design and development? IMO the factories of Nokia covered a big part of the purchase price. Nokia recently inaugurated a factory and the spending were $300 Million for this new plant. Now combine the cost of all the Nokia plants most of which have evolved and carry a much higher price than the the recently inaugurated one. That will alone cover a couple of billions from the deal’s total price.

          Sure Nokia is a valley of extreme talent, but that talent could’ve been acquired by MS much easily by just offering an improved pay-scale and the same could’ve been done with the patents. License them (just the way they are doing right now).

          Apple’s model is of producing high-end and high margin devices, hence shedding a few extra bucks for the production will never hurt them. But for MS which will still produce those budget $50 phones, every single dollar spent counts and adds to the overall COP. Not to mention that most of these local Nokia Factories are producing the budget friendly phones only.

          In the end, the local authorities won’t even let MS just shut down those plants. The govt care for their people and won’t let them cut the jobs of thousands of people. So when they’re going to be run and you have the proper people managing them well, why bother even outsourcing them?

          • JLIT99

            I agree with you, but Microsoft, at least in the days of Ballmer, was lacking in common sense and direction.

            Whether MS actually continues to make $50 dumbphones when nearly all other companies have left that market is to be seen.

            • Yup. The flood of Chinese smartphones has made manufacturers quit the feature phone market. But, Samsung is still making them and IMO Nokia still stands good when it comes to feature phones. So quitting won’t be a good idea. Keypad based phones are excellent from Nokia (love those soft keys 😛 ).

              If MS was not to manufacture these $50 phones, why it licensed the Nokia brand for the same? There’s a lot to talk, but after all the decision is theirs. So let’s end this here 😛

              Ballmer.. hmm.. Neither do i like him from his face, nor his doings. Hope Satya turns out to be a better and sensible CEO than ballmer 😀

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