The inhabitants of Salo in Norway have been left worried about the local economy after Microsoft pulled the plug on the Nokia phone unit on Friday.
Microsoft announced it would close Nokia’s former product development unit in Salo, putting all 1,100 jobs at risk after it said it could hire more staff only last year. Towns like Salo, home to one of Nokia’s first factories set up in the 1970s, thought the US software giant buying Nokia’s struggling phone business would revive the local economy.
Prime Minister Juha Sipila called Microsoft’s decision ‘a big blow’ and visited the town of 54,000 people in Southern Finland on Monday to hear from local people how the government could best help Salo. A former engineer and telecoms executive, Sipila was elected in April on a promise to balance Finland’s budget, cut bureaucracy and lower taxes for small companies.
Ten years ago, Nokia’s operations in Salo employed 5,000 people, and even in 2008 over a fifth of all jobs in the area were within information technology. Today Salo’s unemployment rate stands at 15 per cent, Reuters reported, well above the national rate of 9.7 per cent, following the closure of a Nokia factory in 2012 and previous Microsoft layoffs. Closing the product development unit could push it up to 20 per cent.
Two Finnish sites, in Espoo and Tampere, will remain open, but of its 3,200 employees in Finland, only 900 may survive after negotiations between Microsoft and Finnish employees, expected to start later this month.
“We were of the impression that Microsoft would give its phone business a bit longer to see if it can grow,” said Aimo Leskela, a trade union shop steward and 30-year veteran at Nokia.
Local people hope bigger businesses will take advantage of IT know-how in Salo. Many are even still counting on Nokia, which said this week that it may start designing and licensing mobile phone handsets under its brand name in 2016. Even though Salo was not mentioned as a possible site, the announcement has raised hopes.
“Nokia's return to Salo would be ideal,” said Leskela.