Nokia's woes pushing Finnish town Salo further into recession

Microsoft's decision to close Nokia's former product development unit in the Finnish town of Salo will have dire consequences not just for the company itself but for the local community as well.

According to IBN Live, the town is falling further into recession and the unemployment rate could jump to a staggering 20 per cent, following the latest turn of events.

Finland, a northern-European country of 5.4 million people, relied heavily on Nokia, once a global leader in phone manufacturing. Today, the country is a reflection of Nokia’s state, IBN Live says.

“The decline of Finland's electronics industry as Nokia lost competitiveness against peers Apple and Samsung, along with falling global demand for paper products and EU sanctions on neighbouring Russia, have entrenched the Scandinavian country in a three-year recession,” it writes in a report.

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, 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.

Microsoft, in an emailed statement to Reuters, said that, under its new strategy, the company would cut the range of smart phones it sells and so would not need three development sites in Finland.

Two Finnish sites, in Espoo and Tampere, will remain open, but of its 3,200 employees in Finland, only 900 may survive.