Nokia Siemens Networks enters final stage of synergy-related headcount restructuring

Nokia Siemens Networks has completed the preliminary planning process to identify the proposed remaining headcount reductions necessary to reach its previously announced synergy-related headcount adjustment goal. As a result, the company is now starting the process of sharing these preliminary plans with employees and employee representatives in Finland and Germany. Actual reductions will occur only after the completion of appropriate consultation processes and in accordance with local legal practices.

When the plan to form Nokia Siemens Networks was announced on June 19, 2006, Nokia and Siemens said that they expected the merger to result in a headcount adjustment in the range of 10-15 percent of the global workforce. In May of 2007, Nokia Siemens Networks confirmed that it expected the adjustment to remain within that range, at approximately 9,000 employees. To date, the company has achieved an adjustment of more than 6,000 employees and continues to expect a total synergy-related adjustment of approximately 9,000 employees.

“From the very start Nokia Siemens Networks has focused on building a strong, competitive company and these planned actions are an important step to help us reach that goal,” said Simon Beresford-Wylie, chief executive officer of Nokia Siemens Networks. “With the successful completion of these plans, we will have the vast majority of the synergy-related headcount reductions completed and we can then start to put this chapter of our history behind us and focus on creating a world-class company.”

The proposed headcount adjustments are a result of merger-related synergies, including changes to the product portfolio; site optimization; streamlining of various functions; strategic, long-term R&D and workforce balancing; and other factors designed to build a competitive Nokia Siemens Networks.

“We have now completed the preliminary planning necessary to identify the specific areas where we have additional synergy-related reduction needs,” said Bosco Novak, head of human resources at Nokia Siemens Networks. “It is our goal to engage constructively with employee representatives in Finland, Germany and other countries to quickly and fairly achieve these needed changes so we are able to remove the ongoing uncertainty that our employees have about synergy-related headcount reductions.”

In May 2007, Nokia Siemens Networks announced that it expected a reduction of 1,500‑1,700 employees in Finland, not including the transfer of employees to trusted partners. To date, the company has achieved approximately 500 reductions through its active restructuring process, with substantially all through the use of voluntary severance packages. Headcount in Finland has been further reduced through natural attrition and the transfer of employees to trusted partners.

Nokia Siemens Networks is now proposing a maximum reduction need in the range of 750 employees in Finland, bringing the planned total reductions through active restructuring to less than 1,300. At the completion of the planned synergy-related headcount restructuring activities, Nokia Siemens Networks expects to have in the range of 7,000 employees in Finland, from an initial base of approximately 9,200.

“While we are seeking fewer active reductions in Finland than we originally stated, we have successfully lowered headcount further in the country through natural attrition and transfer to trusted partners,” said Mika Vehviläinen, chief operating officer of Nokia Siemens Networks. “It is important to understand that our presence in both Finland and Germany will still span the scope of the company’s activities – research and development, manufacturing, sales and marketing, services, product design and development, corporate functions and more. These expected changes, hard as they are, will make Nokia Siemens Networks a more competitive company and that will have long-term benefits for Germany and Finland alike.”

In Germany, Nokia Siemens Networks announced in May 2007 that it was targeting active reductions in the range of 2,800-2,900 and reached agreement with employee representatives on an initial reduction of 2,300, which was completed on May 28, 2008. Since then, a further assessment of the business impact of merger-related synergy requirements, corresponding organizational and portfolio changes, and continued challenging telecommunications market conditions have shown the need for further reductions, primarily in the company’s Munich Hofmannstrasse site.

As a result, the company has no alternative but to discontinue its activities at the Hofmannstrasse site. The proposed reduction will affect approximately 500 employees and is planned to be completed by the end of October 2009. The company’s information technology organization located at Tölzer Strasse in Munich will not be impacted as that facility is subject to a long-planned separation from the Hofmannstrasse site.

The company also announced separately an agreement for its manufacturing site in Durach, Germany to be purchased in a management buy-out, led by the current leadership of the facility. That agreement will result in the transfer of around 500 employees. At the completion of the planned headcount restructuring and employee transfer activities, Nokia Siemens Networks expects to have in the range of 10,000 employees in Germany, from an initial base of approximately 13,000.

“Once this planned action is successfully completed, we will have achieved the vast majority of the synergy-related headcount reductions needed in Germany,” said Christoph Caselitz, chief market operations officer of Nokia Siemens Networks. “Where possible, we have sought to lower our headcount through transfer to trusted partners, such as the management buy-out in Durach that we announced today, as we believe that is the best way to preserve jobs. We also added a large number of employees in Germany when we assumed control of Vivento Technical Services from Deutsche Telekom, and we continue to look for similar growth opportunities in the country.”

In addition to Finland and Germany, the company announced today the planned reduction of approximately 50 employees in Egypt related to the closure of a small manufacturing facility and in the range of 20 employees in the United States related to the ramp down of a small site over the course of 2009. Other countries are expected to see limited reductions and most of those changes will happen between now and early 2009, consistent with appropriate consultation processes and in accordance with local legal practices. Consistent with previous statements, the company will also continue to further assess the transfer of employees to trusted partners.