Wednesday, February 07, 2007

What's so special about Nokia

Nokia holds a very special place in the Finnish economy: its turnover is higher than that of the Finnish government's budget, it is one of the largest employers in Finland, it is a one-of-a-kind international success story in Finland and Finns regard it as a "Finnish" company even though 90% of Nokia shares are held by investors outside of the country.

Its the question of Nokia's nationality and loyalties that often puts it in the hot seat in Finland. The very unionized nature of business in Finland calls the company and management to account in ways that most employed by US companies probably find baffling.

Most recently in the international edition of the Helsingin Sanomat newspaper:

Year after year it has been said that such success cannot continue, and whenever Nokia's result has taken a dip, the scare has been accompanied by something resembling triumph: "so now it starts going downhill". And yet, in January Nokia showed that it is able to turn the impossible into the possible. Although the average price of its products declined, and although pressure on the margins grew, the company's gross margin also grew. This means that after manufacturing costs, the company was again left with more money for product development, marketing, and distribution of profits.
However, at the same time, the head shop steward of the Nokia subcontractor Perlos is forced to hold talks on behalf of his fellow employees, which is to result in the closing of Perlos factories in Finland...
Nokia's success and the anguish of its subcontractors raises unpleasant questions. How is it possible to be the most successful in the world, and at the same time to leave thousands of fellow workers to fend for themselves? What is Nokia's responsibility for its subcontractors?
Workers employed by Nokia subcontractors say that Nokia is indifferent toward its roots. Their experience is that the generation that has taken on responsible jobs of planning and management have no country, and that they only serve a multinational money machine. It is the bitter experience of those working in subcontracting that the most important of Finnish values - never to leave one's buddy behind - is no longer a Nokia value.
From inside Nokia it can be said that the company continues to directly employ 24,000 Finns, and that it paid EUR 1.3 billion in taxes last year. The corporate management answers primarily to its owners, and Finns have sold their shares to foreign investors at a good profit. The management of the company is as patriotic as possible.

Another issue evidently aired quite openly in Finland thanks to the union organization was the internal disappointment over the lack of an employee bonus payout even when Nokia announced the strongest performance in the market:
Nokia personnel are expressing annoyance over the introduced cuts to the company's bonus system. Save the top management, all Nokia workers missed out on the so-called Connecting People bonus for the second half of 2006, despite the company's record-breaking fourth quarter result.
"When the result is bad, everyone understands why bonuses are not paid. But when the company delights in the best-ever result and the bonuses are still withheld, that is perplexing to say the least", Nokia shop steward Jukka Kivari explains.
Nokia announces unexpectedly good results for last year
Nokia Press Release - 4Q 2006 and Full year results

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