Sorrow in Salo

Mobile Boom and Bust Cycle for Finnish Town

We’ve used the term European Mobile Crisis to describe the void left in Europe once the continent’s dominance in the handset business quickly faded (see Daily Insight: The European Mobile Crisis Deepens). In the 1990s, European countries led the world in mobile research and development, standardization, regulation, production and market share, dominating the handset charts.

Nokia accounted for 40 percent of global handset sales at its peak in 2008. The company’s surge in unit volumes had been a benefit to several Finnish cities, but perhaps no single town became more associated with Nokia mobile phones than Salo.

Nokia was to Salo what the automotive industry was to Detroit — in the town of about 54,000 people, nearly everyone had a family member who worked for Nokia or a Nokia supplier. The Salo factory pumped out a stream of devices, and the research and development centre helped to design future products. The charming town in the middle of the woods was, in many ways, at the top of the mobile world. But there’s a danger in being dependent on a single company, particularly in a constantly changing industry.

Microsoft acquired Nokia’s devices unit last year, and this week announced that it would cut 2,300 positions in Finland. The news comes after cuts of 18,000 from the former Nokia mobile business unit in 2014. There are few employees left from a company that dominated the industry only a decade earlier.

The statement also details the closure of the Salo offices, meaning a loss of 1,000 positions in that city alone. Product development will be transferred to other offices in Finland, and skilled mobile engineers in Salo will have to move to other locations or other industries. Unemployment in the town is already at 20 percent.

Salo might go down as a poster child of the European mobile industry’s boom and bust cycle. There are similar stories across Europe in countries like Germany and Sweden, but none as pronounced as this.

This is another sign of concern for Europe. It’s possible that European mobile players peaked too soon, missing out on the real boom in smart devices and their platforms, apps and services. Whatever the reason, there’s now a mismatch of talent, with hi-tech hands looking for a new industry.

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