FINLAND - DOES NOT NEED ANOTHER NOKIA BUT MORE ANGRY BIRDS!

By Ruma Dubey

What if half the population of our country, or maybe, one state, was dependent on one single company? That would be preposterous as the shut down or recession at that one company could mean that the entire state could get drowned.  

And scarily enough, that’s what seems to be happening in Finland or as many call it, Nokia-land. You visit the country and almost everyone around you seems to be working for Nokia. But today, Nokia, though it remains a formidable brand, is losing ground fast to Samsung and Apple. Losing market share and brand equity is a very small problem when one at the other end of the spectrum, there is the fear of people of Finland teetering on the brink of a major collapse.

No exaggeration. In 2008, 4% of Finland’s GDP came from Nokia and the company was paying 23% of the country’s total tax.  But in 2011, like the spectacular fall of a meteor to the ground, Nokia accounted for just 0.5% of Finnish GDP.

For the first time ever, a non-Finnish CEO was placed at the helm to bring back the company from the brink -  Stephen Elop, who earlier was at Microsoft. And the moment he took over, he did what American companies do the best – fire people to cut costs. He showed the exit door to 40,000 employees world over the same year and to over 3700 employees in Finland. Another 10,000 employees were fired recently. Nokia has, since over a year now, been dismantling its operations in Finland and moving to low cost countries like Brazil, China, South Korea and Mexico. Many in Finland call it the beginning of the end feel that eventually Nokia could be bought over, maybe by Microsoft.

In October 2012, the almost historical plant in the small town of Salo in Finland which was Nokia’s oldest plant since the company entered the cellphone business was shut down. Over 1000 employees were rendered jobless and the town fell, literally into an abyss. In 2007, 10% of Salo’s population was employed by Nokia. Tax collection in the town has fallen down 75%. In 2010, which was Salo’s best year, tax collection was around $76 million and this year, it is expected to come down to around $ 10 million. Unemployment which was already at 11.5% is expected to shoot up to 20% by the end of 2012.

And mind you, this is just about Nokia. There are scores of other companies at the periphery, ancillaries which existed because Nokia existed. Those too have closed down and the unemployment on account of that is large too.

Well, life has to go on and the Finnish people have moved on after this tight rap. Not everyone displaced is employed yet; it would be particularly difficult for those in Nokia’s R&D to get jobs. Salo will take a while to get out of the abyss but then, it did make merry when the going was good.

The fall of one company, cannot bring down the entire country. It slows down the growth but the Finnish are getting up and walking again. Another small company from Finland is making waves all the over the globe – Rovio or more popularly recognized as the ‘Angry Birds’ company. And the number of start-ups that have mushroomed after Nokia’s collapse have happened only because it collapsed!

There is life after Nokia. Many ex-employees have become entrepreneurs and started their own ventures. And one thing found common in majority of these people is – they do not want to work for large companies. In fact one start-up, Jolla, is set up by an ex-employee of Nokia and will be launching its own smartphone soon. It could become another Nokia in the making. 

Sometimes, an entire township comes up only because of the existence of one single company, like Jamshedpur for Tata Steel. Arcelor Mittal in Luxemborg, China Mobile in Hong Kong, Royal Dutch Sheel in Netherlands, Glencore in Switzerland, PTT in Thailand, there are so many such large conglomerates.  The risk is always inherent of a complete collapse but then, who had anticipated the collapse of Wall Street?

Thus to say that ‘one company economies’ are a bad thing is wrong. They are essential for growth and development. But life is about change so to assume this too will remain permanent is being naïve. Adaptability is the hallmark of human nature thus make merry but save when times are good and learn to move on when things go phut! That’s the moral of the Nokia story.