Microsoft to shut two Chinese plants, wrap up layoffs
Originally published February 26, 2015 at 4:04 pm
Updated February 26, 2015 at 5:23 pm
The closure of factories in Beijing and Dongguan, acquired in the deal to buy Nokia's mobile phone business, will leave Vietnam as the focus of Microsoft's phone manufacturing.
Matt Day
Seattle Times technology reporter
Microsoft next month will shutter the two Chinese mobile phone factories it acquired in its purchase of Nokia’s handset business.
Layoffs, which began last year, will total 9,000 by the time the plants are closed, a company spokesman confirmed on Thursday. That number makes up half of the 18,000 cuts Microsoft announced last year.
Responding to an earlier report of the cuts in Japanese business newspaper Nikkei, a Microsoft spokesman said the layoffs were part of the restructuring announced in July, but “the timing of actual departure was staggered due to local and legal requirements.”
With the closure of the plants, located in Beijing and Dongguan in China’s southeast, Microsoft will have eliminated three of the six major phone manufacturing facilities it acquired in April in its $7.5 billion deal to buy the money-losing Finnish handset maker.
Stephen Elop, head of Microsoft’s devices business and a former Nokia chief executive, last year announced plans to to wind down the Komárom, Hungary, facility.
“Some production” would continue at the Chinese facilities, Elop said at the time.
In the months that followed, there was widespread speculation that Microsoft would eventually close the plants.
China, which earned a reputation as the world’s factory floor during the country’s industrial boom, has lost the favor of some global manufacturing giants. Rapid economic growth there pushed worker wages higher, slimming the profit margin the country’s workforce offered to factory owners. Many global conglomerates have moved manufacturing facilities to countries in Southeast Asia where labor costs are lower, including Vietnam, Cambodia and Indonesia.
Microsoft is placing its bets on Hanoi, Vietnam, the site of the newest factory it acquired in the Nokia deal.
The bulk of the company’s phone production will be focused there, Elop said in July.
Ex-Nokia facilities in Manaus, Brazil and Reynosa, Mexico, were also spared closure. Manaus would primarily manufacture Microsoft products, while Reynosa, located across the Rio Grande from Hidalgo, Texas, was to be converted to a repair facility, Microsoft said last year.
