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Nokia cuts production to save costs

Move in line with decreased demand for handsets as global economic gloom pervades

Top cell phone manufacturer Nokia will cut production at its key Salo plant in Finland as demand for handsets dips worldwide in response to the economic downturn.

Nokia is also shutting down its research and development site in Jyvaskyla as part of plans to slash annual costs in its handset division by nearly $905 million. The latest decisions involving affect a total of around 1,100 workers.

The company also revealed that it would push for more savings in operational expenses, looking at all areas and activities.

As part of the new production plan, staff at the Salo plant will be temporarily laid off on a rotational basis, leaving 20 to 30% idle at a time.

"With these plans, we aim to scale down Salo production to reflect reduced market demand, while operations in the factory continue uninterrupted," said Juha Putkiranta, a senior official at Nokia, in a statement.

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