Microsoft Shutting Down Two More Factories in China
Under the leadership of Satya Nadella, Microsoft has axed many of its operation sites due to its cost-cutting policy. The new CEO of the multi-billion dollar company has his hands on the axe once more, and this time he is shutting down two smartphone manufacturing plants in China to cut down costs that are slowly but surely drowning the company amidst toughening competition.
The two smartphone manufacturing plants that are being sent back to the stone-age are located in Beijing and the city of Dongguan. According to reports confirmed by a Microsoft spokesperson, the two plants would be completely shut down by the end of this month.
The factories destined for the wrecking ball came under the ownership of Microsoft last April, when the company acquired Nokia, a once triumphant mobile-making company that was acquired by Microsoft in 2014. After the acquisition, Microsoft employed more than 9000 personnel in the newly acquired factories, a number which is half the number of employees being laid off by the new Microsoft CEO Nadella under his restructuring of the company’s design.
Industry experts have been debating on the possible premises behind Nadella’s plans to lay off thousands of workers all over the world that currently work at Microsoft. The most potent argument that has been suggested by most industry experts says the company is laying off all the workers due to rising labor costs in China.
However, it seems the case is not that straight forward. According to inside reports from the plant in Dongguan, Microsoft, after acquiring the plant from Nokia, had actually reduced the wage rate the employees working at the plant were receiving, reducing its cost of labor anyways. This fact reduces the potency of the most plausible argument industry experts had suggested to justify Nadella’s move.
But, there exists no anomaly in the actions of Microsoft, according to the ex-CEO of now-gone company of Nokia, Stephen Elop. In 2014, when Nokia was acquired by Microsoft, Elop predicted Microsoft would shut down many of the factories that Nokia owned, as it would want to reduce the production of Nokia by a large margin to meet with the already below average demand. Elop suggested that only a small number of Chinese sites would remain functional by the end Microsoft is done shutting down the redundant units.
According to reports, after the closure of the factories in China, Microsoft would focus most on its smartphone production unit in Vietnam for the most part of its supply of the Lumia phones.
There seems to be no sign of any more cutbacks by Nadella on any more jobs and factories that Microsoft currently owns. However, experts predict the prudent CEO may shut down more Chinese plants in the future, where costs are rising every day for the company. Microsoft currently uses its plant in Brazil for the manufacture of most of its products, and is on its way to developing a repairing site in Mexico.