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Europe-wide, the company is laying off 1500 people, the same number as it shed in the first half of this year. Then, 600 lost jobs at the Tallinn-based cell-phone assembly facility after telecommunications giant Ericsson of Sweden decided to move production from Elcoteq to U.S.-based Flextronics International.
Osmo Kammonen, a senior executive at Elcoteq, said "We have to adjust our capacity to match current demand, which is very low. We are laying off employees because of the weakness of the market, especially the telecommunications sector. Networks have not grown as fast as we predicted."
The 400 are expected to go by the end of the year. Most lay-offs will be implemented by not renewing fixed-term contracts.
Elcoteq is also closing a plant in Poland and reducing the number of employees at its Finnish plants by 25 percent and at its German plant by 40 percent. New employees are meanwhile being taken on in China due to rising demand there.
In the first half of 2001 the company made a 7.3 million euro ($6.64 million) loss on a 922.3 million euro turnover. For 2001 it predicts a smaller turnover compared to last year's results and a loss. The company expects to save about 16 million euros annually as a result of the restructuring.
Hannu Bergholm, president of Elcoteq, said: "Our sector expects growth to pick up again next year and we have no reason to think otherwise."