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Electronics Production | May 30, 2008

Elcoteq mobile phone production in<br>Estonia transfers to Hungary

evertiq reported earlier - referring to YLE - that the reason for Elcoteqs cut backs in Estonia are the ever-increasing labour costs. Jaanus Pauts, Communications Manager at Elcoteq Tallinn, told evertiq that the reason for the current measures was a portfolio and organizational changes but not increasing labour costs.
Based on the customer's strategy, the production of mobile phones has been transferred from Tallinn to Elcoteq´s factory in Hungary.

Mr Pauts told evertiq that Elcoteq Tallinn will focus on the manufacturing of communication network equipment at the Estonian plant. Additional to that a new business area 'Home Communication' will be ramped up in Tallinn.

"As manufacturing volumes fluctuate significantly, Elcoteq’s policy has been to maintain extensive flexibility in its workforce. As part of the February 2007 Action Plan to improve the company’s competitiveness, profitability and cost-efficiency, and because of delays in some customer projects, the company decided that the extent of this flexibility should be reduced. Thus 300 persons were sent to holiday with partial pay and 29 employees were laid off.
Actions already taken to improve operational efficiency also mean that reductions in personnel numbers were possible. Using the option of compulsory holiday with partial pay maintains the capability of upgrading volumes at short notice while at the same time reducing costs", a recent company statement said.

The amount of orders for the Tallinn plant are estimated to increase in September and employees will be back working on the new portfolio then, Mr Pauts told evertiq.

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