Close to 200 high-tech jobs could be lost in Burnaby, when Nokia Corp. (NYSE: NOK) closes its research centre there.
While it’s bad news for the people losing their jobs, it’s not necessarily bad for the local wireless sector, where the failures of larger companies often seed new startups, according to Caroline Lewko, CEO of the Wireless Industry Partnership Connector Inc. (WIP), which helps connect local companies in the wireless space with new markets.
Nokia has been shedding jobs in Burnaby since 2009 and Lewko said some of the company’s former employees have already gone on to create their own companies.
“I’ve probably met, over the last couple of months, about eight new startups that have already come out of the folks who’ve been laid off at Nokia,” said Lewko.
One of them is Adaia Technologies. It was founded by Rob McGarry, a former director of research and development at Nokia. Adaia has developed what it calls “the world’s toughest smartphone” for mountaineers and adventure junkies who need a phone that is combat-tough.
Nokia aims to slash 10,000 jobs worldwide by 2013. As part of the downsizing, it plans to close some of its operations, including its Burnaby research centre.
It’s not known when the Burnaby facility will close or how many jobs will be lost. A Nokia spokesman said the company is not commenting on the closures.
Bill Tam, CEO of the BC Technology Industry Association, said he was surprised to hear the Burnaby operations are on the chopping block, given the close relationship Nokia has with Microsoft Corp. (Nasdaq:MSFT), which has a development centre in Vancouver.
“With Nokia’s partnership with Microsoft, it seems advantageous to have the location here in British Columbia,” Tam said.
Like Research In Motion (TSX:RIM), Nokia has been losing market share to Apple (Nasdaq:APPL) and mobile phone makers like Samsung. The company has been downsizing for some time now.
According to Business in Vancouver’s Book of Lists, Nokia’s Burnaby research centre employed 415 people in 2008. By 2011, Nokia’s local headcount was down to 190.
“They made a number of wrong strategic decisions,” Lewko said. “They didn’t capture the North American market in time, or the smartphone market. They focused a lot on the feature phone market.”
She added that Nokia didn’t move fast enough to change its Symbian operating system, and by the time it switched to the Windows Phone system, it was too late, at least in North America.
Samsung, meanwhile, was quick to adopt the more popular Android operating system.
“You’ve got to be able to move fast and pivot fast,” Lewko said, “and they just didn’t.”
Tam said job growth within Vancouver’s high-sector sector should easily absorb the job losses in Burnaby.
“In our tech talent study, we demonstrated there is probably going to be in the neighbourhood of 3,000 to 4,000 new jobs created in the technology sector overall,” he said. “I anticipate that, with the highly skilled folks that work as part of Nokia today … they will more than likely be absorbed very quickly with other growing organizations in our industry.”
And as Tam points out, the death of one company in the wireless space can lead to the birth of new ones. He cites the death of MPR Teltech Ltd.– the research arm of the former BC Tel – as an example.
“Companies like PMC-Sierra (Nasdaq:PMCS) came out of that,” Tam said, “and Sierra Wireless (TSX:SW) did as well.”•
