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Tough times for Oulu

For long a prosperous hi-tech city, the decline in the fortunes of mobile phone giant Nokia has hit Oulu hard.

Image: Junnu Lukkari

Battling to regain lost ground in the global mobile phone market has meant creating a leaner Nokia. For Oulu, it has also meant the loss of about a thousand jobs and 14 million euros in lost tax revenues. Long a fast-growing hi-tech mecca, suddenly the city is in need of state-backed measures to stay on its feet.

The "new" Oulu created at the start of the year through a merger of five adjacent municipalities is looking to borrow and to get financing from the central government. Local services are being trimmed back and pressure is rising to raise local taxes.

Belt-tightening measures will hit, for example, Oulu's social and healthcare services spending which up until now has been the highest in the nation.

Investments that were included in the municipal merger agreement, such as in new schools and healthcare centres, will go ahead.

"That means," says Oulu City Manager Matti Pennanen, "that we will be financing them with borrowed money."

New and strange

The Oulu region has promoted itself as a hotbed for digital and communications technologies development, and a good portion of its tax base has been well-paid Nokia employees.

Dismissals by Nokia have hit hard throughout the area, says Sirkka Ylitervo, who is the municipal mayor of Oulunsalo, a town just to the south-west of the city of Oulu proper.

"At worst, there will be a lot of big houses up for sale in Oulunsalo, and one can only guess how the market will react to the situation. The worst threat, of course, is that sales times will be long and bring hardship on a lot of families."

The increasing poor performance of Nokia, on top of a global economic recession, is being felt throughout Finland, but in Oulu the situation is both new and strange. Reviving the region will require something that the city has rarely had to do - take on debt.

"We have institutions such as Finnvera, Tekes, Sitra and various opportunities provided by the state to use in dealing with the process of change. We will start accessing these, holding talks with the state, about how to refocus product development capacity and get people employed," explains Oulu City Manager Pennanen.

A week ago, Nokia announced around 10,000 job cuts worldwide, 3,700 of them in Finland.