University of Tampere, Department of History
Paper for the Course: „Finnish History“
Spring Term 2006

The History of the Nokia Company

by: Sarah Stolle

Contents

1 Introduction 1

2 History of the Nokia Company  2

2.1 From a Pulp Mill to a Paper Industry 2
2.2 The Finnish Rubber Works  3
2.3 Cable Industry 4
2.4 The Merger 5
2.5 Information Technology and Telecommunication 6

3 Nokia in the Finnish Society and Economy  7

3.1 Nokia’s impact on the working culture 7
3.2 Nokiazation of Finland  8
3.3 Nokia and Finish Economy in Numbers  9

3.3.1 Nokia’s impact on the Finish GDP and labour-force  9
3.3.2 Nokia’s impact on the R&D expenditure  9

4 Future Challenges  9

4.1 Competition  9
4.2 Future of Nokia-led Finland  10

5 Summary 11

6 Bibliography  12

1 Introduction

“Nokia-Connecting People”: this slogan is known all over the world. Nokia employs 50, 000 people in 120 countries. Currently every third mobile phone sold in the world is a Nokia. The Nokia Company is today one of the world’s leading high tech companies. Its rapidly growth in the 1990s coincided with a basal structural change of the Finnish economy and industry. In this restructuring process Nokia played an important role. Despite the fact that Nokia is a leading multinational company, a major part of its business is located in Finland. Nokia plays a significantly role in the economic growth of Finland, which has been one of the fastest in whole Europe.

But the roots of the Nokia Company go back to the 19th century when in 1865 a forest industry enterprise in the small town Nokia in South Western Finland was established by mining engineer Fredrik Idestam. At the turn of the 20th century technology came with the founding of the Finnish Rubber Works in 1898 and the expansion of electricity into the homes and factories which led to the establishment of the Finnish Cable Works in 1912. With this development the manufacture of cables for the telegraph industry followed and supported so the new-fangled device, the telephone. The three companies (Paper, Rubber and Cables) were merged to the Nokia Corporation in 1967.

Since the 1990s the Nokia Company focuses especially the telecommunication industry. The following essay deals with a detailed overview of the history of the Finnish Nokia company. But besides this, it is also mentioned the importance of this company for the Finnish economy. At the end of the essay I will give an overview of the future challenges for the Nokia Company and its surroundings. At first I start with the development of the Nokia Company; from its roots as a forest industry to a world’s leading telecommunication enterprise.

2 History of the Nokia Company

2.1 From a Pulp Mill to a Paper Industry

The forest industry has the longest tradition of all Nokia businesses. Frederik Idestam established a pulp plant in 1865 in Nokia. Idestam′s wood pulp invention was awarded a Bronze Medal in the 1867 Paris World Exposition.¹ The industrial centre of Nokia. Pictured here is the paper mill of the old Nokia Company, now owned by Georgia-Pacific, and the energy company Nokian Lämpövoima Oy. Source: Virtual Finland (a), A town called Nokia, [WWW document], <http://virtual.finland.fi/Nokia/> In 1880 the first papermaking machine was acquired for the pulp if Idestam. But the years of the First World War closed the foreign markets. The procurement of paper machinery and raw materials became difficult (the same situation in the Second World War). The close of the Russian market was tragically, because Finland had a very intensive trade relation with Russia, one reason was the status of the Grand Duchy. After the war Nokia could expand its international business again. The main export markets were England, France, the USA, Germany and the Soviet Union.² After the merger in 1966 the new Nokia group under its President Björn Westerlund focused especially on energy politics and the cable business. The management was not interested in developing the forestry industry.

In 1970, the production was expanded to include the production of crepe paper in order to keep up with Serlachius, the main competitor. Kari Kairamo who became the in 1972 the head of Nokia’s forest industry (later in 1977 the head of the whole Nokia Group) increased the investments and implemented certain business acquisitions.³ Nokia and Serlachius became 100% owners of British Tissues Ltd in 1977; two years later, Nokia bought Serlachius out. Despite these successes Nokia′s management continued to disagree about the forestry business: on the one hand, the company wanted to sell it off, on the other, it was the target of large investments. Because of this fact the forestry industry started to look forward for growth opportunities as well as new acquisitions. The economic recession in 1975-76, which was the result of the oil crisis, had an impact on the wood processing, especially on the cellulose and paper industry.

[...]

1 Koivuniemi (1998), p.17.

2 Koivuniemi (1998), p.20.

3 Steinbock (2001), p. 9-13.