With global mobile device shipments in decline, the world’s biggest handset vendor is feeling the pinch. On Wednesday Nokia said it is closing one of its research and development sites in Finland and temporarily laying off workers at another.

The Finnish firm plans to close the Jyvaskyla site and concentrate mobile devices R&D in Finland at Tampere, Oulu, Salo and the Helsinki metropolitan area. However, the company will also scale down production at the Salo plant.

Nokia plans to gradually ramp down the Jyvaskyla site and close it by the end of 2009, affecting all of the approximately 320 employees working there. The aim is to help the company adjust the production capacity of its devices unit to reflect portfolio cuts, increasing efficiencies in its R&D operations and reducing operating expenditure. Nokia said its target has been to focus product creation at larger sites, which enable the optimal use of competencies and infrastructure.

In Salo, Nokia will scale down production to reflect market demand, temporarily laying off 20 to 30 per cent of the 2,500 employees there in stages on a rotational basis.

The Finnish firm was the latest big vendor to report disappointing handset shipments during the fourth quarter, with numbers dropping 15 per cent year on year to 113.1 million, and falling from 117.8 million shipments in the third quarter of 2008. These latest initiatives are all part of previously announced cost cutting actions.