Nokia still employs 12,000 people in Finland, one-fifth of its global work force, and the company will maintain research and development, production planning and smartphone customization for corporate clients in Salo and two other plants in Finland, Nokia spokesman James Etheridge said.

"Finland has been and will continue to be critical to our success. The majority of the Windows Phone engineering and development team is in Finland," Etheridge said.

Nonetheless, Nokia has stuck to its decision to move all assembly jobs to its factories in Asia, where it has two plants in China, and one each in South Korea and India.

Neil Mawston, from Strategy Analytics in London, said Nokia was one of the last big cell phone makers to shift assembly to Asia from Europe, following in the footsteps of Samsung, Motorola, and Sony Ericsson.

"It's the way things are heading right now, doing production in developing markets where there is the biggest pool of users on the planet, and R&D in developed markets," Mawston said Thursday. "Nokia has a good history of designing mobile phones in Finland for the past 30 years, so to continue to do that makes sense."

In 2008 Nokia employed 5,000 people in Salo â¿¿ nearly 10 percent of the population â¿¿ and provided work for 2,000 others among those in the IT industry who supplied it with components.

Mayor Rantakokko expects this year's corporate taxes to drop to ⿬14 million, mostly because of Nokia's decline.

Still, he is hopeful. The government has provided the municipality with an extra ⿬5 million over two years to deal with the impact of Nokia's downsizing.

"The layoffs are a bitter blow but we can't let it get us down," Rantakokko said. "Nokia will still have 2,500 workers here and will remain important to us."

"There is a technical pool out there, soon out of work, and the challenge will be to find a use for it," Rantakokko said.

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