On a day that the mobile market celebrated an important milestone, Nokia, the world’s largest handset maker, said it will close an R&D site and cut production to match weakening market demand.

The GSM Association (GSMA), a London-based group that represents more than 750 mobile carriers, on Wednesday said the mobile industry registered its four billionth connection.

Four billion connections for an industry that practically did not exist before 1983, and has seen almost uniformly explosive growth since, is certainly a major milestone.

But the celebration will be muted as the mobile phone sector, which represents the overwhelming majority of those four billion connections, moves into what could be the worst year in its history. (Hell Year for Mobile Phones)

Nokia has been sounding warning bells for months as consumers watch their spending and carriers dramatically reduced their new phone orders and instead have been burning through inventory. (Nokia Lowers Market Forecast Again)

In December the company said it expects 2009 mobile device volumes to drop 5 percent from 2008.

The Espoo, Finland-based company Wednesday said it will shut down its R&D site in Jyväskylä, Finland, and cut production with layoffs to more closely match weakening demand for mobile devices.

The company will implement temporary layoffs of about 20 percent to 30 percent of its 2,500 employees at its operations in Salo, Finland.

The moves are in line with plans previously announced by the company to bring its costs down.

“Nokia is facing stiff competition on the low-end side from white label players such as HTC while on the high-end players like Apple and RIM are providing very tough competition,” said Shahid Khan, senior partner with IBB Consulting. (Nokia Takes Jarring Profit Fall)

The mobile handset industry has seen good growth every year except in 2001, when the dot-com bust triggered 5 percent shrinkage in the market, according to Strategy Analytics.

But 2009 is likely to set a new record.

“We are forecasting a nine percent drop in 2009, but others are saying the fall could be as high as 15 or 20 percent,” said Neil Mawston, Strategy Analytics’ director of global wireless.

But the GSMA, which counts wireless broadband connections from devices including net books, modems, data cards, and routers along with cell phones, said mobile connections will grow in 2009.

The group projects a stunning 6 billion connections by 2013.

“Mobile devices make people more productive and save them time and money so even in a recession you will continue to see strong growth,” said David Pringle, a spokesman for GSMA.