The city's unemployment rate topped 16 per cent in the summer, a level not seen since the Finnish financial crisis of the early 1990s.
But despite the gloom and an average annual temperature of 2 degrees Celsius, the buds of recovery are visible in Finland's biggest northern city, 600 kilometres from Helsinki.
It is becoming a model for the rest of the country as it fights to fill the gap left by Nokia's tumbling sales and the tens of thousands of job cuts that preceded the former world beater's September decision to give up the mobile phone business and sell to Microsoft.
Oulu is now a leading candidate to host a new data centre for Microsoft, which wants to invest US$250 million on such facilities in Finland after it takes over the Nokia business next year.
Former "Nokians" are starting to land on their feet, too.
Pasi Leipala, a former senior manager at Nokia, is now chief executive at Haltian, which designs electronics and software products and is one of the city's most successful start-ups.
Last year you could count its employees on the fingers of one hand. Now it has a staff of 70.
"The best thing about Oulu is that there are so many skilled people; it's easy to hire some of the best talents," said Leipala.
US wireless chipmaker Broadcom is expected to save hundreds of jobs by buying the Finnish wireless modem division of Japan's Renesas Electronics, which previously planned to dismiss all employees in Oulu, most of whom had transferred from Nokia back in 2010.
Telecom equipment maker Nokia Solutions and Networks, which will account for 90 per cent of group turnover after the sale of the handset division, also plans to keep its 2,300 workers in Oulu, and there is talk of hiring more.
Oulu's resilience is in part a national story, the fruits of a determined focus on educational standards, which keeps the nation of 5.4 million people competitive. Finnish students score highly in international proficiency tests and an OECD test in October showed its adults second only to the Japanese in both literacy and numeracy.
While Oulu's light summer nights and quirky events such as the Air Guitar World Championships attract visitors, some local entrepreneurs have even managed to capitalise on the long dark winters.
Valkee, a company that sells headsets designed to relieve seasonal affective disorder, a depressive condition that peaks in the cold sunless months, was founded by former Nokia engineer Antti Aunio and his scientist friend Juuso Nissila.
They went on to develop portable devices that treat the condition by channelling bright light directly to photosensitive regions of the brain through the ear canal.
Kari Kivisto, another former Nokia employee, said Oulu would innovate its way out of the downturn, recovering as it once did after the tar industry collapsed in the 19th century. The city was a centre of tar production in the days of wooden ships, but their iron and steel successors put paid to that.
"The tar business once flourished, and then all of a sudden it disappeared," said Kivisto, whose start-up Spektikor makes disposable heart-rate monitors that flash vital signs and help paramedics respond efficiently.
"Once again we're seeing tremendous change. We'll survive."
This article appeared in the South China Morning Post print edition as: Finnish city reinvents itself as Nokia downsizes
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