Germany: Give us back our $60.5 million, Nokia

The German state of North-Rhine Westphalia wants its €41.3 million (about $60.5 million) back. The reason? Germany wants the corporate subsidies given to Nokia back in 1998 and 1999 for its plant in Bochum. The very plant Nokia is about to shut down at the cost of some 2,300 German jobs. Nokia responded to Germany's demand saying that it is "astonished" and "Based on the facts available to the company and Deutsche Bank, its advisor throughout the entire period, both parties feel strongly that such an attempt is without merit." Of course, Nokia won't hurt too badly if forced to pay out. Nokia's new Romanian plant is expected to cost just a tenth of the Bochum plant to operate. Nokia also posted a staggering $2.6 billion in profit from the last quarter alone. The German authorities know a cash cow when they see it.

Read -- Reuters' take
Read -- Nokia response in full

[Flashpoint @ Feb 6th 2008 8:08AM]

So if you cost 2300 Germans their jobs, they actually demand their investment in your company back????

Well I for one like Germany's government better than Americas...outsourcing all our damn work and letting illegals take the leftover jobs because they don't secure the boarder....

[jonatan @ Feb 6th 2008 8:26AM]

@ Flashpoint

Since you're gone get into recession i want to be the first who offers you a job at the Nokia plant in RO, obviously without papers, so you can fed your obese family back in US.

PEACE

[Asha @ Feb 6th 2008 8:47AM]

I wouldn't say outsourcing should be made illegal, but returning the kick-back money seems more than fair.

[Anthony @ Feb 6th 2008 1:49PM]

I agree w/ Asha. Companies who get subsidies exist on both sides of the pond & it's happened again & again that a company will build a plant, get tax credits & keep it open long enough to find another, cheaper spot.

That's not fair to the people of the town w/ an empty (often unusable) plant or the investment made.

Many have a clause to keep people in place for X years. I wonder if Nokia's 10 year commitment was up.

[Moritz @ Feb 6th 2008 8:21AM]

"Nokia's new Romanian plant is expected to cost just a tenth of the Bochum plant to operate."

Well that are not the numbers published in Germany. Nokia only said that the labour costs account for 5% of the total costs and that only these labour cost are gonna be less in Romania.

[Ihar `Philips` Filipau @ Feb 6th 2008 9:50AM]

Do not forget that everything else is much much more expensive in Germany.

Also, the play of words "labour costs" might mean anything. From my personal knowledge of business in Germany (live here for 6+ years), costs related to employment of people account for 50-75% of expenses. Equipment and hardware in comparison to employment costs nothing.

[Pdexter @ Feb 6th 2008 8:21AM]

Nothing unique with this they are just whining(and all right to do it of course). Nokia had crappy timing with elections coming and couple of other rather big companys left in these past couple of years Germany too.
People should see the other side of the story too as Nokia is building whole infrastructure next to this Romanian plant and brings cash to this university town that name i cant remember now.

[Ion @ Feb 6th 2008 9:32AM]

The name of the city with the big university is Cluj.
Is it that hard to look on internet for the name of a city ?
(google, yahoo, etc can help you).
And that city ain't famous only for the university or around an university.
Besides that there is also an other aspect nobody talks about: in Germany there will be 2300 people fired, in Romania the factory will have at full capacity 7000 people employed. So, in the worst case Nokia can move the whole work force from Germany to Romania, and still have room for double that number.

[Pdexter @ Feb 6th 2008 2:13PM]

Yep, but i wasent bothered.

[Blackster @ Feb 6th 2008 8:23AM]

The problem is that Nokia granted the german government that they would employ 2500ish people, but actually it was always 500 people short of that promise. and the government subsidized those jobs with money. they want it back, easy as that!

[L @ Feb 6th 2008 8:29AM]

Just that Nokia says that they've consistently exceeded the demanded number of employees...

That the NRW.Bank (the entity that wants the money back) doesn't let Nokia take a view at their files is a bit weird imho.



Anyway, some populistic German politicians will surely cry in joy now because they can exploit the whole farce a little while longer...

[Oliver @ Feb 6th 2008 8:23AM]

How could you possibly translate Nordrhein-Westfalen??? That's ridiculous, you don't translate that stuff. North rhine westfalia my ass... this article is bollocks.

[Matt @ Feb 6th 2008 8:46AM]

This article is "bollocks" because of that???

And it is North Rhine-Westphalia in English: http://en.wikipedia.org/wiki/North_Rhine-Westphalia

[pundit @ Feb 6th 2008 8:46AM]

I live in North Rhine-Westphalia. So I'll assume that all the signs here that are written in English are right. Nordrhein-Westfalen is merely the German name put on this region.

[Oliver @ Feb 6th 2008 8:56AM]

@matt:
nope, i meant "new Romanian plant is expected to cost just a tenth of the Bochum plant to operate" is not what has been communicated in german media, that's why i thought bollocks.
@pundit:
you're right, seems I'm wrong. Thought I learned that you shouldn't translate state/city-names. But then again... you live and learn, so do i ;).

That raises another question from me, why do you have english signs in a german state?(assuming you do mean "road signs")...

[Yours Smugly @ Feb 6th 2008 1:43PM]

@ Oliver: In Europe many place names are translated to other than the regional native language for historical reasons. Translating (or localising) city/country/state/ names (and even the names of royalties) was a common practice before the 20th century, and since many places in Europe have a name with a Latin origin (just like Nordrhein-Westfalen), translating is easy. Some examples: Göteborg (Swedish,a city in Sweden) = Gothenburg in English, London = Lontoo in Finnish, Köln (German) = Cologne in English and French.

Nowadays only well-established translations are used, and in some cases original names are replacing the translated/localised names (Bombay -> Mumbai, for example).

As for English road signs in some places in Germany - well, there was this little incident called World War II, which had some certain consequences...

[KyleK @ Feb 6th 2008 8:26AM]

You forgot to mention the reason why the government demands that Nokia pays the subsidies back: The subsidy agreement included several obligations, amongst others the number of jobs Nokia had to provide. An investigation now seems to have revealed that Nokia employed 400 too few people at the plant, thus breaking the agreement.

[nh @ Feb 13th 2008 2:26PM]

But not smart enough to reply to the right comment, or type properly.

Good luck hanging onto that job when a more literate, less demanding immigrant drops off his CV.

[amby @ Feb 6th 2008 8:27AM]

In Europe usually incentives are given for green field factories or keeping alive sites. But for 5-year commitment max. So that would mean that instead of 2004 Nokia kept open the plant until 2007...

I can understand that it hurts, I worked in a 7000+ person factory before, when it closed. But German workers receive such extreme protection and compensation... My colleague from Germany goes on a 1-month holiday tomorrow. He will do another one in September. His overtime is fully compensated (while I work as much as needed with 40 hours paid only) and the leave package is measured in years for Germans. (Don't know the exact Nokia case of course.)

So, every other mobile phone manufacturer has left Germany already - they are trying to pump the last one for the full bill? :-)

[Angel @ Feb 6th 2008 9:34AM]

hello, i`m from romania and i have a friend who works for Nokia.
regarding the cost is the tenth part:
in germany a person would get 1600euro per month, while in Romania, for EXACTLY the same position a romanian receives aprox. 172euro per month.

Now, you do the calculations

[Pro7 @ Feb 6th 2008 10:08AM]

Germany behaves like a dumb blond. The thing is, the average salary in Romania is 100USD - 200USD. Same thing in Bulgaria.
Only an idiot would stay in Germany and pay it's workers about 1200 - 1500 USD. I still wonder, why Nokia hasn't moved it's plant to China.
And don't expect cheaper nokias after they move from Germany to Romania.

[EMaster @ Feb 6th 2008 10:33AM]

Dude everything in Germany is moving east. Most major industries like companies that make dry soups or foods have all moved to Poland. It's pretty F-ed up over there. I haven;t been there since 95 but as far as I know things are pretty bad. Having listened to the Tagesschau for the past few weeks regarding this Germans are really pissed since most of the people working there are in their 40s. Germany has some sort of program where they will "give" them work if they are without a job for a few months. What kind of Jobs and what they pay? No one knows. Probably shit jobs.

BTW for those pissed of about outsourcing in this case? You should have told Reagan to shut up about tearing the wall down. I for one wish it would have stayed up. Maybe then Germany would still be the third largest economic power.

[benjamin @ Feb 6th 2008 10:40AM]

Germany is the best country ever and I hope they drain Nokia's reserves for all they can. You can be certain *CERTAIN* that the quality of their handsets will steadily decrease when they're made by inferior Romanians.

[L @ Feb 6th 2008 11:30AM]

Did you really just write that? I can't believe it...

Shut the fuck* up, retard.

[Andrew @ Feb 6th 2008 3:54PM]

Nokia also has a factory in Hungary and those phones have been VERY reliable and of good quality. I would rather have a phone made in Europe than something made in China.

[benjamin @ Feb 6th 2008 3:55PM]

Andrew is a cool guy.

[Alex @ Feb 6th 2008 5:31PM]

have you ever been to Germany? I've lived here for the past six years and if I started to explain why it is most certainly not the best country I could probably write a book.

[PreGHz @ Feb 6th 2008 11:06AM]

Hey, I'm a German cash cow seeker and I resent you guys for calling us out!

[jonatan @ Feb 6th 2008 11:43AM]

@Flashpoint
My dear 'tard friend, you are just frustrated, get over it. God bless America because you are all "so very well educated"

@benjamin
Sa-ti pape mama ta pula de german superior romanilor.
-=Translated=-
You are right 110%.

@Pro7
The average salary in Romania is 500$/month and increasing because the usd is going down.
Nu fi idiot si da informatii false... sugi pula si tu....

[Anthony @ Feb 6th 2008 1:51PM]

I wonder if this will go against Nokia's green rating. Building huge plants that you then empty when you find a cheaper spot to build another new plant can't be good for the environment.

[Blackster @ Feb 6th 2008 1:57PM]

why? isn't the dollar green? ^^

[Anthony @ Feb 6th 2008 1:59PM]

I wouldn't know. I life in the USA. Haven't you heard? We don't have many of those any longer.

[Miksa @ Feb 6th 2008 3:05PM]

This factory was producing only 6% of Nokia mobile devices but it generated 23% of global mobile device making costs within Nokia. Someone could say that it isn't too cost effective. This plant is not even producing similar high end devices as Nokia plant in Salo/Finland.

It has been said that German government has been also helping a similar profitable plant/production transfer from Finland to Germany by giving support for the German unit. With this move 450 jobs were lost in March 2000. When comparing population of Finland and Germany this would mean more than 7 000 jobs lost in Germany to get same effect in unemployment figures. Fair? No, but global economy has this effect...