Nokia to pay $314 million to German workers, $0 to government
Outraged Germans are getting some but not all of what they want from Nokia, now that the Finnish cell phone maker has agreed to pay a severance package worth $314 million USD to workers displaced by its upcoming factory move to Romania.
Under the final pact announced this morning, Nokia will continue plans to close its plant in Bochum, Germany on June 30. But after that date, the phone manufacturer will establish a "transfer company" that will employ the displaced German workers for up to one year.
In January, Nokia first unveiled its intentions to move production to Romania as a cost-cutting measure. A total of 2,300 workers in Germany will lose their jobs as a consequence.
But after the news from Nokia sparked street riots, government outcries, and calls for consumer boycotts of Nokia products, the manufacturer agreed to participate in a joint task force aimed at creating "innovative solutions" around the Bochum plant closing.
Germans are especially incensed that Nokia announced the closing in Bochum just after posting record company profits for 2007.
Although Nokia's severance package amounts to the much larger sum of €200 million, the German state of North Rhine-Westphalia still wants Nokia to reimburse the €41 million in subsidies the vendor received for opening the factory in Bochum back in the late 1990s.
According to accounts in the German press, some major government officials have implied that Nokia might now be getting a subsidy from the European Union to pull up stakes and go to Romania. State Premier Jurgen Ruttgers has accused Nokia of behaving "like a subsidy locust."
In response, EU Commissioner Gunter Verheugen has declared that subsidies should no longer be paid to attract companies to a region. But despite all the brouhaha, so far, Nokia has not acquiesced to demands for it to return the government subsidy monies for the Bochum factory.
Among all countries belonging to the EU, Germany reportedly contributes the greatest share of revenue.