Nokia outsources plant. Germans demand money back

[The Grim Squeaker]

German State Demands $60.5M From Nokia

Nokia states its astonishment at the audacity of German government's demand of refund of 1999 subsidies for Bochum plant

The dispute between cell phone giant Nokia and the German government began when Nokia announced plans to close down the last cell phone plant in Germany, located in the city of Bochum. The move led to angry protests against the Finland-based company. The protests became particularly heated when Finland announced that it would be relocating the production to neighboring Romania.

Nokia said that it had no alternative, but to shut down the plant. It said that the move wasn't carried out to spite Germans, but was just a harsh business necessity for what it calls an unprofitable plant.

The less-than-thrilled Germans have found an ally in their government. The German government looks to play a little hard ball with Nokia, by demanding subsidies it provided to the plant for renovations back in 1999 be refunded. The German state of North Rhine-Westphalia (NRW) issued the mandate on Wednesday. The demand refund totals to 41.3 million euros ($60.5 million). The subsidies had been used to convert what had been a TV plant into the current cell phone plant.

Nokia describes itself as "astonished" at the move. It said that it and its representative, Deutsche Bank found the claims to be ridiculous and that they had submitted all pertinent papers to the NRW Bank and the NRW government. It claims its requests for information from the NRW government have been denied and that the government is refusing to provide details of the grounds which it feels it can claim a refund on.

According to Nokia, from 2001 an annual average of some 3,200 Nokia and third-party employees were employed at the site, more than filling the requirements of the subsidy, which mandated 2,860 jobs. The company points out that it invested over 320 million euros of its own into the site, greatly surpassing the subsidies. Nokia also points out that increases it is taxes and social payments exceed the amount of the subsidies. Nokia states emphatically, "The facts currently available do not support the planned attempt of the NRW Bank and local government to try to recall the subsidies."

It looks as if Nokia and NRW may soon find themselves battling each other in German, or possible European Union court if the conflict is not resolved.

Oh that is Beautiful. Even as someone who supports outsourcing I find this to be delicious. (If Germany wins)

[Edi]

Been big news here ever since they decided to shut the plant down. The German government claim is ridiculous and they're out to score political points. One of the big problems is that the German workers there belong to unions that have simply squeezed the life out of industry due to unacceptable costs. Plants have been closed down in Finland and retained in Germany because closing them down here was cheaper in terms of firing staff (not talking about Nokia). But with the Bochum plant, the personnel costs in the Romanian plant are going to be just 10% of the German level. Not much of a surprise that this happened.

[Tiriol]

The dispute between cell phone giant Nokia and the German government began when Nokia announced plans to close down the last cell phone plant in Germany, located in the city of Bochum. The move led to angry protests against the Finland-based company. The protests became particularly heated when Finland announced that it would be relocating the production to neighboring Romania.

Bolding provided by me. A rather amusing mistake to make. Apparently our dear government has taken control of Nokia without informing the Finnish public about it.

As Edi said, this has been quite a major news here. Unfortunately for Nokia, this publicity came at the same time as major plants are being shut down in Finland as well, so the reception hasn't been too good. However, Nokia's dismay and outrage at financial demands is quite justifiable - I'd like to see that law or contract which would require Nokia to return the subsidies provided by the local government.

[Shroom Man 777]

Ooh, Nokia's are reeeeal nasty. You gotta respect the Japanese. They know the way... of the Samurai.

[Chris OFarrell]

Ooh, Nokia's are reeeeal nasty. You gotta respect the Japanese. They know the way... of the Samurai.

.....What?

[Pu-239]

It's a Transformer's reference

[[R_H]]

Ooh, Nokia's are reeeeal nasty. You gotta respect the Japanese. They know the way... of the Samurai.

Nokia is a Finnish company.

[CmdrWilkens]

Ooh, Nokia's are reeeeal nasty. You gotta respect the Japanese. They know the way... of the Samurai.

Nokia is a Finnish company.

"Yeah but he's a little *finger twirl motion*"

[Admiral Valdemar]

Ooh, Nokia's are reeeeal nasty. You gotta respect the Japanese. They know the way... of the Samurai.

Nokia is a Finnish company.

"Yeah but he's a little *finger twirl motion*"

I love that scene and my new Nokia to boot (kicks the crap outta the iPhone).

Doesn't Germany have even more insane union appeasement than the States? This move does evoke union led sour grapes.

[Dahak]

However, Nokia's dismay and outrage at financial demands is quite justifiable - I'd like to see that law or contract which would require Nokia to return the subsidies provided by the local government.

They got the subsidies on the ground that they had to maintain a certain number of employees over the running time of the subsidies. The NRW government thinks they did not, so if true, they have all the legal standing to get the money back if one partner did not fulfill its side of the contract.

[Edi]

Be interesting to know what the running time of the subsidies was, so it really does boil down to that then. I suppose it will be decided in court.

[Spyder]

Nokia is a Finnish company.

"Yeah but he's a little *finger twirl motion*"

I love that scene and my new Nokia to boot (kicks the crap outta the iPhone).

Doesn't Germany have even more insane union appeasement than the States? This move does evoke union led sour grapes.

Which one did you grab? I've been thinking about picking up a smartphone.

[Admiral Valdemar]

Which one did you grab? I've been thinking about picking up a smartphone.

The N95 8GB. Beautiful thing, especially when it beats the iPhone in all but aesthetics. My only quibbles are the lack of stopwatch/timer and the battery life, but they can be fixed with downloading Symbian applications (there are hundreds) and by setting the phone up in a way that doesn't mean its looking for WLAN or 3G networks all the time. It pretty much is a mobile office for me and I love the camera, GPS, web and video functions. And if you go with 3, you get free MSN and Skype functions and video calling.

Considering my last Nokia was a 3310, it's a helluva lot different getting this unit. 3.5G technology makes it awesome though if you have a good data allowance with your contract.

[His Divine Shadow]

I got a W910i, the Sony Ericsson, how does it compare to the N95? I've been out of the whole phone business for a while.

[Admiral Valdemar]

I got a W910i, the Sony Ericsson, how does it compare to the N95? I've been out of the whole phone business for a while.

The N95 is the best phone you can get. That's pretty much it. I didn't care about such things until my brother got one and I got sick of having his hand-me-downs (usually Sony Ericssons which served me well). Then someone I knew got an iPhone and wouldn't shut up about it. I looked at getting one, then saw the new N95 and how it does just about everything.

Suits me anyway, and by the time the 18-month contract is up, they'll likely have the N96 or whatever out by then. Hopefully with a power cell that gives it more life if you're using its more energy intensive functions.

[Edi]

A word of advice about different phones: The phone of model x you buy in country y may not be the same model x you buy in country z, because the phone software may be customized for local conditions by the job lot.

[Spyder]

Which one did you grab? I've been thinking about picking up a smartphone.

The N95 8GB. Beautiful thing, especially when it beats the iPhone in all but aesthetics. My only quibbles are the lack of stopwatch/timer and the battery life, but they can be fixed with downloading Symbian applications (there are hundreds) and by setting the phone up in a way that doesn't mean its looking for WLAN or 3G networks all the time. It pretty much is a mobile office for me and I love the camera, GPS, web and video functions. And if you go with 3, you get free MSN and Skype functions and video calling.

Considering my last Nokia was a 3310, it's a helluva lot different getting this unit. 3.5G technology makes it awesome though if you have a good data allowance with your contract.

Hmm, doesn't look like we have the 8GB out here yet. Although there's $150 off the vanilla N95 at the moment.

...Tempting.

[Admiral Valdemar]

A word of advice about different phones: The phone of model x you buy in country y may not be the same model x you buy in country z, because the phone software may be customized for local conditions by the job lot.

True, the N95 has a US and Oceania model, I believe, that makes use of different network options there, also known as the N95-2, which is basically a silver classic looking version of the 8GB. The 8GB has, obviously, 8 gigs of onboard memory, increased RAM, a better RISC chip and more powerful battery.

[Thanas]

Be interesting to know what the running time of the subsidies was, so it really does boil down to that then. I suppose it will be decided in court.

I am not sure if that was in the article, but the german government is not demanding the money back because Nokia is relokating (because the subsidaries have run out), but because Nokia (according to the government) undercut the number of guaranteed jobs by several hundreds during the time the subsidies where still being paid and running.

So basically what they are saying is: we gave you the money to provide x jobs over a certain period of time, and you provided x> jobs, so we would like that portion of our money back to which you were never entitled.

[CmdrWilkens]

Be interesting to know what the running time of the subsidies was, so it really does boil down to that then. I suppose it will be decided in court.

I am not sure if that was in the article, but the german government is not demanding the money back because Nokia is relokating (because the subsidaries have run out), but because Nokia (according to the government) undercut the number of guaranteed jobs by several hundreds during the time the subsidies where still being paid and running.

So basically what they are saying is: we gave you the money to provide x jobs over a certain period of time, and you provided x> jobs, so we would like that portion of our money back to which you were never entitled.

Except that Nokia, in the article, specifically mentions that the subsidy was for 2,860 jobs while the plant's average employement level was around 3,200. Now the fine print may be that there were suppossed to be 2,860 jobs for German nationals and the 3,200 total includes people brought in from elsewhere for technical or manegerial support.It also looks an awful lot like NRW is looking to recoup the total value of the subsidy but I just don't see it happening unless there is a loophole in regards to local versus non-local jobs.

[Dahak]

In essence, it is just their attempt to at least salvage some sort of face in front of the public, because their's nothing else the government can do. It's like "Oh, we couldn't stop them, but we managed to give the Evil Corporation a bloody nose" in the next election...

[Sarevok]

A word of advice about different phones: The phone of model x you buy in country y may not be the same model x you buy in country z, because the phone software may be customized for local conditions by the job lot.

Is the difference usually significant enough to be a factor ? Like for example the N72 I use has some operator specific (Telenor) features. But they are no big deal. Unless some major feature like bluetooth or mp3 is nerfed it should not be a factor.

[Fingolfin_Noldor]

Is the difference usually significant enough to be a factor ? Like for example the N72 I use has some operator specific (Telenor) features. But they are no big deal. Unless some major feature like bluetooth or mp3 is nerfed it should not be a factor.

Occasionally, some models are given a different number in a different country, and even converted from GSM to CDMA.

[Thanas]

Except that Nokia, in the article, specifically mentions that the subsidy was for 2,860 jobs while the plant's average employement level was around 3,200. Now the fine print may be that there were suppossed to be 2,860 jobs for German nationals and the 3,200 total includes people brought in from elsewhere for technical or manegerial support.It also looks an awful lot like NRW is looking to recoup the total value of the subsidy but I just don't see it happening unless there is a loophole in regards to local versus non-local jobs.

If it is found out that Nokia lied to the german government about the jobs provided, german law does allow for the whole subsidy to be recouped from the company.

As for the job value, news report an alleged discrepancy between what Nokia was claiming and actual plant statistics, which is what I was referring to.

From here, translated by yours truly:

Der Handy-Hersteller habe das Soll von 2860 Arbeitsplätzen im Jahr 2002 um 318, im Jahr 2003 um 368 und im Jahr 2004 um 347 Beschäftigte verfehlt

"The handy manufacturer allegedly missed the mark of 2860 employees by 318 in the year 2002, by 368 in the year 2003 and by 347 in the year 2004".

It is all in the early investigations stage, so none of that is proven though. Might all just be hot air, but it is very hard to predict what will happen on that front. Most likely a lenghty court battle will follow.

[Vympel]

.....What?

Your Transformers-Fu is WEAK.