When Nokia announced in January that it planned to close its manufacturing plant in Bochum Germany, many union leaders and politicians were upset with the world’s largest mobile phone maker. To make the closing easier on workers, Nokia will spend $314 million and set up a transfer company that it will help staff for one year. The agreement means the plant can close on June 30 of this year.
Nokia is touting the agreement as being socially responsible and fair to employees while the head of the Bochum employee council says the payments will help families and disabled persons who relied on working for Nokia.
Nokia has apologized for closing the facility but said that while the plant only produces 6% of Nokia products it accounts for 23% of its global labor costs. Labor costs in Bochum Germany are nearly 10 times higher than those at a similar plant in Romania.
Nokia was paid subsidies in the late 1990’s to build the plant and the state government of North Rhine-Westphalia wants its money back, plus interest, for a total near $94 million. The state says that Nokia hasn’t fulfilled the conditions under which the subsidies were granted. Nokia says it has surpassed the requirements.