Germany Rages at Nokia Plant Closure

Employees are outraged over the Finnish cell phone company's plans to close its Bochum facility and move production to Romania

by David Gordon Smith

A crying woman holds out a Nokia mobile phone, a protest banner in her other hand. The image, which dominates the front cover of Thursday's Süddeutsche Zeitung and other German newspapers, symbolizes the wave of grief and indignation sparked in the western German city of Bochum by the news that Nokia is to close its plant in the city.

The Finnish cell phone manufacturer unexpectedly announced Tuesday that it would close its plant in Bochum in the western state of North Rhine-Westphalia by the middle of the year, with the loss of around 2,300 jobs. A further 2,000 jobs at the plant's suppliers are also in danger. The company is moving production to a new plant in Cluj-Napoca, Romania, where wage costs are a fraction of those in Germany, with other functions going to Hungary and Finland. Hundreds of employees demonstrated outside the Bochum plant Wednesday in protest against the closure.

As anger over the news continues in the city and beyond, the company is now being accused of misusing state subsidies. The mass circulation newspaper Bild reported in its Thursday edition that there is speculation that the Romanian government lured Nokia with the help of subsidies from the European Regional Development Fund.

European Commission President José Manuel Barroso rejected the speculation, saying that there had been no help from Brussels for the move to Romania. "If it is possible to move jobs from Finland to Germany, then it must also be possible to move from Germany to Romania," he said. The German Deputy Economics Minister Hartmut Schauerte also told Reuters that EU money had not been used to support the relocation. However a spokeswoman for Nokia told Bild that the firm could have indirectly received subsidies in Romania in the form of financial help for building roads to the factory, for example.

The economics minister of North Rhine-Westphalia, Christa Thoben, is checking to see if Nokia will have to pay back €17 million ($25 million) in subsidies it received from the state. Nokia had received a total of around €88 million in subsidies in Germany, from the federal government and North Rhine-Westphalia. According to Thoben, Nokia had assured her it would guarantee 2,856 jobs in Bochum in the long term. However only 2,300 people are working in the plant at the moment. Observers point out, however, that the deadline for the job guarantee expired in September 2006.

Politicians from both sides of the political spectrum have condemned the decision, with critics pointing out that the plant never operated at a loss. The governor of North Rhine-Westphalia, Jürgen Rüttgers, publicly embraced weeping protestors Wednesday and called on the company to reverse its decision, accusing the Finnish firm of being a "subsidy locust." The term "locust" is used in Germany as a negative shorthand for unwelcome profit-hungry foreign investors such as hedge funds. Rüttgers, who belongs to Angela Merkel's center-right Christian Democrats, is known for his populist protectionist take on globalization, having famously coined the phrase "Kinder statt Inder" ("children instead of Indians") in 2000 to argue for promoting education instead of immigration as a solution to the country's shortage of computer specialists.

Kurt Beck, leader of the center-left Social Democratic Party, also accused Nokia's management of exploiting the taxpayer. Hannelore Kraft, head of the SPD in North Rhine-Westphalia, said her party needed to "organize social resistance" against the move.

Despite the outspoken criticism, the company said Thursday it would not reconsider the decision to close the plant.

Nokia is the latest in a series of cell phone manufacturers to move production from Germany. One year ago, BenQ closed its German plant, while Motorola announced six months ago it would leave Germany. The manufacturers are reacting to increasing competition in the handset market which is putting pressure on prices and causing firms to look to cut costs.

Commentators writing in Germany's main newspapers Thursday all agree that mobile phone manufacturing has no future in high-wage Germany and on the whole defend the company's move.