Germany Still Upset At Nokia, Demands Subsidies Returned
So, here’s the situation. About a decade ago, Nokia setup shop in Bochum, Germany. They hooked up with the local government and secured a bunch of subsidies (to the tune of $60.5 million) to help renovate a TV factory into a cellphone factory. Stipulations of these subsidies included a certain number of jobs created and a certain amount of additional funds invested in the factory over time.
Recently, Nokia announced that it was closing the plant, and moving the work to nearby Romania, which will reduce associated operating costs by about 90%. The local Germans got uber-upset, holding protests and claiming that they would never buy Nokia products again, blah blah blah. It’s been a big PR mess, and I have to say, honestly, I’m a bit dismayed at the Germans reacting so poorly. Sure, it sucks to have a big factory like that closed, but seriously?
In today’s news, it turns out that German government wants Nokia to repay the subsidies that it was given 10 years ago for said plant. Nokia’s holding out, maintaining that it has done everything and more to satisfy the terms of the agreement, and that it’s not refunding anything.
Really, I think Germany is suffering the worst in this situation. It hasn’t really affected Nokia much on a global scale, and if I’m a company looking to setup shop, I’d be a bit more wary of Germany, if this is how big a pain it is to get out later on down the road.
It’s a complicated situation, Ricky.
Combine German industry’s historically benevolent relationship with the trade unions in an area struggling with already high unemployment plus a large dose of regional (rather than national) politics thrown in to the turmoil. (And quite possibly a degree of xenophobia towards both the Finns and the Romanians.)
These are difficult times in central Europe with massive wage differentials across the newly-relaxed borders, leading many in the workforce to feel like sacrificial cannon fodder.
Even here in the UK there are hardly any low-paid or casual jobs available any more as formerly-east European migrants dominate the sector.
Thank goodness for the minimal protection of minimum wage levels!
I guess the folk in the southern American states went through much the same angst when industry started heading south to Mexico?
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Posted by HeavyLight on February 6th, 2008 at 10:34 pm.