Nokia to close production facility in Bochum

Financial Times: Nokia to shut uncompetitive German plant.

Yep...Top of the news today!

one of the big businesses pulled another coup. I heard on the radio that they`ve been subsidised by the EU and that the move and all the rest of it - new factories etc, will probably be subsidised by the EU as well. The workers will probably be laid off but the executives will receive a golden handshake and a bonus for F**cking it up. The politicians will spout verbal Dhiaorrea and all be ever so concerned and will no doubt use this as a Theme in the upcoming election campaigns.

When the new Big Brother/Superstars/Dee`s Dance circuses start it`ll all fade into the background again.

//Rant mode on//

Big businesses and Politicians have a vested interest in F**cking us and stealing our hard earned money. As long as politicians are allowed to sit on the boards of such concerns, nothing will change. They fix their own Salaries at sometimes astronmical amounts...sit on their Arrses and do nothing...and after a few years are rewarded for their services to Industry/Politics. Bunch of Cnuts - all of èm. I remember some years ago the big slogan was "Die Renten sind Sicher (Norbert Blüm)...Google for "Abgeltungssteuer 2009" and see whats in store for us. Read èm and Weep!

//Rant mode off//
Topics merged by admin

Instead of a conspiracy theory, maybe the cost structure to produce a mobile phone is to expensive in Germany compared to competitors who produce mobile phones in lets say – China and in this case, Hungary.

Globalization.

Good if you want to buy inexpensive imports.
Bad if you lose your job because of those same imports.

Having received subsidy in the recent past of ca. €70 Million Nokia now announces it will close it's Bochum works and lay off the 2300 workers there, in order to move production to Romania. Bochum is profitable but Romania would be more profitable. While I have the greatest sympathy for the workers concerned and find Nokia's behaviour unacceptable, I can't help adding that there weren't many supportive voices from Germany when Siemens did something very similar in the North East of England. What do you say ? Would you buy a new Nokia ? Not me !

I didn't realise I was right on the button with my comment. Here is :an extract from the Nokia website

"* As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for the third quarter 2007 are not directly comparable to results for the third quarter 2006. Nokia’s third quarter 2006 included the former Nokia Networks business group only."

Obviously Nokia have picked up some bad habits from their friends at Siemens.

The regional government made a bad trade. The Germans are as guilty of doing this abroad as anyone else ... how many subsidies did they receive to locate there, and did they ever pay them back?

Did anyone ask Cargolifter to pay the taxpayers/workers back? Soak the rich!

Thanks for the post about VW. Do you think they'll close the facory there ?

They did ... in 1984.

Well at least the site was put to good use: Tropical Islands

From the Nokia Germany Website, Corporate Responsibility / Soziales section:

"Verpflichtung zur sozialen Verantwortung
Unser Ziel ist ganz einfach - wir möchten, dass Nokia weiterhin ein interessantes Arbeitsumfeld bietet - und wir möchten zum Wohl der Gesellschaft, in der wir tätig sind, beitragen. Jeder Nokia Mitarbeiter entscheidet mit über Leistung und Reputation von Nokia in den Bereichen Gesundheit, Sicherheit, Mitarbeiterbeziehungen, Corporate Community Involvement und Menschenrechte. Aus diesem Grund ist jeder Mitarbeiter für den Erfolg von Nokia wichtig, denn er hat Anteil an der Verantwortung für das soziale Engagement."

I don't see what the big deal is. Nokia is in the business of making phones for profit, not as a job creation scheme for NRW.
If they got benefits from the state, the state should have made sure that they would have to pay back some of the money if they were to leave.
There is no point trying to boycott Nokia because they also employ people in other parts of Germany - in Düsseldorf, in Munich, Berlin and Bad Homburg to name but a few places and a boycott might just cause more job cuts.
Germany has to realise that it cannot compete on price for basic factory jobs and to concentrate on upskilling its workforce for the 21st century.
It was a fine advantage in the 50s in the time of the Wirtschaftswunder to have lots of unskilled labour (and they even had to import the Gastarbeiters to provide it) but nowadays unskilled or low-skilled labour is relatively much cheaper a few miles to the east but the German education and qualification system has not been updated quickly enough.
Look at the disjointed logic in having, on the one hand, a shortage of trained craftspeople, and on the other, 3-4 million people on the dole. Why can't the state put a bit of effort into better training some of those people?
And what hope is there for the poor kids who finish their hauptschule at the age of 16 nowadays with no discernible qualifications? (aside from state-subsidized makework jobs?)
(/rant)

Ahhh ... but German logic has it that wanting to create maximum return for shareholders is "lust for profits". Q: You're suposed to be only in business to make people "happy" via make-work jobs ... or the Great Unwashed may get poorer than they already are and want to rise up and hurt us ... why don't you understand this? A: Tell people that they have to get a university degree (and meanwhile you get busy and build a real university system that allows one to actually obtain a decent one by world standards) if they want to live in an advanced economy, and until this happens get busy building lots of walled communities and prisons and let the sensible people do what has to be done or it's never going to be anything better than a theme park for old you-know-whats.

This place retains its crown as the Special Olympics of all things economic.

No need for Germany bashing.

Germany is the biggest exporter in the world and this is not entirely due to state subsidies or "companies are places to keep employees happy and employed". There is definetely high quality and value in the german products, engineering and processes.

Not that I am german or anthing. I have worked many years in the US industry.

What I like out here is state support for education, health services and supportive benefits that allow a cushion for employees when jobs are gone - unlike US where one would be working in a macdonald's next day out of work since your company can fire you anytime. The social support system is excellent here in Germany at the same time that the german industry is globally competitive.

Regarding the Nokia factory, the improtant thing is to move the workers on the innovation / skills ladder. A new technology becomes a commodity technolgy in a few years and this requires it to be moved to a low cost location. This is normal and this is what Nokia is doing exactly. The Germany state needs to provide a cushion and to retrains workers for different / new skills. For a small community / town, where the factory is the major employer, this shore means loss of livelihood for the whole community. However, doing politics over it does not solve the problem. I support Nokia since it makes sense for their business. It is the resposibility of the state to look after the affairs of the people and perhaps negotiate some exit settlement with Nokia for the people who are laid off.

Change is the reality of 21st century business and I think Germany is a leader in industrial development and adopting change. The reorganiozation of large organizations like Siemens, Volkswagen, BMW, Deutche Telekom etc show that change does take place in Germany along with social responsibility.

To me it looks like Germany has the best of both worlds - a welfare state along with a competitive capitalistic business enterprise.

Sounds like a perfect political kick up the arse to me. Corporate tax rate in Romania is 16%. Best they keep making Germany competitive for business and they will keep business. Corporate tax is down this year from 39% to around 29% and that is purely down to pressure from outside. Now they need to make it less of a pain in the arse to hire and fire.

Of course with the Kurt Bs & Oscar Ls of this world around that ain't going to happen is it?

If the "cushion" were that cushy, the Bochum plant's workers would not be upset in the least about the factory's closure. Perhaps you should familiarize yourself with the plight of the long-term unemployed.


No, it is not the responsibility of the State to retrain workers- the State has little idea of what skills are needed and the relevant quantities. It is also absolutely not the responsibility of either the NRW or German Federal Governments to be negotiating severance packages, especially since the workers were represented by the largest labor union in the country. Additionally, given the poor record of both governments in subsidzing the Nokia factory (whose closure was announced almost as soon as subsidies ended) if I were one of the Bochum plant's workers I wouldn't feel too good about the government negotiating on my behalf.

I disagree, I think the State would be better off subsidising the retraining or upskilling of its citizens, instead of relying on the private sector to do it. In a globalised world, the private sector will just import trained labour from India or Romania or Poland instead of training people themselves.

The state should make it its business to find out what skills are needed and will be needed in the future and then try to fill that gap. An education system that produces lots of excellent art historians is not going to attract much investment.

The politicians can certainly do something about the importation of labor by restricting it, although with EU treaties, they have in that respect screwed German workers over.


Once again, how will governments know? No company wants to had over proprietary information, and with shortened product cycles and a more globalized world ecomomy, training decisions made today in preparation for five years hence may well be completely obsolete by that time. With EU-wide labor mobility, how can you even begin to even relatively accurately estimate, say, the supply of electrical engineers ten years from now?
I don't want governments dictating to students what they will study at university, either. It is inappropriate in a free society. Let the market signal what is wanted and needed to students and have them make their own decisions based on their own situations and that of the larger economy. It is also possible to create a glut of graduates, even in the hard sciences, through daft government policies such as quotas. Market signals work, let them do their job.

BTW, Nokia, apparently in damage control mode, has offered the Bochum workers employment at the new plant in Romania.

How do you figure? % of GDP? Total?

I don't see how EU treaties have "screwed German workers over" - the EU is all about the free movement of labour and goods and services. The German workers can go to another EU country as easily as, say, an Englander can come to Germany. There is reciprocicity there, if the German worker is suffering it's more likely because Germany is ill-prepared for a flexible, mobile labour force.

In terms of training for the workplace, the state should be subsidising training to compete with other states who subsidise. The marketplace of which you speak is EU-wide and other governments and state bodies are competitors and actors too. If the Irish state, for example, subsidises people training as carpenters and the German government doesn't, then the Irish citizen has an advantage in the workplace. Eg. then they can come to Germany and work as carpenters and reduce the need for a German employer to take on carpentry trainees which means more untrained people on the dole.

If there is a glut of graduates, then some of them may be forced into emigration or, better still, into innovation. I don't see how this can be a bad thing.

Apparently biggest exporter by Total exports, but may well be overtaken by China this year.

Musical Interlude

It's a bit complex, and somewhat nuanced; however, Freedom of Movement has increased labor supply for some jobs within Germany more than it has increased the demand for labor to fill those jobs. In some cases, a lack of labor flexibility is the issue, in other cases it isn't much of an issue or it is irrelevant.

Not all goods, and especially not all services, are tradeable. At any rate, there are several reasons why your example of the Irish carpenter doesn't apply in real life. One is that such training is not standardized; even it were, the Irish government would be pretty upset if it spent euros to train people who then took their skills out of the country to benefit rival economies!

Creating a glut of graduates or unskilled/skilled workers in a particular industry subset depresses wages, which typically ends up reducing innovation. With the supply of labor plentiful and wages relatively low, why automate or develop different work processes? Skills are also usually not that transferable, as the relatively inflexible labor market shows. I don't want government wrecking labor markets with misguided schemes and wasting taxpayer money in the process, and then demanding that German industry fix the gluts by hiring more people than industry actually needs (in order to cover up government mistakes in training too many people). More flexibility, not less, is needed, I am sure you will agree.

Many countries train people up only to see them leave - however there are benefits to this - they send back earnings and they gain experience which is of benefit if and when they return.

As for the Irish carpenter, a lot of Irish and English construction employees came to Germany in the early 1990s. My example does very much apply in real life.

Not all government or state schemes are misguided.

There isn't a country in the world where the state does not train people. Every country has an army, every country has a civil service and these are people that get a lot of their training from the state.

"If and when" doesn't sound like the strongest case for laying out some significant monies, and can you quantify how much money Germans working outside of Germany send back to Germany in the form of remittances?
It is true that there are numerous instances of countries spending money to train and educate people who will leave and thus benefit other economies. However, this is greatly disliked- ever heard much positive press about "brain drains"? If you are training people that you know will be taking their training overseas, you are subsidzing employers in another economy. How many voters in Germany want to see that on a large scale?


I am not so sure it does apply here. What was the extent of their training to be construction workers back in their home countries and how much did it cost? Is specific training required to do construction work in Ireland or the UK? Where they trained with the knowledge they would be seeking employment abroad or was there an expectation that they would be working in their home countries (which in Ireland's case was already growing strongly at that point)? The early 1990s saw the post-reunification construction boom, so how many came and how many are still working in Germany? How much money have they send back to Ireland or the UK? Keep in mind that a lot has changed in the UK, Ireland, and Germany since the early 1990s.


That is painting such a broad brush that it cannot help but be accurate in at least some instances. I think what you have proposed is misguided.


Absolutely correct. I am a former US servicemember myself, and I seem to recall my training benefiting the US military, US government, and the US civilian economy quite a bit. In the examples you give here, the country knows it will directly benefit from training the people who go to work for their own government. This is non-sequitir to any debate over providing training/portable skills to people who the country knows will leave.

Apparently you misunderstood me. I was not in any way suggesting that people not receive a free basic education to the secondary level (to include vocational training for those not headed to university). I was saying that there are, because of the attendant economic effects, limits to how much training should be provided by government rather than industry in certain cases, including those of the structurally unemployed.

Well, this is a chicken and egg situation, isn't it? The structurally unemployed have the lowest level of experience and training. And they don't have the resources to pay for training courses themselves. My argument is, if they had been given a bit of training they could work to fill the lack of craftworkers that exists in Germany. And if they emigrate, they are no longer a burden on the social system here.

The opportunity cost of training people is very low - you only have to pay them the same as they are getting for being unemployed anyway so the additional costs are very small.

As to construction industry - yes, these people were trained in their home country, most of them were in Germany only for a short time, some of them are still here.

I know one guy in the construction came over here, then went to Singapore for a few years, now he is Canada. He served out his apprenticeship in Ireland and it included some state-sponsored training. It's the same with a lot of electricians, plumbers etc. they work most of the year and spend a few weeks in a classroom to get recognised qualifications.

As for the flexibility of qualifications, lots of Irish people went to the States in the 1980s, many of them in the construction industry. Nevertheless, because of language differences etc, it is probably easier to do that than emigrate within Europe.

The employees in Bochum mostly probably have basic soldering skills etc., that's the sort of work that is much cheaper a few miles to the east. Now Barrosso has waded in and said that the EU will try to find something for them, which I think is grossly unfair on the people in Bochum who are already unemployed. Why should these newbies jump the queue for training or whatever, just because the media and the politicians made a fuss?

One problem with this thinking is that if there really is that much of a shortage, why shouldn't companies be training people, rather than the government, considering there is already an apparatus of apprenticeships designed to do just that, plus the companies know the market and their needs better. I see the role of government as information intermediary via the Arbeitsamt between potential trainees/workers and companies looking for them. There is no need to subsidize industry by having government provide training that might anyhow not even meet either industry or individual company standards.

As for training them with an eye towards possible emigration, keep in mind that there is even more of an information gap between foreign labor market needs and what the German government knows about them. What about meeting licensing requirements (say for an electrician) elsewhere? Will the training encompass that? What about people, say, 45 and older who would face age discrimination pretty much anywhere, have families and can't realistically emigrate? That isn't a coherent solution.

I am somewhat less worried about people being on the dole given Hartz IV and other changes in benefits.


I completely agree. See my point about distorting markets? I guess the EU feels somewhat responsible given its role in subsidizing the plant in Romania and doesn't want too much bad press of its own.

Anyone know when the Bochum plant was opened?

Arsenal, I forgot to mention something yesterday. As I understand it, Nokia has offered to have the Bochum workers to keep their jobs (in Romania, of course). Since you are supportive of labor migration for Germans who cannot find work within Germany, then does such an offer should pretty much do away with the need for re-training the Bochum workers?

Just for your information - The State of NRW brought the Nokia factory from Hungary to Bochum by offering Nokia attractive subsidy packages.

Without the subsidy packages, Nokia would have never moved from Hungary to Bochum. Therefore it is no surprise that the Nokia Management has
decided to move back to Eastern Europe after the vesting period.

So in all, it is very interesting to see Nokia heading back to Eastern Europe.

I think we are talking past each other. I don't think those specific workers should necessarily be retrained. I disagreed with whoever said the government should not be training people - in general. But the state should make an effort to train particularly younger people.

Also, the Arbeitsamt seems to be positively encouraging people to go abroad. I live in the east and I see adverts on the trams from the arbeitsagentur on how to go abroad. Also on arbeitsagentur.de, info on going abroad and overseas jobs is acessible within 2 clicks.

Companies should be training people, but it seems the system does not work as well as it might. And in a few years time, when the new EU countries citizens are allowed to work in Germany, they will probably find it easier to import a trained employee from Poland or Hungary or Latvia than taking on an azubi for a few years.


As for licensing, the rules within Europe are that if a profession is licensed or regulated in a persons home country then their qualifications should be recognised in any other state where the profession is regulated. Basically everything is regulated in Germany - including hairdressing, bicycle repair etc. so Germans really shouldn't have a problem getting recognition in other European countries where needed.

That sounds much too nebulous to me. Do we have any real analysis on this, or just anecdotal evidence? If the system is understood to be that companies train people, then it stands to reason they won't waste time and resources training people they know they won't need, which also sends a signal to workers to pursue another career path.


All the more reason for government not to be training people that German industry and trades do not want to hire. From the point of view of the Germany-based worker/prospective apprentice, would you pursue training that had no future career benefits? Most people do not want to work overseas, so it is more likely they will want to take on a career path which will bring them employment here.


Understood, however, we all know what is official and what happens in real life- that Germans generally do not regard tradespeople even from other European countries to be properly trained. No doubt there are sometimes similar issues for Germans abroad, and once again, most people do not want to go work overseas. If it were that easy, why are there any unemployed tradespeople in Germany at all? Why haven't they all gone overseas? Age or language has something to do with it in many cases, but there is more to it than that.

It's acting as an information intermediary, which I have already said it should do. I see nothing wrong with that; however, no government-provided training is being offered.

If the government trains additional tradespeople or industrial workers, the initial effect will be a drop in wages offered as the supply of labor would exceed the amount of labor demanded. If the government-provided training is inferior to that of industry, and its graduates are at a disadvantage in the marketplace (quite likely since those being trained by companies would have had the work observed during the apprenticeship by the same people who would hire them full-time) tax money would have been wasted, a glut of workers would be on the market, and there would some pretty unhappy people without jobs. If the government-provided training was as good as industry's (most unlikely) then industry would phase theirs out, making it a taxpayer subsidy to industry- and we have more than enough of those already.

The Register: Germans demand Nokia return funding

From that article:


Well, they've failed there!


The idea behind taxation is that companies and individuals provide a surplus to the system, rather than simply returning what they've been given.