BERLIN, 7 February 2008 — The dispute between the German state of North-Rhine Westphalia (NRW) and Finnish phone maker Nokia intensified yesterday after the state demanded Nokia pay back subsidies it received for a plant that is to be closed.
NRW said it would seek the reimbursement of subsidies worth 41 million euros ($60 million) for a plant in the western city of Bochum, which Nokia said last month would be shut down.
Nokia shot back, saying that it “strongly believes it has acted correctly” and adding that “the facts currently available do not support the planned attempt of the NRW Bank and local government to try to recall the subsidies.”
Saying it was “astonished” by the German request, Nokia added that it had invested more than 350 million euros in the plant since 1999, “well above the amount stipulated in the agreement.”
The NRW Bank paid the subsidies to Nokia in 1998-99. If the stalemate lasts more than a week, Nokia will be able to appeal the request before a German tribunal. Nokia’s decision last month to close the Bochum plant raised howls of protest in Germany, where 2,300 jobs were expected to be lost at the factory and with local sub-contractors also expected to be hit.
The Finnish firm plans to shift production to Romania where labor costs are lower. The regional economy ministry said in late January that an initial probe of subsidies for the factory suggested that Nokia had hired “between 200 and 400” fewer people than the 2,860 it promised to employ between 2002 and 2005.
That was the basis for the state’s demand, since the closure itself was announced after the period for which Nokia had committed itself.
Nokia said yesterday that more than 3,200 workers had been employed at the Bochum plant on average from 2001 onward. “Nokia not only fulfilled the conditions of the agreement, it exceeded them,” its statement said.
The group added that NRW Bank had rebuffed requests to look at its records, saying: “Therefore, it is unclear how the bank and the government arrived at their position.”
