January 18, 2008 / 12:37 PM / 12 years ago

UPDATE 2-German rage over Nokia plant closure grows

(Adds background, reaction, talks)

By Sylvia Westall

BERLIN, Jan 18 (Reuters) - German anger over plans by Nokia NOK1V.HE to close a plant escalated on Friday, with the finance minister accusing the cellphone maker of “caravan capitalism” and others vowing to replace their Nokia phones.

Nokia, the world’s top cellphone maker, said earlier this week it would close the plant in the western city of Bochum because it was not competitive and move production to Romania.

The Finnish firm’s plans to cut up to 2,300 jobs have drawn political criticism ahead of state elections.

“This is the expression of a caravan capitalism which systematically undermines support for this economic and social system,” Finance Minister Peer Steinbrueck a Social Democrat, told German radio.

“People are losing confidence and that is extremely dangerous and of political importance,” he said.

The Economy Ministry later said it had hosted talks in Berlin between Nokia officials and the economy minister of North Rhine-Westphalia, the state where the plant is based. A ministry spokesman declined to give details on the outcome of the talks.

A Nokia spokeswoman in Helsinki declined to comment and referred questions to Nokia representatives in Germany, none of whom were available throughout Friday.

Nokia has said labour costs in Germany are nearly ten times higher than in EU-newcomer Romania and has refused to back down.


Germany, the world’s biggest goods exporter since 2003, has seen its telecommunications sector hit hard in recent years.

In 2006, 3,000 workers lost their jobs when BenQ Mobile (2352.TW) declared bankruptcy, a year after it bought off Siemens’ cellphone unit.

Carmakers have also cut thousands of jobs in Germany to boost productivity while appliance maker Electrolux closed a German plant in 2006 and cut around 1,750 staff.

In Bochum, workers said they had finally given up believing the plant might be saved. “All our hope has died,” worker Patsiou Dimitva said, crying outside the plant. “Only a miracle can help us now but I don’t think there will be any.”

Germany, Europe’s largest economy, is Nokia’s fifth-largest market, with net sales of 2.06 billion euros.

Some union leaders in Germany have called for a boycott of Nokia goods, and senior politicians have joined in the attack.

According to daily Bild, Peter Struck, the head of the Social Democrats (SPD) in parliament, had asked his office to get him another cellphone and Consumer and Agriculture Minister Horst Seehofer was looking at alternatives to Nokia.

A government spokesman said Chancellor Angela Merkel had no plans to give up her Nokia phone, but added she understood the reasons for the boycott calls.

Some politicians argue Nokia should repay German subsidies it received in the 1990s, but other officials have noted the company has invested much more than it received.

A deputy economy minister in NRW said the state may have grounds for pushing Nokia to return up to 40.8 million euros of subsidies given on condition the firm employed 2,800 people.

Government economic adviser Peter Bofinger said subsidy abuse should not be tolerated but insisted closures were normal.

“Jobs are cut and shifted elsewhere — this is part of normal market developments, even if it is a hard blow in this case,” he told the Saarbruecker Zeitung newspaper. (Additional reporting by Matthias Inverardi, Sakari Suoninen, Mike Shields and Reuters Television; editing by Sue Thomas)

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