The area where the German factory is located has already received around €40 million from Nokia and investment by the local authority, the organisations have claimed
The European Commission has approved an application from the German government for around €5.5 million to help around 1300 workers made redundant by Nokia.
In a statement released this week, the EC said that the workers from the factory located in Bochum, in the German region of North Rhine Westphalia deserved the money because although staff were being made redundant in large numbers across the whole of Europe – the area concerned was particularly badly off. The workers will receive around €4000 each from the fund.
“The redundancies occurred in an area which traditionally has an unemployment rate of 3 to 4 percentage points higher than that of Germany as a whole. The funding will help the 1,316 most disadvantaged among these dismissed workers to return to employment,” the EC said in a statement.
The money is being made available via the Globalisation Adjustment Fund (EGF) which is designed to support European workers who may have had their jobs outsourced to developing countries with cheaper labour costs. “There is a general trend amongst mobile phone manufacturers towards shifting production for mobile phones and accessories, mostly to ’emerging’ markets in Asia,” the EC stated.
However, the EC appears to have some reservations about what Nokia’s real motivation for making the redundancies were even though it had highlighted outsourcing to Asia as a possible motive. “Despite this general trend, the redundancies at Nokia Bochum were unforeseen, as in 2007 operations were profitable,” the EC said in a statement.
But according a statement from Nokia last year, the company said it wasn’t moving the jobs to Asia but rather elsewhere in Europe. In January 2008, Nokia announced that it planned to close the Bochum facility and “to move manufacturing to its other, more cost-competitive sites in Europe”.
Nokia said its decision to close Bochum was “based on the lack of competitiveness of the location. Renewing the site would require additional investments but even this would not result in manufacturing in Bochum being globally competitive”.
“The planned closure of the Bochum production site is necessary to secure Nokia’s long-term competitiveness,” said Veli Sundbäck, executive vice president of Nokia and chairman of the Supervisory Board of Nokia GmbH. “Due to market changes and increasing requirements for cost-effectiveness, production of mobile devices in Germany is no longer feasible for Nokia. It cannot be operated in a way that meets the requirements for global cost efficiency and for flexible capacity growth. Therefore we have to make this tough decision.”
In July 2008, Nokia announced a joint plan with the local authority in Bochum to establish a “Growth for Bochum” package. “Nokia will support these measures by contributing the sum of 20 million euros plus the net proceeds from the sale of Nokia’s production facility and property in Bochum. NRW will also contribute a co-investment in the amount of 20 million euros,” the company said at the time.
According to the EC there have been 23 applications to the EGF so far, for a total amount of over € 130 million, helping about 29,000 workers. “The Nokia application is the third concerning the mobile phone sector approved by the Commission for presentation to the European Parliament and the Council. Other applications relate to the automotive sector, textiles, electrical equipment, computers and domestic appliances,” the EC said.
Commenting on the funding for the German workers, EC employment commissioner Vladimír Š pidla said: “In the context of the current financial and economic crisis, the employment situation in the affected areas is particularly vulnerable. I am glad that the affected workers can be supported by the safety net which the EGF can provide.”
In a recent annual report, it was claimed that 10,000 people have received assistance from the EGF in 2008 and around 69 percent of those helped in 2007 had found a new job by the end of the support.