Nokia Pays $314M to Close German Plant

Nokia announced this week that it will be closing one of its manufacturing plants in Bochum, Germany. Shutting down a location and causing people to lose their jobs however, is not looked on lightly by European authorities. Germany officials ordered Nokia to pay a hefty $314-million USD in and setup a transfer company in order to help affected employees through the phase.

German unions and politicians heavily criticized the big Finland-based cellphone manufacturer when it announced its plans to shut down the plant in January. The closing of the plant is expected to affect approximately 2,300 people.

Despite criticism and the payout, Nokia will still stick to its plans to shutdown the Bochum plant on June 30th of this year.

Nokia officials said that its announcement and action plans for the affected employees are "fair and responsible social plan." Gisela Aschenbach, head of employee council in Nokia’s Bochum office, said "additional payments will take into account the specific situation of families and severely disabled persons."

Olli-Pekka Kallasvuo, Nokia CEO, apologized this week for the company’s decision to close the plant, but reiterated that the decision was necessary. Kallasvuo told reporters that the Bochum plant accounts for 6-percent of Nokia’s handsets but accounts for 23-percent of its global labor expenses. Nokia indicated that the Bochum plan labor costs were approximately 10 times higher than another plant it runs in Romania.

German officials were upset with Nokia’s statement and argued that labor costs are only a small factor of overall costs.