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Nokia forges $315.4M deal with Bochum plant union

Posted: 10 Apr 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Bochum plant? Nokia Germany? union package deal?

Nokia Oy and union representatives at the Bochum, Germany plant have agreed on a $315.4 million package to soften the blow of the controversial closure of the Finnish group's facility.

Some 2,300 employees will lose their jobs at Bochum as Nokia is moving production to Romania, were costs are cheaper. The plan was strongly criticized when the Finnish handset maker announced it earlier this year.

Nokia CEO Olli-Pekka Kallasvuo has apologized for the decision to close the plant but has said it was necessary, given that the factory makes 6 percent of Nokia's handsets but accounts for 23 percent of its global labor costs.

The mobile phone maker said the package agreed April 8 allows for the plant to close on June 30 as planned. After that, Nokia will set up a "transfer company" for affected staff for one year.

Gisela Aschenbach, the head of the employee council in Bochum, said that "additional payments will take into account the specific situation of families and severely disabled persons."

Nokia said the outcome was a "fair and responsible social plan."

"We are well aware that closing the site is painful for all affected employees and their families. As we have clear responsibilities to our employees in this kind of difficult situation, it was our special concern from the start to compensate the loss of the jobs in a respectful and fair manner," Veli Sundback, Nokia executive VP, said in a statement.

Sundback added he hoped the $315.4 million package would settle the disagreement between the mobile phone maker and the North-Rhine Westphalia (NRW) state government , where Bochum is located.

NRW has demanded Nokia pay back subsidies of around about $94 million to revamp the plant. Nokia has refused to back down. A deal is expected to be completed within weeks, Nokia said in a statement.

Nokia and the unions also agreed on terms related to the planned divestments of a unit that makes automotive products, and a software research business in Bochum.

"Successful divestments would enable employment for approximately 300 staff in total,'' the statement said. Earlier this year, Nokia announced plans to sell the automotive unit to Razvan Olosu, the former head of its Enhancements unit, and Equity Partners GmbH.

The software business is being acquired Sasken Communications Technologies.

- John Walko
EE Times Europe

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