14 DAY TRIAL // Nokia seems to have serious problems with the German state, after the January announcement regrading the company's factory in Bochum, North Rhine-Westphalia, which is planned to be shut down in the summer of 2008. The plant's closing was presented by Nokia as being necessary, in order to assure the company's long-term competitiveness. The production from the Bochum factory will be transferred to Nokia's new plants from Cluj, Romania, and Komarom, Hungary, where labor costs are significantly lower.
All good for Nokia apparently, but the German state sees things a bit different. The North Rhine-Westphalia (NRW) Bank and the NRW government announced Nokia, at the beginning of February 2008, that they will try to recover the subsidies payed by the German state to the Finnish company in the late 90's to be used in the benefit of the Bochum factory. At that time, Nokia declared to be surprised by this intention, saying that it had fulfilled all its duties and, in fact, it also exceeded them.
Well, now Nokia must be double-surprised, as the German state, via the NRW Bank, sent a demand note to the Finnish producer, asking it to pay about 60 million Euro (92 million USD), representing the above mentioned subsidies, plus interest. The payment should be made until the 31 of March 2008, otherwise the NRW Bank will be forced to take legal actions.
For the moment we can't say if Nokia will indeed pay those 60 million Euro, nor if the German state is right about claiming back the subsidies. All we know is that, although the Bochum factory accounts for about 23 percent of Nokia's global labor costs, it only produces 6 percent of its mobile phones, hence it can easily fall into the "not quite profitable" category.
We'll see what happens in the next days/weeks and we'll report back when interesting updates about the Nokia vs. Germany situation are available.