Restructuring events
European Restructuring Monitor (ERM)
The restructuring events database contains factsheets with data on large-scale restructuring events reported in the principal national media and company websites in each EU Member State. This database was created in 2002.
The German subsidiary of Nokia, the world's largest manufacturer of mobile phones, announced on 15 January that it is to cut 2,300 jobs by closing its manufacturing plant at Bochum by mid 2008. Another 2,000 temporary agency jobs and jobs in supplier companies are also likely to be affected by this restructuring. Production is planned to be split and will be offshored to Hungary, to Nokia's main manufacturing plant in Finland and, primarily, to a new plant in Cluj, Romania, which will start operations in spring 2008.
The company attributes the restructuring to market changes, requirements for global cost efficiency and flexible capacity growth.. However, as Handelsblatt notes, wages add up to less than 5% of production costs and Nokia's profit margins are already the highest in the sector.
According to Handelsblatt the company’s strategic objective is to restructure manufacturing on a global scale concentrating its manufacturing plants in 'industrial villages' near suppliers of low-priced preliminary products. Financial Times Germany quotes a company spokesperson as saying that most of the suppliers are located in Asia. He also said that increasing flexibility of production may require an increase in manual work which is considered too expensive in Germany.
The announcement has spurred a wave of protests. The plant, which was established in 1989, is located in a region that is strongly affected by the decline of manufacturing industries. Since 1995 Nokia has received 90m euro in public-sector subsidies. The German Metalworkers' Union (IG Metall) and the state of North Rhine Westphalia have criticised the company for “taking the money and running”.
The authorities are considering a range of possibilities for recovering some 41m euro of the subsidies Nokia received in 1995-99. They claim is that Nokia never employed the number of workers the company had promised to hire when receiving the subsidies.
On 12 February 2008, Nokia rejected alternative plans by IG Metall and by the Nokia works council aiming to prevent the Bochum plant closure. The works council had suggested doubling the manufacturing capacity by increasing investments by 14 m euro. Nokia reacted by saying that this will not provide for the efficiency needed and that the plans are unfortunately not to be implemented. The works council and Nokia agreed on negotiating alternative plans to keep jobs at Bochum.
Details onmeasures to reduce the impact of the restructuring are available on the European Industrial Relations Observatory (EIRO).
Active labour market policy measures are supported by the European Globalisation Adjustment Fund (EGF).
Eurofound (2008), Nokia, Offshoring/Delocalisation in Germany, factsheet number 66230, European Restructuring Monitor. Dublin, https://apps.eurofound.europa.eu/restructuring-events/detail/66230.
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