Tuesday, February 12, 2008

Nokia in Romania

The good things

After testing the production line on 15 January, the 11th Nokia factory from Jucu started the production. Nokia invested 60 million euros at Jucu and with all his partners the total investment is about 200 million euros.

The Tetarom III Park has 154 hectares and Nokia and its suppliers use 90 hectares for Nokia Village.

Company officials said the Jucu factory now employs 350 people. The factory will have 3500 workers, but the authorities appreciate that will be necessary above 15000 people for all the companies.
Romanians working at Nokia will receive a salary package between 200 and 300 euro, as compared to a starting salary of about 1500 euro in Western countries.
Workers in the factory are contractually obliged not to reveal information about work at the company. However, conditions are very good since officials plan to built football and basketball fields for worker's free time.
Staff will begin by working one single shift, but switch to two from March. In fact, the shift system is one of the legislative hurdles that Nokia's management is faced with. The manager of the new plant recently asked the Labour Minister, Paul Pacuraru, to improve the legislation and reduce the number of shifts.

The Nokia production would target Middle Eastern and African markets mainly, Nokia officials say. Nokia Senior Vice President Juha Putkiranta said that Romanian workers at the Nokia plant receive an attractive salary package and hot meals, but refused to comment on other production details.

Putkiranta said that Nokia's factory in Romania will produce, among other models, Nokia 1200 destined for the Middle East and Africa. The Jucu factory will produce 5 handsets every second. Nokia officials argue that the Romanian factory will set up the necessary software on the models produced.
The first Romanian made handset is a Nokia 1200. This phone was used by Juha Putkiranta to call Tapio Saarela, the Finnish ambasador. The second and the third telephone were given to local authorities.

Future plans

The industrial park in Jucu, Romania where Nokia relocated its factory is about to extend. Along with the desire of other companies to invest in the area, Daimler Mercedes being just the last name added to the list, the terrain available in the Tetarom Industrial Park proves to be insufficient, even though the park already signed for some neighboring 1,000 hectares with a private partner. At least by some 170 hectares (420 acres) are still required, daily Ziua de Cluj reads.

Cluj county vice-president Kerekes Sandor declared for HotNews.ro that there are plenty of companies willing to invest at Jucu. However, he admitted that local authorities need to extend the industrial park before any plans can be made.

Even if the land surrounding the current industrial park pertains to the state, it is administered by the Agricultural Sciences University to perform agricultural research. Thus, University officials argue that they have no idea of the City Hall's plan.

German group Daimler will open a final assembly factory within the Tetarom III industrial park in the village of Jucu, Cluj county, Ziua de Cluj informs. The production facility will spread over some 170 - 200 hectares and will require a 400 million euro investment. The new factory will employ some 4000 people, the newspaper informs. Same Jucu is currently hosting the construction works of a future Nokia factory.

"Two other car producers expressed their interest for the terrain near the Nokia factory. It is a rough competition and the labor unions have their say. Some 350000 cars will be produced in the Jucu Industrial Park. The perspective is fantastic", sources in the business field say.

"As it was the case with Nokia, all discussions and negotiations have a confidentiality clause. I can not tell you anything about the negotiations with any of the investors", said the Cluj County Council president, Marius Nicoara.

Tetarom general manager Viorel Gavrea said that there are demands from major investors that may occupy a further 700 hectares area, but that the target is to obtain from the local council the 170 hectares the park still needs.

Kanji Tsushima, the Japan ambasador in Romania, said that he will recommend to Japanese companies like Toshiba and Hitachi to invest at Cluj.
BYD, the giant Chinese producer of batteries, and Hansaprint, the producer of Nokia's manuals and paper stuff, are willing to invest in Nokia Village.

Thousands of Romanians from Europe, USA and Canada are willing to come and work at Jucu. The Nokia Village has taken the Romanian's mind. Many teenagers are sending e-amils to apply for The Nokia scholarship.
IT, Telecom and Mecanic Engineers showed their interest to work at Jucu. In the campuses, the students are talking about the new opportunities.

The local president of the Cartel Alfa Syndicate, Grigore Pop will found the Nokia syndicate at Jucu to protect the workers and prevent the Bochum situation. He adviced the authorities to take measures to keep Nokia for a long time.

The bad things

High prices

Even before the construction was launched, the prices started to grow from 2-3 euros to 30 euros and more for only 1 sqm. An appartement in Cluj-Napoca became more expansive than a Bucharest appartement.

Foreign workers

13 companies involved in the construction works at the site of the future Nokia plant in Jucu, near Cluj, Romania have received fines totalling over 58,500 Romanian Ron after local authorities ran checks in the area. The main irregularities identified were related to foreign citizens detached to work on the site, NewsIn informs. Some 161 foreign citizens from Slovakia, Germany and Poland working on Nokia's building site are not legally registered.

Bochum incident

"The planned closure of the Bochum production site is necessary to secure Nokia's long-term competitiveness," said Veli Sundb├Ąck, 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."

Due to Nokia's Bochum, Germany plant having a "lack of competitiveness," as many as 2300 manufacturing jobs will be lost as the world's largest wireless handset maker closes down shop there. Making electronic products in Germany is "no longer feasible" from an economic and cost efficiency perspective, said Veli Sundback of Nokia's supervisory board. The plant has been in operation since 1989.
Nokia will not refund the subsidies it received for the construction of its production facility in Bochum, Germany. The factory is about to be shut, Nokia deciding to outsource the production to Romania, Forbes informs.

According to company officials, there are no reasons to return the 41 million euro subsidies received a decade ago, since it invested more than the German officials demanded. Regional NRW Bank, the institution that contributed to the Nokia factory construction between 1998 and 1999, demanded the company to return the funds it received and to answer within a week.

Regional authorities of the German land Renania North-Westphalia argued that the refund claim is motivated by Nokia's fail to employ the promised 2860 people, having employed, in fact, between 200 and 400 people less, between 2002 and 2005.

Nordrhein-Westfalens minister for economic affairs Christa Thoben (CDU), accusedthe finnish mobile phone manufacturer of “subvention tricking” (”Subventions-Tricksereien”) and warned the company of a possible “massive image damage”.

Meanwhile, the record-breaking profits announced by the company in 2007 led to a massive discrediting of the company in Germany, many consumers announcing they will boycott the brand.

How long will stay Nokia in Romania?

John Guerry said that Nokia will stay for a long perios and Nokia Senior Vice President Juha Putkiranta refused to answer to this question.

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