Nokia Will Pay $314M to Close Bochum Plant

DUESSELDORF, Germany (AP) -- Nokia Corp. said Tuesday that it has agreed with worker representatives on a $314 million plan to soften the blow from its closure of a factory in Germany and the reopening at Jucu in Romania.

Nokia was heavily criticized by German unions and politicians when it announced in January that it planned to close the plant in Bochum in the industrial Ruhr region at a likely cost of 2,300 jobs.

Nokia will set up a "transfer company" to help 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."

"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," executive vice president Veli Sundback said in a statement.

Nokia Chief Executive 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 company has said labor costs in Bochum were nearly 10 times those at another plant in Romania -- a point that has particularly irked officials in the region, who argue that labor accounts for only a small proportion of overall costs.

The state government in North Rhine-Westphalia has demanded that Nokia return investment subsidies paid in the late 1990s, plus interest - a total of nearly $94 million.

It has claimed that Nokia has failed since 2002 to fulfill conditions under which the subsidies were granted, including creating a minimum number of permanent jobs.

Nokia has rejected the demand and the charge, saying it exceeded requirements.