German politicians ditch their Nokias (Nokia's craven capitalism?)

FT ^ | 01/19/08 | Hugh Williamson

[TigerLikesRooster]

German politicians ditch their Nokias

By Hugh Williamson in Berlin

Published: January 18 2008 21:09 | Last updated: January 18 2008 21:09

German politicians on Friday declared that they were ditching their Nokia mobile phones as anger grew over the Finnish company’s decision to move a factory from Germany to Romania at the cost of 2,000 jobs.

Peer Steinbrück, finance minister, accused Nokia, the world’s largest mobile phone maker, of “caravan capitalism” while a spokesman for Angela Merkel, the chancellor, said that she was expecting “more information” on Nokia’s motives.

Many Germans appeared shocked at Nokia’s announcement earlier this week that it was moving its plant from the western city of Bochum. The company has often been praised for keeping Germany’s last mobile phone plant long after others shifted production abroad.

The agriculture minister, Horst Seehofer, said he was switching to another brand of phone “because I don’t like the way they are doing this”.

Economists, meanwhile, shook their heads at the fuss.

“The decision is not really surprising. said Christoph Schmidt, head of the RWI economic think-tank in Essen.

“It was a matter of time before this shift occurred. It’s a necessary – but painful – adaptation process for Germany.”

Christian Dreger of Berlin’s DIW economic institute added: “Most producers of textiles and consumer electronics moved out of Germany to eastern Europe and elsewhere in the 1990s or before. Nokia’s decision is completely understandable”.

Nokia said labour costs in Romania were only a tenth of those in Germany.

The cost gap is even bigger than Nokia claims, with average labour costs in Germany in 2006 topping €32 an hour, compared with €2.45 in Romania, according to European Union data.

Mr Schmidt said that at times like these “Germans tend to forget that the country is actually a winner from both globalisation and EU enlargement”. Germany, the world’s biggest export nation, needs open markets, and German companies also benefit from moving to low-cost locations, he said.

Nokia rejected calls to reverse its decision but said it would pay the generous compensation and retraining packages common after German factory closures.

[MrEdd]

Finland?

[max americana]

Why are the krauts throwing a hissy fit about losing 2000 jobs? If Nokia moves manufacturing to a cheaper place, prices go down for the German consumers.

As usual, the culprit is socialism, union jobs and benefits for THOSE 2000 workers instead of the buying and spending German consumer class.

[pepsionice]

The real story here....is that Germany finally did what most states do....offer huge incentives and financial aid....to lure the company there in the first place. They followed every rule in the book that Texas or Florida or Colorado would use. Then....when every single benefit had been used up (in the absolute literal sense)....the company closed up and left for Romania.

Adding to the amusement...as the Germans demonstrated last night on the news...they could have picked Spain or Portugal as the next plant area...and had a decent argument that competent workers would be found to operate the new plant....but no...they picked Romania. To find 2000 capable and technology-driven employees in Romania...will be a huge task. Considering how backward the region is...the last thing on earth you’d do to buy a cellphone...is to buy a Nokia made there. I’ve owned three Nokia phones over the past six years. This one I own now...runs out in June...and I won’t be buying another.

[SolidWood]

Romanian-made can’t be worse than the Chinese/Malaysia/Vietnam etc. made stuff.

[max americana]

here’s the funny part to notice on the “editor’s choice” side of the page:

Nokia to shift 2,300 German jobs to Romania - Jan-16

Those weren’t GERMAN jobs but were simply jobs. Welcome to the world of outsourcing and cheap labor, Germany.