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Job outsourcing: Problem or solution

Massive public protests last month against Nokia's decision to move one of its major manufacturing facilities from Germany to Romania did little to stir the company. But a recall of federal subsidies by a leading bank there has apparently stirred the giant.

The gulf between Germany and Finland-based cell phone maker Nokia only grew wider today, as the company has now become the epitome of that country's growing outsourcing problem. Bochum, located in the westernmost state of Nordrhein-Westfalen (NRW), is where Nokia operates a key manufacturing facility that has already seen massive layoffs, and which now Nokia plans to close. One of the country's leading financial institutions for business development, NRW Bank, is also located there.

This morning, NRW Bank and the state government there formally requested that Nokia return the 41 million (about $60 million) in federally approved subsidies received in 1998 and 1999, for failing to maintain factory hiring levels the company had promised to maintain at the time.

According to Deutsche Welle today, the NRW state legislature contends that since 2002, Nokia has failed to maintain its factory hiring levels by as many as 400. But the matter was apparently tabled until late last year, when Nokia made a decision to move its manufacturing facilities to Romania. The move sparked massive public protests, including a call from leading opposition leaders in parliament's SPD party to boycott Nokia products.

"Nokia is astonished by this," reads a statement from the company this morning. "Based on the facts available to the company and Deutsche Bank, its adviser throughout the entire period, both parties strongly feel that such an attempt is without merit."

Deutsche Bank, Nokia says, already turned over to NRW Bank documents the company says prove its factory generated more than enough jobs to fulfill the quota, implying that all of its hires over a multi-year period taken collectively meet the state's requirements for subsidy. Other documents, the company says, show that the company already invested 350 million in the Bochum plant, which is where the 41 million went, and then some.

Having heard about enough from his country's wayward former partner, German Finance Minister Peer Steinbrck published an editorial in this morning's Frankfurter Rundschau that, translated into English (with some help from Google and our own German-speaking Tim Conneally), compared Nokia's executives with the managers of Chinese


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