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June 28, 2022
BUSINESS

Nokia shuts down Romanian plant, 2,200 jobs to be axed

The President and the PM were not surprised by the decision. While Basescu blames bureaucracy, the PM says the crisis will surely lead to other multinationals exit. Unions blame the new Labour code that backs investors in the detriment of the workers. The unemployment rate in Cluj County will surge from 3.5 to 4 percent, the Prefect warned.

By    Bianca Cojocaru in Bucharest and Catalin Bogdan in Cluj

Nokia will close down its plant in Jucu, Cluj County, as part of a programme meant ‘to make the company more efficient and to lower the costs’, Mediafax informs. The management claims it took the decision because its high-volume plants in Asia are more efficient for the group. Alin Tise, President of the Cluj County Council, confirmed yesterday that Jucu plant’s production will be transferred to other plants in South Korea, India and China.

The 2,200 employees were told that the plant will continue to function until the end of the year and they will collect their salaries until March 2012 and will benefit from a compensatory package and from bonuses if efficiency standards are met.

Nokia CEO Stephan Elpp stated that other plants will be closed too. The company will concentrate its development capacity in Berlin, Boston and Chicago, closing its plants in Bonn and Malvern. The plants in Komarom (Hungary), Salo (Finland) and Reynosa (Mexico) will be the main suppliers for European and North-American markets, Stephan Elop stated.

Nokia has invested more than EUR 150 M in Jucu (construction costs alone totalled EUR 60 M) and brought to the region four of the company’s suppliers (Hansaprint, BYD Electronic China, Stora Enso and Foxconn Hungary).
Elop argues that the mobile phones’ market is changing rapidly and people in Europe prefer smartphones at the expense of regular mobile phones.

“This is the main reason why the Cluj plant is being closed. There was no question of salaries. It’s not about the costs, it’s about the fact that suppliers and consumers are starting to be located in Asia. It’s not just us, it’s all mobile phone producers,” Elop explained.

According to gandul.info, on September 28 the Nokia leadership informed its employees that the plant will close. “We will help the sacked employees to retrain professionally and to find new jobs,” Elop added.

Vreme claims the plant will be relocated in Moldova

Moreover, Communications Minister Valerian Vreme stated yesterday that Nokia decided to relocate its plant from Jucu to the Republic of Moldova, out of “strictly economic” reasons, and the company will apply the same measure in other countries too. According to him, the economic reasons have to do with globalization and the fact that the labour force is cheaper in the Republic of Moldova.

On the other hand, Nokia President Stephen Elop dismissed the rumor. “The production that started in Cluj will be absorbed by plants in China and Asia, relocating the plant to the Republic of Moldova is out of the question,” the Nokia official stated, hotnews.ro informs.

At the same time, Valerian Vreme underlined that there are IT&C companies that would like to invest in Romania such as Huawei, Dell and ZTE. “All these comp that came to me want to expand their business in Romania, want to open development centres. We represent a human resource for them, this is our strong point,” Valerian Vreme pointed out. He underlined that the Ministry of Communications is currently working on a draft law that would offer state aid to investors, aid such as incentives concerning salary taxes. Vreme claims that Nokia’s decision shows that the state aid scheme for the IT&C sector has to be urgently applied because it would determine investors to remain or develop businesses in Romania, Mediafax informs.

Unions angry

In his turn, Cartel Alfa President Bogdan Hossu stated yesterday that the changes brought to the Labor Code will allow Nokia to close down the plant without showing any responsibility for the employees, the responsibility for them falling on the Romanian state’s shoulders. the Union leadear explained that the closing of the plant was not a surprise considering that the Romanian legislation allows companies to wave their responsibility in case they shut down.

Nokia boss: we’re trying to sell the plant

Nokia will look for potential investors interested in buying the Jucu plant, Elop added, Mediafax informs. He pointed out that during this period the plant will only keep the sales service employees, the rest of the employees set to be laid off.

Jucu Mayor Dorel Pojar regrets Nokia’s decision, stating that it will affect the local budget considering that “taxes and fees running into several million RON per year” were levied.

Daniel Don, head of Cluj County’s Employment Agency (AJOFM), stated that the decision will hike the unemployment rate in the county from 3.3 per cent up to 4 per cent. Don stated that AJOFM Cluj can handle a wave of layoffs and can manage the problem, considering that it previously had to handle Bechtel’s layoffs.

The situation of the 159-hectare plot of land in Jucu has to be clarified, according to hotnews.ro who asked for the declassification of the contract. The plot of land was put at Nokia’s disposal, the latter having the possibility of buying it after completing 15 per cent of the investment. Moreover, the decision to classify the contract prompted the European Commission (EC) to start an investigation on whether state aid was offered. The investigation has remained without results. Likewise, the Anti-Corruption Office (DNA) started an investigation into suspicious deals surrounding the investment in Cluj but eventually decided not to start criminal prosecution.

GDP might be hurt

Analysts say Nokia relocating its Romanian plant abroad will have a significant impact on Romania’s Gross Domestic Pro­duct, yet, this loss could be offset by a re-invigoration of the construction and farming sectors, whose development nonetheless depends on support for infrastructure projects and increasing the absorption rate of EU funds. The European Parliament approved on Thursday an extension until 2013 of the European Globalisation Adjustment Fund (EGF) crisis plan.

Prefect, taken by surprise

The prefect of the Cluj County, Florin Stamatian voiced his surprise at the decision made by Nokia, saying that the local administration knew nothing about the intention, although now he learned that the decision dates back since February. Local authorities are concerned with the situation of the 1,300 employees to be laid off until the end of this year, whose number will increase to 2,200 in the first months of 2012. This will increase the unemployment rate at county level from 3.5 pc to 4 pc. Prefect is confident that the County Employment Agency will be able to access European funds worth EUR 10 M in order to deal with the crisis provoked by the factory’s closure. The funds will serve to finance professional conversion programmes and as incentives for the economic activities capable of absorbing the new jobless. Rumours already speak about two investors willing to develop new operations in the Cluj County. One of these names is Ecolor, which works for Ikea. The prefect also mentioned job opportunities with local call-centers. Based on the initial contract with Nokia, local authorities also want to update all the provisions in favour of the employees to be laid off, mainly with regard to the number of compensation salaries, using a precedent created a few months ago, when the software engineers of the Jucu factory received ample compensation when they were made redundant. Prefect Sta­matian regrets Nokia’s decision also because the factory was the top exporter of Cluj County, with significant contributions to the local budget. “Perhaps we will learn many things from this painful situation,” Florin Stamatian concluded.

Nokia representatives held talks with government reps at the Victoria Palace. The cabinet held an extraordinary sitting last night as well, with no additional information available before Nine O’Clock went to print.

Basescu: Bureaucracy chases multinational companies away

Before leaving for the Warsaw Pact for Eastern Europe summit, president Traian Basescu stated yesterday that this was a phenomenon Romania should have seen coming. The president claims that factories in other industrial sectors may follow suit and reiterated he had warned about the risk that multinationals may start pulling out of Romania. “This is a phenomenon we should be forewarned about and we can only make up for it by creating jobs, based on resolutions adopted by the Romanian Government. (…) I would make this comment concerning this and the potential investors we have. I mean those who wish to explore the Black Sea or to mine for gold. If we go on stalling them with red tape and with our procrastination in making important decisions, these too will go. (…) When I launched my message concerning the mineral deposits, the bureaucrats replied, grudgingly, that they had to evaluate resources,” Basescu further stated.

PM Boc: there is a high risk multinational companies move shop

As a coincidence, the prime-minister Emil Boc warned ministers as of  Wednesday night there was a high risk that some multinational companies operating in Romania should move shop, as the economic crisis enhances global competition, and argued the government should be ready to draw other foreign investments in Romania, in that event, Realitatea.net reports. “I noticed that, if we allow the bureaucratic system to get out of hand, the investors pack their good intentions and head back home, taking their investments along (…) We are in the midst of fierce global competition and the economic crisis enhances this competition,” the prime-minister stated.

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