German State Seeks $92 Million from Nokia Mar 13, 2008

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A German state has asked Nokia Corp. to return subsidies — with interest, for a total of nearly US$92 million — that it got to build a cell phone factory it now plans to close.

Nokia announced in January that it plans to close its manufacturing plant in Bochum, in the industrial Ruhr region — a move that likely will result in the loss of 2300 jobs. The state government in North Rhine-Westphalia said last month it was demanding Nokia repay some $63 million in subsidies paid in 1998 and 1999. The factory makes 6% of Nokia's handsets but accounts for 23 percent of its global labor costs.

The government said its state-owned NRW.Bank has now sent Nokia a demand to pay nearly $92 million — the subsidies plus interest — by March 31. The state government said the bank would take legal action to secure payment if it doesn't have the money in hand by then. The state economy ministry claims Nokia has failed since 2002 to fulfill the condition that it create a minimum number of permanent jobs. Nokia called for a discussion of the state's demand and said "a meeting will be offered in the next few days," the ministry said in a statement.

Chief executive Olli-Pekka Kallasvuo has apologized for the decision to close the plant but said the plan was necessary. (AP)

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