EU Considering Halting State Subsidies To Foreign Investors

Brussels, Belgium (AHN) - The European Union is considering halting state subsidies to attract foreign investors in the wake of Nokia's pullout from Germany. The world's number one mobile phone manufacturer is set to shutdown its Bochum plant in Germany and open facilities at Cluj and Jucu in Romania to cut down on production cost.

Gunter Verheugen, EU Industry Commissioner, told German newspaper Welt am Sonntag, "Nokia gives us cause to reconsider state policy of subsidies altogether... I think there's no sense in the state paying subsidies in order to attract companies."

Nokia's decision prompted German politicians to ask for a refund of $120 million in state and federal subsidies the cellular phone maker received over 20 years of operations in Bochum.

Up to 2,300 Bochum plant workers will lose their jobs because of the pending facility closure. Nokia started firing part-time employees. With the specter of joblessness, Berthold Huber, head of the IG Metall Trade Union, said, "In Germany it is much too easy for companies to close factories and leave people unemployed... These companies do enormous damage to society, and they need to be held responsible for it."

Kurt Beck, head of Germany's Social Democratic party, called for a boycott of Nokia handheld units. Despite the complaints, Nokia said it is pushing through with its plan. The phone company will have a dialogue with German politicians and union representatives to discuss a social package for affected workers.

Amid the furor caused by the transfer, Nokia is rushing the construction of its new facility in Romania at a Transylvanian sheep pasture. The plant's exterior is almost finished, while inside, computers are being installed to track the movement of phone parts.

Nokia said it chose Cluj because of its proximity to a known technical school that churns out engineering graduates willing to assemble phones for one-fourth of the wages paid to German workers. In preparation for its shift to Romania, Nokia held a job fair in June that attracted 8,000 applicants who started lining up at 6 a.m.