A subtle shift of handsets production from West to East?Nokia recently announced its plans to discontinue the production of mobile devices in Germany and close its Bochum site by mid-2008. The company plans to move manufacturing to its other, more cost-competitive sites in Europe.
One of these sites could be the Romanian plant from Cluj, which should start manufacturing on 11th February. The plant will produce 5 mobile phones per second, but the payment for those employees that are working in the manufacturing area seems to be one of the lowest in Europe - only 220 Euro.
As a consequence of the planned shift of production from Bochum to other European sites, Nokia also intends to discontinue other non-production activities at the Bochum site. In conjunction with the announced plans to close its Bochum site, Nokia is also announcing plans to sell its line-fit automotive business and it is in negotiations with Sasken Technologies to sell the Bochum-based adaptation software R&D-entity.
The planned closure of the site in Bochum is estimated to affect approximately 2,300 Nokia employees.
Nokia's decision to discontinue manufacturing in Bochum is based on the lack of competitiveness of the location. Renewing the site would require additional investments, but even this would not result in manufacturing in Bochum being globally competitive.
There's no wonder the Bochum site is closing, as Nokia started to reorient itself on the Eastern market where the workforce is a couple of hundred times cheaper than on the Western market.
The only problem could be the fact that the Romanian plant doesn't produce handsets for the European market, but only for Asian and African market. Anyway, there's no telling if Nokia will transfer some of its production from Bochum to Cluj.
All in all, the financial costs associated to this restructuring will be determined along with the consultation process and reported in Nokia's quarterly reporting for 2008.