Latest on Nokia's Jucu factory closure: Contract still secret / Nokia chief dismisses rumors on Moldova plant / Economic effects

As Nokia announced the closure of its plant in Jucu, Cluj county on Thursday, four years after its arrival in Romania, a three-party contract on the Jucu factory signed by Cluj county authorities, Nokia and the Tetarom industrial park remains secret. That comes against Romanian legislation and despite calls that the contract be made public. HotNews.ro first demanded the disclosure of the contract as early as 2007, but without results.

Romanian media including HotNews.ro have been demanding the disclosure of the still secret contract over the Nokia plant in Cluj county as it involves public investments amounting to over 30 mln. euro in addition to the land in Jucu, where the factory is based. Additionally, there is no info on guarantees that Romanian authorities might have demanded to secure its investments.

• Thursday, September 29, HotNews.ro once again demanded Cluj County Council to disclose the contract. The first official demand by HotNews.ro in this regard dates as early as 2007, but the then-head of the Cluj County Council, Marius Nicoara, refused to reveal the provisions of the contract.

The stake of the Nokia business in Jucu revolves around assistance provided by the Romanian state to the Finnish company, as a HotNews.ro investigative report in 2007 revealed. Statements by the officials who backed the investment at the time – Cluj County Council head Marius Nicoara and then-PM Calin Popescu Tariceanu – showed that:

• total investments amounted to over 30 million euro
• Nokia promised investments of over 60 million euro
• Nokia received from the Romanian state the right of free use of 160 ha of land in Jucu (90 hectares for Nokia, the rest for parts providers)
• Nokia might buy the land if interested once 15% of the investment is done
• The Romanian part covers infrastructure costs

Since then, the secrecy over the contract has determined the European Commission to launch an investigation on possible state assistance to Nokia. The investigation gave no result. National anti-graft prosecutors also launched an investigation but eventually decided not to launch criminal pursuits.

Local journalists on Nokia departure

• The Cluj county did not feel Nokia’s presence there in terms of taxes and other fiscal contributions, while taxes paid to Jucu were minimal, Cluj-based journalist Liviu Alexa told HotNews.ro. He said the responsibility for the terms of the contract with Nokia belongs to ex-PM Calin Popescu Tariceanu
• For his part, another journalist, Rares Bogdan, explained that nobody knows the guarantees the Romanian state assumed so that Nokia not leave as it did from Bochum prior to its move to Romania. There was only speculation that Nokia would have to stay in Romania for at least seven years, he said.

Stephen Elop, Nokia: No relocation to Moldova

Nokia president Stephen Elop dismissed on Thursday information that the company would open a factory in the Republic of Moldova. The production started in Cluj will be absorbed by factories in China and Asia and Moldova was not taken into consideration in this regard, he said in an answer to a HotNews.ro question. His statement comes as a Romanian Communications Ministry state secretary, Marius Fecioru, told HotNews.ro on Thursday that despite concluding 2010 with a profit in Romania, Nokia was considering it might reduce operational costas by half if it rellocated its activities, apparently to the Republic of Moldova.

• Background note: – Moldova PM Vlad Filat met the Nokia management during a trip to Finland on September 13.

Olso on Thursday, Nokia’s Stephen Elop said employees in Jucu would be paid until March 2012. He said the key reason of the decision to close the Jucu unit was a change of conditions in Romania and that people were more interested in buying smartphones instead of normal cell phones, while buyers and providers are in Asia – where Nokia has to focus more.

Nokia’s business in Romania

• The business of Finnish company Nokia in Romania reached over 1.6 billion euro in 2010, with a net profit of 43 million euro for a number of 1552 employees, according to financial data published by the company.
• The decision to leave Jucu comes as other companies opted to do so as well. ING closed a center in Cluj six months after its opening due to „economic and legislative changes” in the past several years. Other companies in the eolian energy and financial services have also withdrawn.
• According to unofficial data due to be released soon, Romania’s exports dropped 5.4% in the third quarter. The relocation of the Jucu factory isn’t of any good in this regard either.