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Officials: Incentives wouldn't keep Nokia

Local and state economic-development officials say all of the business incentives at their disposal -- including tax breaks, loans and training programs -- likely wouldn't have been able to save Nokia Corp.'s Melbourne plant and its 400 jobs.

The Swedish cellular phone maker announced Monday that it plans to close its main cellular phone repair facility at NASA Boulevard on Melbourne International Airport property by September 2005, laying off 400 workers in the process. The job cuts will begin in February.

Company officials at Nokia attributed the plant shutdown to the improved quality of its phones, saying there was an overall drop in repair work.

But analysts who cover the mobile-phone industry say quickly advancing cell phone technology made refurbishing phones less cost-effective.

Executives who work for Enterprise Florida, the state's main economic-development arm, say they never got a call from Nokia, asking for help or guidance about what it could do to stay in the state, adding the state is aggressive in retaining and growing its high-tech work force.

Officials at the Economic Development Commission of Florida's Space Coast felt something was up at Nokia in September, and tried crafting a plan showing the benefits of doing business in Brevard County. Their efforts to stop the plant closing were unsuccessful.

Some of the technicians employed at the Nokia plant said they foresaw the closure of the operation, adding that many of the company's American jobs are being moved to plants in other states and to other countries, including Mexico.

Nokia spokeswoman Mary Graves, however, denies that the lost local jobs are being shipped to Mexico, but add that some positions are being "outsourced," possibly to other plants in the United States. She stressed that only a drop in overall phone repair volume is the culprit of the closing.

John Jackson, a wireless analyst at the Yankee Group, a Boston-based research firm, said there is a limited market for refurbished cell phones in the United States and that's probably partly the reason Nokia was closing its Melbourne facility. People are buying newer and fancier phones and aren't as interested in repairing older ones.

However, refurbished phones still are a big seller in many Latin American countries, Jackson said.

Only a few days before the official announcement, Melbourne-Palm Bay Area Chamber of Commerce President Lee Bohlmann said she had heard rumors there were problems at the plant, but she didn't know the full scope of goings-on until Monday.

"I don't think it was a matter of placement" with the Nokia plant being in Melbourne, as opposed to another city or state, but rather that the phone-maker made a "tactical move in an industry that is changing very quickly," she said.

When Nokia informed Bohlmann Monday it was closing the plant, she said she asked "if there was anything I could do -- any way I could be of assistance. And the answer was 'no.' It was a decision that had already been made. If a company is making an economical change, it's difficult to offer them a carrot or a candy bar, and ask them to stay."

She added that the arsenal of business incentives available to lure new business to Brevard or improve the operations of existing firms, which could take the form of property-tax breaks, loans or training programs to improve productivity wouldn't have made a dent.

Why?

Nokia already makes more than $40 billion a year in revenues, so a few thousand dollars in tax breaks would be insignificant. Plus, such a break is only given if a company is adding jobs, not taking them away. Further, Nokia wouldn't need a loan, with $5.14 billion in profits in 2003.

Unfortunately, Bohlmann said, a small, struggling unit of a larger company is "pretty much on their own." Big companies like Nokia "don't make decisions based on local need because they have to think about the good of the company."

In September, the Economic Development Commission did its "due-diligence process to identify and assess the situation at Nokia" in an effort to provide a "competitive package and influence any decision the company would be making in the future," said Lynda Weatherman, the organization's president and chief executive.

But the firm's efforts to keep business operations flowing at Nokia were moot because, "given the nature of this downsizing, different than most, the opportunities available within the local community were not a significant factor into the company's final decision," she said.

While the Melbourne plant closing shouldn't slow Florida's torrid pace of creating jobs, "we never like to see companies close," said Enterprise Florida spokeswoman Lisa Nason.

She said her organization never got a call about Nokia leaving Melbourne and, hence, couldn't try to dissuade the phone giant from shutting down and moving some operations outside of Florida.

Nason said the state has a "whole host of incentives," for small and large businesses alike.

These include relocating to areas that offer special tax breaks, other tax-refund programs or work-force training programs to increase employee productivity and company efficiency.

Nason said the state has helped companies that were considering leaving Florida reconsider and not just stay, but invest in the area and add jobs.

That occurred in the case of Apopka-based Digital Infrared Imaging, which was weighing a decision to move its operations and 16 employees to Connecticut. Instead, it chose to stay and add 24 jobs and $850,000 in capital improvements.

With that not happening in Nokia's case, Richard White, who worked at Nokia for two years as a temporary worker, said he hopes the jobs lost in Melbourne aren't shipped to subcontractors in Mexico.

"I can tell you why there isn't enough work in Melbourne: They are relocating the work to a facility in Mexico," he said, adding that with Nokia such a major player on a global scale there are "plenty of phones for Melbourne, but the workload gradually is moving to Mexico City for cheaper labor."

Graves, the Nokia spokeswoman, didn't rule out some of the jobs going to Mexico, but said the company hasn't decided the "most feasible thing to do" related to where the jobs will go because Nokia has "authorized service centers all over the country."

FLORIDA TODAY staff writer Wayne T. Price contributed to this report. Contact Monroe at 242-3655 or bmonroe@flatoday.net


Nokia donation
In somewhat of an irony, Nokia Corp. earlier this year donated $500 to Brevard Works, a campaign to encourage voter approval of a measure to allow the county to keep offering property-tax breaks to businesses relocating in Brevard County, or expanding in the area and adding jobs. Voters overwhelming approved the referendum on Nov. 2.

 

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