Despite drastic drop in employees, Nokia in talks with Microsoft to keep Chennai factory functioning

Despite drastic drop in employees, Nokia in talks with Microsoft to keep Chennai factory functioning

Nokia wants to keep the Chennai-based plant up and running. It is in talks with Microsoft to keep the factory functioning, the company said on Saturday. From the 8,000 employees that the factory had at the beginning of the year, it has now come down to 850.

Recently around 5,000 employees of Nokia’s Chennai-based plant opted for a severance package. Nokia’s Sriperumbudur factory, which is also one of the company’s largest, has been the center of a lot of controversies over the last two years. The plant didn’t become a part of Nokia’s $7.5 billion acquisition with Microsoft which was completed last month. Instead, Nokia is taking care of the operations at the factory on a contractual basis for Microsoft.

However, the company now wants to keep the factory running. “Nokia in discussion with Microsoft continuously assesses volume requirements and plans production accordingly”, a spokesperson of Nokia told Financial Times.

Nokia has faced several tax disputes over the plant from the Indian Govternment. Especially the whopping Rs. 2,100 crore fine the Delhi High Court imposed on it last year -- against which the phone manufacturer pleaded to the Supreme Court of India, only to lose the appeal. Another is a 24 billion rupees tax bill by the Tamil Nadu government in India, which found the company illegally selling the factory’s handsets to Indian consumers.

In a dramatic move, Nokia downsized the production at its Chennai plant, and started moving the equipment to its other factories located in China and Vietnam. This move scared the 8,000-strong staff the company employs, the majority of which are women. The employees went on several strikes and recently made a video to make more people aware of this issue.

And now Nokia has announced that 5,000 employees have opted for the severance package. "As a responsible employer, our effort was to provide a clear financial option, which offered employees the chance to seek new opportunities outside the company based on a firm financial footing".

The company invoked India’s Bilateral Investment Promotion and Protection Agreement (BIPA) with Finland to resolve the dispute. It sent a letter to the Prime Minister of India to uplift all the taxes on friendly grounds. We are yet to hear if that changes anything.