Is Cheap Labor Worth It?

January 21, 2008

Nokia saved a bunch of money but lost their customers.

Nokia announced a plant closure in Germany this week. The company will move manufacturing from the Ruhr District of Germany to the cheaper labor pool of Romania. The move will cost Germany about 2,300 jobs. It’s costing Nokia a lot more than they are going save.

A major public uproar broke out after Nokia announced the closure. “Throw away your Nokia phone and change service” was a common theme on various websites and Blogs throughout the fatherland. The average volk picked up the message and did respond accordingly by cellfonen tossen im der trashgebin. Being a  state election jahr, die govermentin bureuakraten decided to jumpin am die banden wagon und dumpin govermentin cellfonen. Numerous members of the Merkel government competed this week for press time and print space to renounce their use of Nokia phones with one cabinet minister announcing that Nokia phones will not be allowed in his house.

Gut for them.

It might not be the smartest move in the world to move to cheaper labor in a recession year. Those “over priced” workers are also customers. They are relatives and friends of other customers. Word gets around very fast today. It will cost Nokia millions of advertising Euros to try to gain back some customers. For the phone made in Deutchland, there’s a free opportunity to gobble market share.

The U.S. economy is going get hammered this year but the smart businesses will enjoy opportunities created by the cost-cutters.

Chris Reich, Author of TeachU’s Business Talk Blog
[email protected]

Chris Reich

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