Angela Merkel joins battle over BenQ's future 02/10/2006 00:00

2 October 2006

MUNICH - German Chancellor Angela Merkel stepped into the battle Monday over the future of Taiwanese-owned BenQ Mobile GmbH & Co's German mobile phone handset business.

BenQ Mobile said Friday it had filed for insolvency for its German mobile phone operations, casting doubt on the future of around 3,000 jobs at the former Siemens AG unit and triggering a political outcry about the possible closure of the business.

In a telephone call with Siemens chief Klaus Kleinfeld, Merkel called on the giant German electronics firm to show responsibility in the fight to save the BenQ Mobile phone operations and the jobs at the unit.

Faced with fierce criticism of its involvement in the demise of BenQ, Siemens has created a special 35 million euros (45 million dollars) fund to support employees employed at BenQ.

"We want to help," said Kleinfeld after BenQ last week turned off investment funds for the German mobile phone unit and moved to apply for insolvency.

Siemens effectively paid BenQ last year to take its loss-making mobile phone operations off its hands. The Taiwanese consumer electronics group had aimed to secure at least 10 per cent of the world market, but at the last count that figure was just 3 per cent.

However, the move to offload the troubled German mobile phone business appears to have backfired with Juergen Ruettgers, the prime minister of the North Rhine-Westphalia state where part of BenQ's operations is located, leading the workers' condemnation of Siemens.

In an interview with leading German tabloid Bild, Kleinfeld said the Siemens board had decided not to accept its 2007 salary increase, as a sign of solidarity with the affected workers.

The company plans to channel salary increases totalling around five million euros into a special fund. Siemens is already considering whether to take legal action against BenQ.

Merkel also told Bild that she believed Siemens had a special responsibility in the BenQ case. "I would welcome Siemens doing everything now, in order to help with the workers' future prospects, she said.

But union leaders dismissed the Siemens' move as inadequate. "10,000 euros per person is no substitute for jobs," said IG Metall regional representative Detlef Wetzel.

In the interview with Bild, Kleinfeld denied that his company had handed over its mobile phone business to BenQ with the understanding that it would possibly file for insolvency at some point.

"It had always been our goal to create a solid future for the Siemens mobile phone business," Kleinfeld told the newspaper.

"We gave financial resources, patents and even the Siemens brand in order to make this possible," the Siemens chief said.

Kleinfeld said this was done with the understanding that BenQ would strengthen and even expand the German mobile handset production operations. "They broke their promise," he said adding that Siemens was examining legal steps against BenQ.

DPA

Subject: German news