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Around 40 staff, or nearly 9 percent of Nortel's Galway workforce, will be made redundant in the coming weeks following the news. In total, Nortel has 370 workers in the Republic of Ireland, with 350 of those based in Galway and the remainder in Dublin. The company also has 900 workers at a plant in Belfast.
In a statement, the company said that order management and support functions would primarily be impacted, and the company went on to say that it would work with employees to "minimise the impact" of the job losses. Nortel has now entered into consultations with employees to determine the scope and nature of the cuts, as well as any redundancy packages to be offered.
A spokesperson for Nortel told ElectricNews.Net that no cuts are planned for the Northern Ireland facility, which has seen around 1,000 jobs go in the last two years. The company's operations in the Republic have not fared much better, having experienced 150 layoffs in October 2001. The spokesperson went on to stress that none of Monday's cuts would come in its research and development operations in Galway.
In late May, Nortel said it would cut 3,500 jobs worldwide in its optical networking operations, taking a charge of USD600 million. At the time, the Canadian telecommunications equipment maker said it did not expect a meaningful recovery in the optical networking market before the end of 2003 or early 2004. This move, along with many others like it in recent months, is designed to reduce Nortel's global workforce to around 42,000, from a high of 95,000 in January 2001.
What's more, it seems that the cost-cutting programme may continue for the rest of year, after the firm made some rather ominous comments last week. In its results, Nortel Networks posted more losses for the second quarter, although it did match estimates. In a bleak forecast that came with the results, Nortel predicted that its customers will continue to keep capital spending down until 2003, and the firm forecast flat sales in the current quarter.
Moreover, the company said that in this difficult environment it may have to cut more costs as it reviews its break-even target of USD3.2 billion in quarterly sales. It's worth noting, however, that the firm did not announce any specific job-cutting measures as part of its new cost-cutting plans, and it declined to say if any such plans were in the works.
The Canadian company matched forecasts with a pro forma loss of USD0.09 a share in the quarter with sales of USD2.77 billion, just slightly below consensus targets of USD2.8 billion. Second-quarter net loss was USD697 million, or USD0.20 a share, much better than last year's loss of USD19.4 billion, or USD6.08 per share, which was mostly due to a USD14 billion write-down for acquisitions.
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