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Fear for jobs as Nortel makes more cuts
Thursday, May 30 2002
by Ciaran Buckley


There are fears for jobs in Belfast as Nortel announced 3,500 redundancies
worldwide in its optical networking operations, taking a charge of USD600
million.

The telecommunications equipment maker announced that it does not expect a
meaningful recovery in the optical networking market before the end of 2003 or
early 2004. 



Nortel Networks plans to record charges of approximately USD600 million worldwide
in relation to restructuring, the majority of which is to be recorded in the
second and third quarters of 2002. This will reduce Nortel's global workforce to
around 42,000. "We are still assessing the announcement in terms of our Irish
operation," said David Silke, PR Manager for Nortel Networks in Ireland,
speaking to ElectricNews.Net. 



Nortel employs around 240 people in Galway in an R&D centre and over 100 in its
sales and administration office in Dublin. It also employs 1,100 people in its
Monkstown operation outside Belfast. Silke confirmed that optical networking
comprised part of the Monkstown operation, but he said that the Galway operation
was unlikely to be affected. "The R&D centre has won a global remit and is
Nortel's only enterprise R&D centre in Europe," said Silke. "There is no
reason to believe that the latest cutbacks will affect the Galway operation."



Nortel has had a series of redundancies in Ireland over the past 12 months. It
integrated its Shannon office into its Galway office and reduced the workforce on
the island from over 3,000 to 1,500. Since January 2001, Nortel's worldwide
workforce has fallen from 94,500 and will reach an expected level of 42,000 by
the end of the third quarter in 2002. 



The company plans to streamline the optical networking business and focus on the
capabilities that it expects to be in demand when the market recovers, including
optical switching, next generation photonic transport capabilities and network
management and intelligence. The plan includes the potential sale or resizing of
the optical components business. 



"We are aligning our optical business model to where we see the industry going
to ensure we are well positioned when spending resumes," said Frank Dunn,
president and chief executive officer of Nortel Networks, in a statement.
"Optical backbone networks are the foundation of multimedia broadband networks
and we expect Nortel Networks to remain an industry leading provider of
end-to-end optical networking solutions." 



Dunn added that Nortel aimed to further reduce its cost structure to bring it
into a profitable position at the current market levels. He predicted that the
latest announcement would reduce costs from the previous target of USD3.5 billion
down to USD3.2 billion.