News | May 17, 1999

Nortel Announces Restructuring Plans

In an effort to be more flexible, agile, and responsive, Nortel Networks (Brampton, ON) has unveiled a restructuring plan. According to the company, the new restructuring plan will affect 4,000 employees worldwide and will increase the efficiency of the company's operations.

Nortel says a key element to the restructuring plan is the move from the company being a telecom manufacturer to being a company that focuses on customer requirements, software technology, and high-value network solutions. In order to achieve this goal, Nortel will establish seven systems houses in St. Laurent, Quebec and Calgary, Alberta, Canada; Raleigh, NC; Billerica, MA; Monkstown and Galway, Ireland; and Chateaudun, France.

Nortel says the systems houses will be the corner stone of its new manufacturing operations framework, which shifts the focus and resources from vertically integrated manufacturing to an integrated chain, where Nortel's internal strengths are complemented by those of contract manufacturers. The systems houses will link customers, design centers, internal manufacturing, suppliers, contract manufacturers, and other parts of the supply chain to establish a flexible structure. These system houses will also be responsible for overall quality, customer delivery, and new product introduction.

As part of the strategy, Nortel said it will divest most of its electromechanical subsystems manufacturing, a significant part of its repair business, and almost all of its complex PCB assembly. Starting this year, the company plans to sell these business to contract manufacturers.

In Canada, the company expects to divest its manufacturing and repair operations in Brockville, North York, and Mississauga and its electromechanical assembly operations in Calgary and St. Laurent. In Vancouver, BC, Nortel says it will continue product development, customer service, and marketing, but will continue to explore alternatives for the divestiture or outsourcing of its manufacturing operations.

In the US, the company intends to sell its repair operations in Nashville, TN; Richardson, TX; and Sunnyvale, CA. In Santa Clara, the company will change its focus from volume manufacturing to new product development and introduction.

The company's European Operations will also be affected by the restructuring plans. Electromechanical operations in Chateaudun and Monkstown are being offered for divestiture. Fixes wireless manufacturing has been transferred from Paignton, UK. Fixed wireless manufacturing will now occur in Calgary while assembly has been moved to Monterrey, Mexico and Cwmcarn, Wales.

As announced in January, Nortel expects to save in the range of $250 to $300 million per year when the restructuring plan is completed. The company plans to finish the entire restructuring plan within three years.