350 Northern Ireland tech jobs hang in balance

22 Jan 2004

The fate of 350 Nortel Networks workers based near Belfast looks uncertain as a result of its parent company revealing its intention to divest itself of all remaining manufacturing activities in Northern Ireland as well as France, Brazil and Canada, and outsource the activities to Flextronics as part of a potential US$2.5bn deal.

The Nortel campus in Monkstown employs around 720 people engaged in activities ranging from manufacturing to optical R&D, customer services, supply chain management, software development and strategic management. Approximately 350 of these workers are engaged in manufacturing communications systems. Nortel Networks employs an additional 220 people in Galway engaged in strategic R&D.

A spokesman for Nortel in Belfast told siliconrepublic.com: “There is the potential that 350 workers could be impacted. However, Nortel has so far announced only its intention to divest of manufacturing and no decision regarding the workforce has yet been taken. In terms of the remaining workers in Monkstown engaged in strategic management, supply chain management, software and R&D, there is no issue there, their jobs are safe.

“The key thing to remember is that we haven’t announced any lay-offs”, the spokesman told siliconrepublic.com.

Nortel this afternoon announced that it is in discussions with Flextronics about the activities being considered for divestiture. It said that the successful completion of these discussions could result in Flextronics undertaking and managing in excess of US$2bn of Nortel Networks’ annual cost of sales on a go-forward basis and involve the transfer from Nortel Networks to Flextronics of more than US$500m of manufacturing and inventory assets.

As well as this, Nortel Networks anticipates receiving from Flextronics proceeds in excess of US$500m in cash over a nine-month period for primarily inventory and certain intangible assets.

“At this stage, however, there can be no assurances that these discussions will lead to a binding agreement,” Nortel stressed in a statement.

Despite offloading its manufacturing functions, Nortel said it intends to retain in-house all strategic management and overall control responsibilities related to its various supply chains, including customer interfaces, order management, quality assurance, product cost management and testing and fulfilment.

The successful completion of these discussions with Flextronics could affect up to approximately 2,500 Nortel Networks employees, the company warned.

“Flextronics has the supply chain capabilities to meet our time-to-market, quality and cost-reduction objectives,” said Chahram Bolouri, president of global operations at Nortel. “They also have substantial resources and presence in many of the countries where we do business, which will enable us to rapidly scale globally. At the same time, divesting the remaining parts of our manufacturing operations would enable us to focus on the core capabilities required to deliver converged networks to our customers.”

Last September, contract electronics manufacturer Flextronics announced its decision to close down its last remaining Irish manufacturing facility in Tullamore, Co. Offaly, with the loss of 80 jobs. In March 2002, Flextronics decided to close its north Dublin-based manufacturing operations where it made printed circuit boards and enclosures with the loss of 300 jobs.

By John Kennedy