STMicroelectronics to close Ottawa plant

STMicroelectronics NV Thursday said that it has implemented further cost-cutting measures, including the shutdown of its wafer fabrication plant in Ottawa and the transfer of most of the jobs to other facilities.

The plant was formerly the in-house silicon semiconductor production operation for Nortel Networks Corp. and was acquired last year by ST in a joint development and supply agreement between the two companies. ST expects to move out of the plant by the end of the year; the move is expected to result in charges of approximately US$30 million, which will be recognized this quarter, ST said in a statement.

About 450 people will be affected by the closure, but several positions will be offered relocation to other ST sites, the company said. The employees will be transferred to whatever location would best benefit from their skills, Michael Markowitz, director of U.S. press relations said.

The number of employees to be laid off due to the closure was not yet known, Markowitz said.

The research and development capabilities that ST gained in the Nortel agreement will remain in Ottawa, researching high-speed technologies for optical networking products.

ST said the Ottawa plant has been functioning below capacity, and that production will move to larger, lower-cost facilities

ST warned of a continued economic slowdown in January when it reported its financial earnings for the fourth quarter of 2000.

The company will also limit its capital investments to $1.5 billion this fiscal year, down from the $1.9 billion originally announced, ST said.

STMicroelectronics, in St. Genis-Pouilly, France, can be reached at