Nortel lays off, adjusts pensions

Nortel Networks announced a net reduction of 1,100 jobs globally last month, part of a previously announced business transformation plan designed to improve its performance.

The Brampton, Ont., company also announced changes to its North American pension program which will reduce its pension liability deficit by US$400 million by 2012.

“Today’s announcements continue our efforts to increase competitiveness, better manage our costs and secure the resources to fuel Nortel’s innovation,” Nortel CEO Mike Zafirovski said in a statement.

In all, the company announced that it will cut 1,900 jobs, while creating 800 new positions in two planned Operations Centers of Excellence in Mexico and Turkey. Prior to the announcement, Nortel had about 35,000 employees.

The exact positions that will be trimmed have not yet been decided on and the cuts will be spread across a variety of job titles, a spokesman said.

The company expects 1,200 of the 1,900 cuts will be in operations, while another 350 will be from middle-management positions and another 350 will be from undefined “business unit efficiencies,” Nortel said. It expects savings from the cuts to total $175 million by 2008.

The new centres in Mexico and Turkey were located in those two countries because of their strong labour pools, cost competitiveness and proximity to major customers, Nortel said.

In total, the company wants to consolidate 100 sites spread around the world into fewer operations centres that focus on delivering engineering, product and technical support, order management, purchasing and data analysis, Nortel said.

Nortel will eliminate pension plans for current employees and move affected employees to “defined contribution” retirement plans, in which Nortel will contribute two per cent of an employees’ eligible earnings for a retirement fund.

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