Nortel Cutting 1,100 Jobs

By Mark Evans | Published: June 27, 2006

Well, this is no surprise: Nortel is slashing 1,100 jobs, including 350 middle managers – a move that will reduce annual operating costs by $100-million by 2007 and $175-million by 2008. You had to know CEO Mike Zafirovski had something up his sleeve when he’s talking about better times ahead by 2008. Do not be surprised if there are even more job cuts are announced as Nortel’s strategic plans are finalized. Update: Nortel is also changing its pension plan structure to save about $100-million a year. The adoption of a defined contribution plan has become pretty standard fare within the technology industry, which begs the question why it took Nortel so long to climb on the bandwagon. One thing disgruntled Nortel employees may find difficult to accept is while their pension benefits are changing, Zafirovski received a US$500,000 "special pension benefit" when he was hired (a guaranteed payment on top of his normal pension benefits).

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  • Anonymous

    Pension going too… as a mid-career employee of Nortel I think it’s finally time to go elsewhere.

  • http://www.kbcafe.com Randy Charles Morin

    I’ve built some pretty big toilets in my time. None as big as Nortel.

  • Anonymous

    This sucks a big one for employees in the Traditional Plan – our RRSP contributions were capped…… we’ve now got an 8 year lag….. Thanks Mike!!

  • Domenic

    Forbes is reporting @ http://www.forbes.com/2006/06/27/nortel-pensions-layoffs-cx_gl_0627autofacescan05.html?partner=yahootix , that in fact, “Nortel will ax 1,900 posts globally, but beef up new operations centers in Mexico and Turkey with 800 fresh jobs.”

    Do you hear that giant sucking sound? It seems as if developed nations can not compete. My point, Having spoken to Immigrant American coworkers. Other workers on work visa’s will not share information as they fear loosing their jobs and situation even with someone that is from that part of the world now here with American Citizenship. Wow, what have we done to ourselves?

  • anonymous nortel employee

    who knew Mexico and Turkey had such a pool of high tech engineers. I just don’t get it? What kind of innovation could possibly come out of that poor country?

  • USAtalks

    I recommend chekcing out WSJ.com’s June 23, 2006 article AS WORKER’S PENSION WITHER, THOSE FOR EXECUTIVES FLORISH. The question needs to be raised at the Nortel shareholders’ meeting on 6/29 if executive, unfunded pensions are changing. If so, how? If not, why not? Exec pensions have more impact on the bottom line than the fully funded rank and file pensions.
    With Nortel’s contributions to retiree medical in the US going away and pensions being “dumbed” down there is no reason to stay or even sign on with Nortel. Go to a company with fewer problems, more employee support in the way of tools, training and headcount. Or why not a start up that doesn’t have many benefits but REALLY pays well and gives out bonus not underwater stock options? It at least has the chance to be the next Microsoft.

  • Me

    “What kind of innovation could possibly come out of that poor country?”

    Maybe the same innovation that came out of the poor country called India.

  • anonymous nortel employee

    Name on innovation that came out of india? Yes, they can program but can they innovate? The majority of all innovation comes out of the startup culture of the United States, not India. There is a cultural difference. Nortel will need to innovate, god knows they did nothing with their enterprise routers

  • poor country innovation

    hey anonymous nortel, you are so naive and ignorant with a big fat ego, as big as your fat butt you sit on everyday.

    a few examples:
    - the world would not give nuclear technology. they built their nukes
    - the world would not give cryogenics. they built their own
    - the world would not give missile technology. they built their own faster and better than the best (check out brahmos)
    - they built their own satellites

    what do you have? everything is manufactured in china. the software is built in india. design is in korea and japan. you can sit and say innovation but you will be dead in 5 years.

  • poor country innovation

    hey anonymous nortel, you are so naive and ignorant with a big fat ego, as big as your fat butt you sit on everyday.

    a few examples:
    - the world would not give nuclear technology. they built their nukes
    - the world would not give cryogenics. they built their own
    - the world would not give missile technology. they built their own faster and better than the best (check out brahmos)
    - they built their own satellites

    what do you have? everything is manufactured in china. the software is built in india. design is in korea and japan. you can sit and say innovation but you will be dead in 5 years.

    do not underestimate countires and stereotype them because they may be poor.

  • fresh blood

    good move as this will now force many of the deadwood to think of moving out as there is no retirement pot either. this will stem the rot, allow mobility and bring in new blood.

    if you see the demographics at Nortel, average age is 45+ with about 22 years. 35% of the workforce plan to retire in the next 5-10 years.

    this is good for Nortel

  • Anonymous

    should have gone for 3000+ jobs

  • MoneyGames

    If laying off 60,000+ people didn’t get rid of the deadwood truncating pensions and retiree medical, moving 800 jobs to Turkey and Mexico and laying off another 1100 people isn’t going to remove deadwood. It is going to remove the remaining REALLY good, loyal and faithful employees who have endured one thing after another – including longer work hours with out compensation – since 2000.
    No USA employee can retire in 5 years who is 45 – no health insurance, no pension…….
    Lets get real only the employees with talent and experience are going to leave voluntarily.

  • fresh blood

    i think it will be a mix. some deadwood and talent will go. why are they hanging on. for retirement, for stability, not wanting to take any risk. yes some will try and stay.

    but a lot of them will try and make the move to govt or somewhere else. i did not mean somebody is 45 will retire in 5 years. read my note. the average age is 45. so in a 33000 workforce, if the average age is 45, can you imagine how many there must be around 55? these are people in middle management and stuck in jobs just kept with no value.

    so, the equation again;

    losing pension + 350 middle management jobs + uncertain layoff = cash out now and get a job

    there is nobody left who is loyal. its now a do not care and do not work hard mentality because there is no reward or outcome from doing so. loyalty died a long time ago in this company. good talent – there is some. but how can you have talent when you have not gone anywhere in the past 5 years, not innovated anything new, worked on same old same old.

  • fresh blood

    to give you a number, one can quickly estimate roughly 14,000 in the 45+ bracket. At least half of this number will start looking. why risk it?

    now imagine 7000 move on. 7000 of talent gets mobility. their jobs free up. 7000 new hires across the globe. we need this to happen here.

  • anonymous nortel employee

    Slow down Mr Anti US worker. Why are you bringing up Nukes? You must be a non US/Canadian citizen to get so fired up. Lets stay on topic, we are talking about networking gear. Show me one new product that came out of India that we use? Thats all i’m asking. Plus someday when a low cost worker takes a job from you as up try to raise a family, your tone will change my foreign friend.

  • MoneyGames

    Fresh Bloods words – its now a do not care and do not work hard mentality – I agree to some extent. There are people who have continued to work hard over the past 5 years but now why should they continue to work hard? At least they will go back to the 8 hour (USA) or 7 1/2 hour (Canadian) days not the 12 to 15 some have been doing since Mr. Z came on board. Employees are burned out from over work – now with no reward at retirement you will either move on as soon as possible or move on in the next12 to 18 months when the timing is best for you….giving up less of yourself and your life in the meantime.

    What does Nortel make? I don’t think new blood will be able to answer that question. The veteran employee may have an idea of what Nortel needs to do or make but no one is asking and if they ask they don’t listen or care for the answer.

  • fresh blood

    lots of vets know what to do and how to do it. the problem is these people are at the lines and who cares about what they think. if this were a co like GE or Microsoft then yes senior management would be listening.

    its like that the dasani ads of water filtering. 7 filters of middle management change what gets sent to the top and what should be sent down. so the first thing Nortel needs to do is show all middle managers the door. it will take 6-8 months to stabilize but people will strive to do this once they see accountability.

  • http://- -

    ah .. the alliance Nortel with Microsoft ? what a sweet deal !!!

    more ppl to go out sooner than expected to make the organization flatter and leaner.

    ******** LISTEN UP !!! after you half work on or finish your Microsoft-Nortel projects, DO NOT TAKE THOSE IPs. Microsoft attorneys will come after you and your assets or asses********

    the jobs go to India and Mexico/Latin America. Microsoft is increasing staffing in those places as you read.

  • http://- -

    new common ways to save money in big companies.
    company offer stock options to employees at old rates to write off as bad debts and restatement again.

    employees to fire or lay off before -

    the stock options to expire
    funds matching is 1-for-1
    employees work more than a certain years
    few employees in a group (to merge or get rid)
    groups not making more profits

  • Nortel Survivor

    It is clear to me that most of you responding don’t have a clue. I was Nortel employee for almost 15 years and was not deadwood or a slacker. I worked my ass of for Nortel and had pride in what was being produced. I asked for two years for a package but they didn’t want to give it to me because I was actually productive, finally I got it and left when they were desperate to meet the “numbers”, I was 45 a the time. I wanted out because it was clear to me the company was on a sprial to oblivion. At that time the only goal of Nortel was to keep up with Cisco, ergo all the acquisitions and divestures…a complete mess and financial loss! I believe the only reason the company still exists is because of the Canadian governments favored status of their once Icon. I often “joke” when will Cisco take over Nortel! Probably never they will just let it die an agonizing death. Most Nortel products are developed at BNR which I believe doesn’t even have a presence in CA any more, maybe RTP. Bottom line Canadians have a different attitute about work, similar to the French, so I doubt if anything significant will ever come out of the frozen tundra. Alliance with Microsoft has been in the works since I can remember and I don’t see much from that either. Moving things to Mexico and India is not going to solve anything. I did a stint in Mexico for Nortel and the nationals would leave Nortel and go to the competition for dime more which made it impossible to keep a trained staff. I was smart and took my pension in cash to avoid having anyone in Nortel screw that up as well. My attitidue now is work when and were I want and if I don’t like the way senior management is operating I move on. I have gotten over the fear of being unemployed and now enjoy the time between jobs.

  • former nortel guy

    I found this blog is extremely interesting. All the topics about nortel (whether on or off topics) can be found in this single but long page.
    As a former Nortel guy, I survived in the worst date, and the only reward from Nortel is the sponsorship of my green card. With average 1% increase of my salary over 6 years (count on the 3 years frozen).
    The truth is Nortel may not be a very nice place if you want to WORK, but really nice place if you want to RELAX, even the darkest day, I can code only 500 lines for the whole year.
    Even more surprise, Nortel even keep bunch of guys like me for years, the standard for their layoff is keep the sequence of salary, age, relationship to manager, then productivity. I think the only reason I can survive is because of the lower wage.
    I wonder I will totally forgot how to code if I stay three more years in Nortel, the only good reason for the leaving is you must to survive, and not much place will be the same as in Nortel.
    Now, I am the core engineer in a small but profitable company, different altitude to my work, not much complaints, I can win respect by complete the key project in time (which the dream for my Nortel career). The single big loss for my Nortel career is I didn’t have chance to wait for the big fat pink slip with 5 digits check.
    What a shame, but no regret.

  • Ming Chu

    Recently, I received Nortel stock class action
    notification, how about Nortel stock in 401K,
    anyone knows?
    Ming

  • Nortel ?

    I left Nortel in 1998,in one of the layoffs..after 13 years.. i got my 401K
    but could not get my pension money at that time.sept of 1998. Come to learn
    that “end” of that year or early 1999 people leaving were able to get their pension /i called Nortel HR etc.. they said plan changed & i would have to wait
    till i was 57 or 64 years old or something… i have not received any statement
    or anything in the mail.JUST curious if anyone have any info: on this subject etc.
    Thanks!

  • http://www.nuglobalmonopoly.com/davidharding David Harding

    RE: Anonymous Nortel employee says, “Name an innovation that came out of India?”

    Here’s one: Raman Spectroscopy in the 1930′s. Sir Raman won a Nobel Prize for discovering that intense monochromatic light interacts with molecules that have vibrational energy and gets scattered at a higher wavelength.

    So what does that mean today? Well, I distribute a globally patented portable laser technology that uses this principle in physics to non-invasively measure key nutritional antioxidants in the cells of your body and gives you an overall indication of your antioxidant status in less than three minutes. No blood, no pain and at the end location – the tissue. It has never been possible to do anything like this before. This is a gigantic breakthrough in the health and wellness industry. So huge in fact that it is permanently changing the way we look at nutrition and vitamin supplementation forever.

    I should also mention that in my line of work I receive compensation whenever consumers purchase scientifically formulated supplements that are guaranteed to raise their score, as measured by our exclusive scanner technology, or their money back. I own my own business, don’t carry any inventory, the products are automatically shipped directly to consumers in over 40 countries on a monthly basis and I work from the convenience of my home.

    This may not sound like a traditional business model or financially significant to some engineers, but consider this, would you rather get paid a salary once for developing a disruptive technology that consolidates an entire global market segment that is expanding and makes all other competitors obsolete overnight, or a small piece of all of the revenues generated by that revolutionary technology while it operates in the field year after year? One scenario is a job and the other is wealth creation.

    Right now this project is still in its infancy but doubling in size every year as a direct result of the patented scanner technology. It is backed by a publicly traded 23 year-old parent company with a successful track record, deep pockets, cash on hand, no long-term debt and a “Force for Good” corporate culture.

    I’m looking for people who are ready to consider looking at something fresh related to their field that, if they like what they see, could provide them with a sizeable recurring income stream now and into their retirement. Please check out the tour at my website and contact me via my link if you’d wish to investigate this opportunity further: http://www.nuglobalmonopoly.com/davidharding

    I hope that everyone out there who is looking for a better situation finds one. And I would like to thank Sir Raman from India for his Nobel Prize wining discovery that is going to improve the health of millions of people around the world and give those that get involved in the deployment of the nutritional laser scanner a bright and secure financial future.

    All the best!

  • Lorenzo

    I worked for Nortel for nearly 20 years before layoff came to me in 2001.

    Where do I go to collect my pension????

    anyone, please advise!

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