Nortel Opens Facility in Turkey

By Mark Evans | Published: April 5, 2007

Nortel’s move to reduce costs by opening facilities in lower-cost geographies took another step forward with the opening of a new “Centre of Excellence” in Istanbul, Turkey. The facility, which was part of an announcement last year that also included a new $38-million service centre into Mexico, will provide support for customers around the world, network technical support for North American customers, and network integration and technical support for customers in Europe, the Middle East and Africa.

Nortel CEO Mike Zafirovski said the facility is “an important milestone in the Nortel story. This center is vital to improving customer support as we enter a new era of communications driven by the convergence of three powerful mega-trends we believe are significantly changing the industry – hyper-connectivity, communications-enabled applications and true broadband.”

Translation: If Nortel wants to lower operating costs, increase gross margins and boost profits, the company needs to leverage lower-cost places such as Turkey, Mexico and China. Last year, for example, it opened a new state-of-the-art R&D lab in Beijing’s Zhongguancun Science & Technology Park. As Canada’s flagship high-tech company, a big question is how many more jobs will be moved out of Canada and the U.S., especially high-paying R&D positions.

[Slashdot] [Digg] [Reddit] [del.icio.us] [Facebook] [Technorati] [Google] [StumbleUpon]
This entry was posted in Financials. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
  • The psychiatrist

    f Nortel wants to lower operating costs, increase gross margins and boost profits, the company needs to leverage lower-cost places such as Turkey, Mexico and China. As Canada’s flagship high-tech stories, a big question is how many more jobs will be moved out of Canada and the U.S., especially high-paying R&D positions.

    Mark,

    This center in Turkey is specifcally for tech support,I doubt very much that this new facility will replace “high paying R&D positions”.

    Management has made it clear more than once that Ottawa remains the core of Nortel’s R&D.

  • Mark Evans

    But the point is Nortel has talked about moving R&D jobs such as engineers to places such as China. The fact the company talks about being being committed to Ottawa may, in fact, be true but the last thing Nortel wants to do is upset the federal government given how much support it provides Nortel when it comes to vehicles such as R&D tax credits as well the backing of the EDC.

  • whereisrnd

    The question is, is the Enterprise Business R&D really in Ottawa? Perhaps that should be the research. You may want to check out Nortel’s Website
    http://www.nortel.com/corporate/global/namerica/canada/offices.html#ontario

    What is this place called Belleville? I looked it up on google maps and it’s almost smack between Toronto and Ottawa. Anyone know what they do in that location?

  • Last Hurrah

    Nortel can’t afford to let mother Canada go until they get their debt/equity ratio in order and free themselves of its pension obligations to various Canadian investor groups. In some ways you could argue Canada gave up on Nortel when they changed the board and made Mike Z CEO. Its turning into an American company more each day because of its leadership. Nortel still needs that credit facility from EDC in order to bid on large carrier RFPs.

  • chrismcboo

    Please use this post…

    Nortel Belleville? It is the 2nd oldest Nortel facilitiy, with Montreal being the first. Belleville currently has the design lead for the CS1K product line, and numerous other PBX related accessory products (Call Pilot for example). There is also a group providing tech support for North America.
    Belleville and Ottawa have always worked closely together.

  • Pink Flower

    The statement that Nortel isn’t moving R&D jobs to low cost centers is a fallacy.
    Nortel hasn’t moved ‘jobs’ to low cost centers, but guess what? by paying external 3rd party contractors from companies like TCS(Tata) in India it is moving the work, but they can claim that they aren’t moving jobs because these people are Nortel employees.

    Smoke and mirrors, smoke and mirrors.

  • ericableu

    Get your earplugs out because that loud painful sound you will hear will be Nortel’s customers *screaming* when they call into ER/GNTS/GNPS expecting to communicate to experienced, knowledgable technicians who have decades of experience and instead get a language barrier with minor skills.

    Really, it’s a beaut’ of a move. Reposition Nortel to capitalize on services and then offer cut-rate labor.

  • Last Hurrah

    Erica-Good point. From a differentiation standpoint, Nortel doesn’t have much in the product spaces they are in so I think the only thing left for them to do is become a service oriented networking company. The problem is margins in services overall have gone down because of more entrants into that space and globalization. Cisco also has a strong services business with better products to back up their services. It will be interesting to see how Nortel does the rest of this year with consolidation, Asian equipment vendor and no growth story.

  • Lurker

    Nortel has better switching products than Cisco. Cisco may have better core routers or fact they have some but I think to generally state that Cisco has better products is not accurate. Depending on the product, one may be better over the other. Cisco has suceeded in some marketing that make people tend to favor Cisco just because they are Cisco and they will not compare to anyone else. I think no one knows about some of the good Nortel products due to marketing, etc.

  • Last Hurrah

    Lurker – switching products are becoming more of a commodity each day. Cisco realizes this is the case and that they sell network solutions not point products. They no longer view Nortel as a competitor but now see Alcatel, Huawei, Google and Microsoft as competitors.

    http://techiqmag.com/2007/04/08/cisco-10-trends-worth-watching

    Nortel continues to try and play catch up after wasting the last 6 years not evolving.

  • umts

    R&D jobs have already moved to india in the past… with not so much success (as these guys are good to make support for products that have no more problems: In fact, they make good work when there is nothing to do!)… Now china. Well, we’ll see if they make better engineers or if it’s another way to increase profits for 1 or 2 years, just time to make big stock option money for current high management before they leave.

    We can say this move started when factories have been moved abroad… and as development is always better located close to production… you see what I mean.

    And if Mickey Zero wants to cut costs… He can start cutting the money he makes. It’s indecent.

  • Cavalier

    The establishment in Turkey has these main problems, and it wount be easy to overcome those:

    1- New hires are inexperienced.

    2- Selectivity in the recruitment process is minimal, no high-achiever Turkish graduates chose neither Netas nor anything Nortel-related anymore as their first step in their career.

    3- Maybe the Turkey site (both as CoE and the R&D) is keeping the number of employees stable on “paper”, the circulation rate of employees starting and quitting their jobs is crazy. Most new entries leave after 6 to 12 months. Mainly due to salary and compensation unsatisfaction.

    Therefore it will be very hard for Nortel to establish a expert support division, that can effectively communicate with the customer. I doubt that this investment will pay off as intented. I don’t know about the Mexico side though.

  • many

    Last Hurrah; *both switches and routers* are commodities. What costs is putting them into the floor space and tying them into the network. What used to be done by a single vendors well engineered box and peripherals, is now done by six boxes (and counting) and at least three different vendors.

    If cisco is indeed selling network solutions, then IMO their strategy is lacking a bit. Most of their “so called” solutions I see are multiple boxes, confusing divisions of responsibility and full of potential spaghetti configurations. (too many ways to do the same thing). Their focus seems to be on selling hardware. I think they are missing out on the software train, mostly because their software sucks.

    There are other boxes out there that have *both* a switching and routing fabric in the same box with a *big* backplane. I have not seen a viable box in this category form either cisco or nortel

    On another note, I had a presentation from cisco last year that emphasized their “high touch” customer services. Among the selling points was *north american* customer support (of course you pay more). I thought this was an outsourcing hoot.

    I agree nortel has pissed away six years trying to clean up systemic problems with top down management changes.

  • TwitterCounter for @markevans
  • Seeking Alpha Certified