Nortel Needs Cost-Cutting Help?

By Mark Evans | Published: February 24, 2009

For the past three years, Nortel has been in cost-cutting mode as Mike Z. and his senior management team focused on making the company leaner, meaner and viable.

Well, that didn’t work as well as planned so Nortel filed for bankruptcy protection so it could have more flexibility to reduce its workforce and, as important, lessen its debt obligations.

But now Nortel says it needs more help to slash cuts so it wants to hire a consulting firm, Mercer, to help it with compensation issues. Of course, Mercer doesn’t come cheap. According to Reuters, junior associates will cost $250 to $300 an hour, senior associates cost $350 to $450 an hour, a principal working on the file costs $667 an hour, while a specialist principal costs $725 to $870/hour.

What I want to do is….how do I get on the Nortel gravy train?!

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  • scalpcutter

    The feds and board sloths like JM are pathetic.
    Instead of talking about export development the feds should be talking internal develop visa vie Nortel.
    Where's the bailout?
    Where's the funding for technology and the incentive to keep Nortel Strong in Canada. Instead we get some clown who kicks in 30 million for EDC.
    Do you really think that does Nortel any good at this juncture?

  • The psychiatrist

    Nevermind shoes,I'm thinking more along the lines of steel toe construction boots.

    Actually I think a great idea would be to form a group and publicly embarrass Z and his questionable decision making lately.Surely someone here can do some digging to find a “connection” between Z and the decision to hire Mercer at an ourageous cost to the company under this restructuring period.

  • scalpcutter

    Maybe they have not revised it yet or re-org is pending?
    Apparently the internal org chart at every nortel campus is not up to date at all and shows people who have been laid off for a time thereafter. They probably outsourced that to China, Mexico, India, Turnkey or poland, or an exec in Toronto is now responsible for it.
    Check it in a month and get back to us.
    If it is like that in a month, I see your point.
    Nortel Downfall tells you all you need to know about the black belts.

  • Hotwheeler1

    The fed is on “Carbon Sequestration” theme now…Nortel is already “green” and “the bad stuffs are already behind us” according to the fair-hair John Manley. You think the Conservative Harper wants to bail out his Liberal buddies…no way in hell.

    The board is pathetic and should be fired first…They meet to chit and chat once a month and collect cheques..whatever Z does and says, they are just there for a ride. Absolutely outrageous !

  • Lied2Me

    GREAT IDEA!!

    Well Mike Zeigheil will have to cut costs SOMEWHERE in order to pay for these guys. Thanks for taking MORE food out of the mouths of the remaining employees.

    I wonder what the cash outlay of this plus all of the useless Leand Six Sigma cust cutting projects was? Hmmmmm…… bet you could buy a few Happy Meals with it.

  • longgone

    if Mercer is worth a daMn, they will advise to immediately dump Z and his jackals without any further compensation or future payment…..and do so without having the first Mercer associate or principal ever having set foot on NT property…..

  • less

    The Mercers out there are similar to hiring Jenny Craig or a faith-based financial coach. You meet at Starbucks and give them $500 to feel your pain, and kindly tell you how you could possibly maybe save up to $150 if you stopped going to Starbucks and removed some light bulbs from your home. Of course, its gonna cost you another mere $11-$15 per day to keep looking fab… but… down the road those $150 savings could buy a well-earned pedicure, a few massages, and mayeb even some rubber boobs! Yay!

    Your friends will be sooo jealous….

  • nortelgirl

    The notice on the epiqsystems site states that any party wishing to oppose the application must file an objection on or before March 13 2009 at 4:00pm Eastern Time in advance of a hearing on March 20 2009 at 11:00am.

  • less

    I smell a sly ad slogan coming on:

    “When people talk, Mike listens”

  • betoX

    announcement on his way to the press… for now, 5000 to go ….

  • WootWoot

    Nortel to begin Ottawa job cuts this Thursday

    http://ottawa.ctv.ca/servlet/an/local/CTVNews/2…

  • watching…

    Where does the 5,000 come from?

    Can you provide a link to press release if/when it appears?

  • betoX
  • joremero

    my estimate is between 30% to 50% of employees in USA, UK, and Canada…anyone disagrees?

  • exnortel2
  • broadbandbill

    “There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families,” said Mike Zafirovski, Nortel president and chief executive officer.

    Mike, give me a f@<!)& brake! You know NOTHING about BURDEN and how this will AFFECT the employees and their families. You knew once (back in Macedonia) but Jack’s Way and your OWN GREED erased that memory. I WILL FIND IT FOR YOU!!!!!!! –bb

  • ToasterTank

    Mike Z and company have pretty much continued to cut heads across all lines of business instead of deciding just what business Nortel needs to be in and focusing on those business'. At this point I don't think that Mercer could offer good recommendations without some very detail knowledge of Nortel's product structure. Then again maybe Mercer is behind the recent increase in prices that Nortel implemented at their Cafeteria's and vending machines the past few weeks which sounds like something dreamed up by a Six (sick) Sigma Black Belt

  • broadbandbill

    When people talk, Mike thinks how to get more money…–bb

  • jdifunto
  • tryn2makealivin

    There was a webcast to start at high noon and as a backup a dial in (not 1800) you were asked to use your personal line. Neither worked…….. Business Made Simple

  • less

    When people talk, Mike charges them by the word.

  • protosphere

    Downplaying bankruptcy to delist, now 3,200 more job cuts to the 1,800 already announced is 5,000 with no severance. Yet. they will pay an expensive outsider to justify maintaining their exorbitant pay practices.

    A new $100M in lawsuit insurance recently announced while taking their losing options bet off the table to replace it with cash. Isn't immediate cash bonuses than traditional options what got them into this mess to begin.

    First protected under safe harbor, now bankruptcy protection. The walls are closing in risking careers.

    We witnessed the slander, tanked ultimatum, bonds loophole burning billions, many still there in crazy levels as fraud trials loom, gag employees today, green CEO who defrauds from day one to promote criminally charged pal, risking careers, endless hype 3 years to bankruptcy with poor $20 to 8 cent buying opportunity, endless contradictions, endless…

    As added security, there is $100M in new liability insurance just in case, even if Mercer says no flies on them.

    Their accelerating death spiral following $30B sales/90K employees to $8-10B sales/26-30K employees can't catch let alone with today's escalating decline after bankcruptcy. Telecom is tanking this much, let alone them.

    Even during their final hours, this saga is to be witnessed to be believed.

  • CatchNortel

    when ppl talks, Mike smirks…..

  • less

    And then it typically takes, what, 2-3 months for his face to restructure. So (secular) bear with him, Believers!

  • Ex_Nortel

    The fact that The Nortel Management Team (and the BoD) has to bring in outside 'consultants to help them stream line their business and cut costs is a stunning admission that Nortel's leadership is totally clueless about how to run their business. When Cisco strategically revamped its business in 2001, the process centered around John Chambers and his executive team analyzing the problems, making tough decisions, and implementing those decisions. There were no 'consultants' from Bain or Mercer or McKinsey involved in this process. The result is that Cisco has basically doubled its sales and profits by depending upon its experienced management team who understood Cisco's business and its markets to make the tough but right decisions back in the late spring of 2001.

    In 2005, Gary Daichendt and Gary Kunis presented the BoD and Bill Owens with an operational plan that would have cut R&D by $450M and pared supplier costs by $150M per year plus would have brought in over $2B in cash from the sale of money losing businesses while investing in very profitable partnerships with Nokia and Huawei. This led to a parting of ways as Nortel wanted to continue with its old and obsolete business model and practices.

    Now Nortel is depending upon high priced consultants with absolutely no industry or record of success in the networking industry to restructure. Basically Nortel is admitting that its management does not understand its business or the market it competes in. This very sad – and even sadder for its employees and former employees who will end unemployed and without severance.

  • less

    “There is nothing more annoying than putting conscious employees on notice.”

  • exnt2

    Mark, Mark, Mark you are still so idealistic that the gravy train is for people like you and me. Ideal. Naive. This program is by invitation only for the Harvard, McKenzie, GE, Motorola boys club.

    for only $1 and 1 minute.

    CUT ALL PRODUCTS THAT DO NOT MAKE REVENUE. CUT 80% of VP'S, DIRECTORS AND SENIOR MANAGERS. REPLACE WITH GOOD LOWER RANKING EMPLOYEES. CUT OUT THE FAT LAWYERS AND CONSULTANTS. SAVE MILLIONS. REPEAT.

  • BornCanadian

    That's right. Too many Chiefs, not enough indians

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