TORONTO-Nortel Networks said about 10 percent of its work force, or 8,000 employees, will be
affected in a restructuring that calls for plant divestitures, manufacturing rationalization, a greater reliance on
outsourcing and redeployment of employees, said the company.
Divestitures, retraining and attrition will help
minimize employee impact, said Nortel.
The company said it expects to realize savings during the next 18 to 36
months of between $250 million and $300 million a year as a result of the restructuring. Any efficiencies generated by
the program are not expected to significantly impact 1999 financial projections from continuing operations, said the
company.
The news follows an announcement in September that Nortel would lay off 3,500 employees.
Nortel
said a key element to its strategy is the transition from vertical integration-making and assembling most of its products
and systems-to virtual integration-acting as a systems house linking customers, design centers, internal production
centers, contract manufacturers and other resources. The transition will allow Nortel to focus on changing requirements
for software technology and higher-value integrated systems and networks, said the company.
