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Nortel announce plans

Nortel announced that they as a measure “to increase competitiveness by improving operating margins and overall business performance” they are changing the North American pension plans programs and cut as many as 1100 positions.

As quoted by Mike Zafirovski, Nortel president and CEO., “I am confident in the progress we are making in turning around Nortel and recreating a great company. In the past few months we’ve taken important steps, some with near-term impact, and others with longer-term benefits, toward transforming our operations to be more efficient and customer-focused. Today’s announcements continue our efforts to increase competitiveness, better manage our costs, and secure the resources to fuel Nortel’s innovation.”

Key Company actions announced today include:
• Pension Plan: changes to control costs and align with industry-benchmarked companies. These changes are expected to result in an estimated annual reduction of US$100 million in pension expense starting in 2008 and savings of more than US$400 million in cash by the year 2012. This will reduce the Company’s unfunded pension liability deficit by approximately US$400 million.
• Global Operations: initiatives designed to create a world-class Operations organization to speed customer responsiveness and to instill process excellence while reducing costs.
• Organizational Simplification: flatten the organization and shift to a culture marked by agility and accountability.

The Nortel press release is at;
http://www2.nortel.com/go/news_detail.jsp?cat_id=-8055&oid=100202605&locale=en-US

Nortel had been one of the biggest telecommunication companies in North America, in fact even the world. But as most of the telecom giants they were hit hard by the burst of the technology bubble at the turn of the century. Also they have had some business set back, due to mismanagement and mistakes made in the accounting office. While some have thought that they may merge with other companies, such as Siemens Enterprise section, it’s also thought that they may be taken over by one of the larger companies. This is their latest announcement as they strive to once again become one of the industry leaders.

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