More tough times ahead for Nortel – Metro US

More tough times ahead for Nortel

It was 48 years ago that Northern Electric, the forerunner to Nortel, came to Ottawa with fewer than 50 engineers and opened a research lab. By the year 2000, the facility employed 22,000.

Today marks one week since the latest layoffs began. This time, 5,000 will be let go companywide. Several people I have spoken to fully expect 1,500 to 2,000 jobs to be lost in Ottawa.

In May, Nortel is to unveil a business plan allowing them to come out of bankruptcy protection. Samih Elhage, a Nortel executive responsible for Ottawa, told me “once we have that plan we will know the resources we will need.”

Wayne Gudbranson, CEO at the Branham Group of Ottawa, which tracks Canada’s tech sector, thinks Nortel will “look like a startup” when things are done. Jeffrey Dale, head of Ottawa’s economic development agency, OCRI, fully expects more cuts and says the business plan will tell this region just how hard the hit will be.

Dale says OCRI will ramp up its programs aimed at helping those who want to develop new firms but he says the economy, a lack of investment money, and a lack of severance packages will create a harsh climate. Dale hopes other levels of government will provide investment funds.

Another impact will be on the companies who do business with Nortel. Each year, Nortel buys about $150 million dollars worth of goods and services from Ottawa area firms, and that will shrink.

In addition, Debbie Weinstein, a lawyer who has worked with most of the movers and shakers in tech, says “local companies have already lost the equivalent of months of cash flow” as Nortel walks away from debts. One example, Bridgewater Systems, has written off a million dollars.

Nortel has contributed a huge amount to Ottawa’s economy and about a third of local firms can trace their roots to Nortel. Will Nortel pull out of Ottawa? Not likely. Will they leave their current campus? Likely. Will they remain Ottawa’s tech leader? Not likely … in fact many believe that crown has already slipped away.

Website of the week
www.polycola.com: The site allows you to use two search engines at once.

• This Sunday, the 6 p.m. news will be pre-empted by the annual Heart Institute Telethon. Join CTV from 9 a.m. to 7 p.m. on Sunday, March 8.

– Be sure to watch Tech Now this Sunday as part of the CTV NEWS at 6 p.m.; technow@ctv.ca.

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