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Nortel sells plants
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August 4, 1999: 12:13 p.m. ET
Telecom firm to turn over certain operations to five firms; 500 jobs cut
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NEW YORK (CNNfn) - Nortel Networks Wednesday sold some of its manufacturing and repair operations to five companies as part of a three-year plan to save up to $300 million.
As part of the divestitures, which the telecommunications and networking firm outlined in May, approximately 500 Nortel (NT) employees will lose their jobs. Nortel valued the first year of the agreements at more than $1 billion.
Under the agreements, Nortel will outsource certain operations to SCI Systems Inc., based in Huntsville, Ala.; Montreal-based C-MAC Industries Inc.; Sanmina Corp. of San Jose, Calif.; Communications Test Design Inc., based in West Chester, Pa.; and United Tri-Tech Corp., located in Cornwall, Ontario.
SCI Systems, C-MAC, Sanmina and Communications Test Design will become suppliers to Nortel.
"With today's announcement, we have achieved a key milestone in moving Nortel Networks from being a vertically integrated company, where we manufactured almost everything in-house, to a virtually integrated company, where we will complement our internal strengths with the best-in-class expertise of these manufacturing and repair services companies," said Chahram Bolouri, Nortel vice president, global operations.
The five companies will employ approximately 2,300 of the 3,000 employees who were part of the divested operations. Of the remaining 700 workers, Nortel said about 200 would remain with the company while the other 500 positions will be eliminated.
Nortel said it expects to save between $250 million and $300 million when its global operations strategy is completed in 18 to 36 months. The company added that the agreements will have "no significant impact" on its 1999 financial results from ongoing operations.
Nortel shares fell 1 to 85-3/4 in morning trade. 
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Nortel
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