Nortel sells European plants

Nortel Networks will sell manufacturing and repair operations in Europe, the US and Asia in the final phase of its restructuring process.

Electronics manufacturer Solectron will buy Nortel's new product introduction (NPI) prototyping, printed circuit board, telephone set assembly centres and some repair facilities in a four-year, $10bn deal.

Nortel began its Manufacturing 2000 restructuring initiative 14 months ago, and the networking giant expects to save up to $300m a year when it sheds manufacturing units to focus on optical and wireless internet products.

Nortel will sell several of European centres, including Belfast's printed circuit board manufacturing site, which will be relocated elsewhere in Northern Ireland, a repair centre in Cwmcarn, Wales, and operations in France.

So far, the company's cost-cutting drive has meant axing 10 per cent of its global workforce. Richard Lowe, Nortel's vice president for global operations Europe, said he is "not expecting any layoffs" for the 4200 workers at the sites acquired by Solectron.

Solectron will continue NPI, manufacturing and repair services for Nortel's optical, carrier, enterprise and wireless products. The manufacturer will also be free to do work for other vendors.

"Solectron will own the units and is under no obligation to facilitate only Nortel. But it will manufacture our exclusive products just for us," said Lowe.

The European part of the deal should be finalised in June or July, subject to European labour regulations.

Clive Longbottom, an analyst at Strategy Partners, said: "Nortel has decided it is not really a fabrication company and is becoming more solutions focused. It is a good move if it wants to take on Cisco in the optical fibre and voice over IP market."

Nortel also announced a new industry group, called the Broadband Content Delivery Forum (BCDF), which will recommend open architectures for multimedia content over broadband networks.

Tim Johnson, a senior analyst at researcher Ovum, said internet advertising and applications service revenues will be worth more than $20bn worldwide in 2001.

"The full development of content service revenues will depend on streamlining access and communications for the subscriber," he said. "If the BCDF helps do that, it will deliver significant benefits for everyone involved with content services."

Other BCDF members include AltaVista, AT&T Broadband, BBC, BT, Hewlett Packard, and Sun Microsystems.