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Nortel Layoffs, Possible Election Loom From Avaya Acquisition

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September 17, 2009

Nortel Layoffs, Possible Election Loom From Avaya Acquisition

By Brendan B. Read, Senior Contributing Editor

Up to 400 Nortel employees in the enterprise division’s Toronto, Ottawa, and Belleville, Ontario may be laid off resulting from the sale of that unit to Avaya (News - Alert), reports the Canadian Press.

If true, this development could rekindle a possible election in whose outcome i.e. a defeat of the ruling Conservatives and their replacement by the Opposition Liberals could quash or alter the $915 million deal, which has not yet been approved by the Canadian government. Avaya had won the Nortel (News - Alert) division Monday following a bidding war that led to a significant hike in the price from $475 million the two companies had shook hands on in a stalking horse agreement.
While Nortel has refused to provide any figures about its workforce and the potential impact of the sale announced this week, those familiar with the deal told the wire service said Thursday the enterprise unit currently employs close to 1,000 people in Canada. The hope is that the ultimate number of those forced out the door will be lower than 400, said one source.
Thousands more work for the division abroad, including about 2,000 in the United States. Many of those are protected by successor laws that mandate the buying company to keep them on.
“The number that would apply to Canada, and the United States for that matter, is we’re expecting to keep a bare minimum of 60 percent of the Enterprise workforce,” said Nortel spokesman Jay Barta.
He called discussion of layoffs “premature,” saying no decisions had been made.
 “We have not scheduled or moved forward on any layoffs in the Enterprise department,” said Barta.
Word of the Avaya agreement has sparked angst among affected Nortel employees and spawned speculation about mass layoffs in the order of thousands said the wire service. But the source, speaking on condition of strict anonymity, said that simply wasn’t the case even though there was “a lot of uncertainty and there’s a lot of shop talk going around.”
Transition planning was underway with firm layoff numbers expected in the next month or so.
Avaya spokesperson Gerard Carney said Thursday the company expected ‘minimal employee disruption’ in Canada and said it was too soon to speak about possible layoffs.
“We are committed to retaining as many jobs as possible and expect to retain a substantial number of employees and maintain the research facilities in Carling (in Ottawa) and Belleville,” said Carney.
The Avaya enterprise purchase along with the $1.13 billion deal to sell the wireless unit to Ericsson (News - Alert) appeared to be heading to a relatively easy OK. There had been a cooldown of election talk in Canada. Sensing that forcing Canadians to go to the polls this fall could be very unpopular with them, Liberal leader Michael Ignatieff has maneuvered the left wing New Democrats and the Quebec nationalist Bloc Quebecois into supporting the minority Conservative government.
While the Liberals continue to state that they want the Conservatives out, the other parties have promised for the time being to vote with the Conservatives if and when the Liberals introduce a non-confidence motion that if passed would result in an election. The Liberals may have an opportunity to make such a move in early October.
Yet the Liberals have made it known though that the Nortel sales to both Avaya and to Ericsson will become an issue in an election when it occurs, which will be when enough of the parties see a clear advantage that could include from developments like the layoffs. In a statement released Thursday Liberal leader Ignatieff blasted Conservative Prime Minister Stephen Harper, accusing him of abandoning Canada’s future when it decided not to help Nortel.
 “Stephen Harper didn’t think it was in the national interest to keep Canada’s single largest source of private research and development from going bankrupt, and he didn’t think it was in the national interest to conduct a review of the sale of its wireless assets,” said Ignatieff. “Any country around the world would have immediately reviewed a sale of this magnitude and importance. Stephen Harper and his Industry Minister Tony Clement are willfully turning their backs on the future of Canada’s technology sector.”
Liberal Industry Critic Marc Garneau added that the decision shows that this government doesn’t understand the importance of certain critical technologies to the future of the country.
“This is not about Nortel’s book value. It’s about a major part of Canada’s technology development – the future of Canada’s technology sector, with its potential to generate billions of dollars and thousands of jobs” he said. “Canadians want their government to help build the future. Stephen Harper is squandering our future, plain and simple. We can do better.” 

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Michael Dinan

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