AQW 7923/09


Mrs Naomi Long
Alliance Party
East Belfast


Tabled Date: 20/05/2009
Answered On Date: 01/06/2009
Priority Written: No


Question:
To ask the Minister of Enterprise, Trade and Investment for her Department’s assessment of the redundancies announced by Nortel.


Answer:
On 14 January 2009 Nortel Networks Corporation successfully petitioned the courts in the United States, and Canada, for protection from its creditors under Chapter 11 of the US Bankruptcy Code. In conjunction with Nortel operations across 15 other European countries Nortel Networks UK Limited petitioned the UK High Court, Chancery Division, to enter a UK Administration process under the Insolvency Act 1986.
Nortel’s actions in this respect were a coordinated global action to facilitate a global restructuring of the business and whilst regrettable, were understandable given the prevailing challenging international economic climate, reduced infrastructure spending by international customers and general tough trading conditions.
While the company today remains in Administration, it continues to trade, and is not in liquidation. Company management have stated that the company has sufficient cash on hand to fund ongoing operations.
As part of the global restructuring process, Nortel’s Executive management team and its Administrators determined that a world-wide workforce reduction was necessary to realign the company’s cost-base. In conjunction with an earlier announcement during late November 2008 announcing some 1,800 job losses globally, a further 3,200 job losses world-wide were announced during late February 2009. Specific job losses were not at that time attributed to specific Nortel sites. However it was communicated to staff that all operations around the world would be effected, that Nortel was a complex global business, facing a global slowdown in demand for its products, and was undergoing a major global restructuring process. The job losses were therefore widely anticipated by employees.
On 30 March 2009 Nortel announced that its UK operations would suffer a total of 228 job losses with 87 attributed to the Monkstown campus, and whilst highly regrettable, were unavoidable. The job losses actioned by Nortel’s UK Administrators were affected under the provisions of the UK Insolvency Act 1986. The Administrators, as court appointed officials, were also required to give consideration to UK employment legislation.
Today Nortel Networks UK Limited continues to provide high quality, hi-tech jobs for over 380 employees at the Monkstown site in addition to supporting a further 80 jobs through its supply chain needs. The company has and continues, to make a valuable contribution to the local economy. At today employment levels wages and salaries for Nortel staff at Monkstown are in excess of £10 million per annum.
Nortel’s decision to down-size it global operations is based on the commercial challenges it faces and was taken as a direct response to the global slowdown in demand for telecoms products. It is in no way a reflection on the skills / capabilities of the Monkstown site or Northern Ireland’s capabilities as Region. Nortel’s Monkstown site continues to occupy a key position as Nortel’s Europe Middle East Africa supply chain management centre; managing the flow of Nortel product orders worth over US$2 billion annually.
Officials from Invest NI, the Department for Employment and Learning and other Government agencies have worked together to deliver a practical programme of help for those employees affected with the aim of managing their transition to new skills and job opportunities.
Nortel’s restructuring planning is ongoing and includes efforts to attract buyers for certain parts of the business. Invest NI continues to work towards retaining and attracting new Foreign Direct Investment that can best utilise the valuable telecommunications and ICT skills present within the Northern Ireland workforce.