Nortel Networks Corp. is eliminating about 100 positions in Calgary, but the company and analysts say the move doesn’t signal a weakening of the city’s high-tech industry.
The layoffs are part of Nortel’s worldwide initiative — announced a couple of weeks ago — to find efficiencies in its operations and focus on areas of high value for customers and high-growth potential, said Nortel spokeswoman Tina Warren.
As reported in Business Edge last week, Nortel continues to hire people to fill positions in high-growth areas, including its expanding wireless research and development operations in Calgary.
“Wireless is very much a high-growth area,” Warren said. “We are a leader in the wireless Internet market and are committed to Calgary.”
She couldn’t say how many positions needed to be filled in the wireless or other high-growth divisions such as fibre optics. Nortel employs about 2,000 in Calgary.
Eliminating 100 of those jobs “is always a difficult decision to make,” Warren said.
The employees affected are being given 60 days notice and encouraged to apply for other positions opening up within Nortel, she added. Outplacement services will be offered.
Nortel’s layoffs here don’t indicate a general weakness in Calgary’s high-tech sectors, said Dean Kim, technology analyst at Acumen Capital Finance Partners Ltd. in Calgary.
Nortel also has manufacturing facilities in Calgary, so it makes sense to trim jobs there in light of the economic slowdown in the U.S. and, to a lesser extent, in Canada, he said.
“Cyclical sectors like manufacturing certainly are greatly affected” because orders drop off as the economy slows, Kim said. “Probably, the company’s taking a proactive step to manage its costs.”
Nortel announced two weeks ago it would eliminate 4,000 full-time jobs, including nearly 1,000 positions in Canada, in the next six months. The company said then that the cuts would be concentrated in the traditional circuit-based phone switching areas.
With the Calgary layoffs, the number of Nortel workers being laid off across Canada has swelled to 1,150. About 200 employees at Nortel’s Brampton headquarters and another 750 in the Ottawa region had already received termination notices.
But in the wireless and fibre-optic areas, Nortel is expecting to grow 30 per cent year over year, Kim said.
In June, the company said it would double its fibre-optic manufacturing capacity, adding 9,600 jobs in North America, Europe and Australia. In Calgary, Nortel is building a $54-million expansion, announced last fall, at its Westwinds campus. It will add a 200,000-sq.-ft. facility to provide more room for wireless research and development.
Most technology companies that are either headquartered or have major operations in Calgary or Edmonton are still doing well, Kim said.
“There’s nothing fundamental that’s dragging everything down,” he said. “In fact, I see the reverse. I see a lot of companies gaining more market share and revenue growth.”
Bill Hanniman, vice-president of recruiting at Eagle Professional Resources Inc. in Calgary, told Business Edge that there’s no sign of slowdown in the local market for information technologies professionals. Eagle specializes in putting IT professionals into contract positions.
“We don’t hear even in some of our client meetings any immediate (news) that is going to impact or change that, at least in the short term,” Hanniman said.