TORONTO - As many as 400 Nortel Networks employees in Canada stand to lose their jobs as part of the company's bankruptcy sale of its Enterprise division to Avaya Inc., The Canadian Press has learned.
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 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.
Overall, Nortel has about 5,000 employees in Canada.
The Enterprise workers are based in Ottawa and Belleville, Ont., along with a handful of others in Toronto.
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 per cent of the Enterprise workforce," said Nortel spokesman Jay Barta.
Barta 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," Barta said from Richardson, Texas.
Word of the Avaya agreement has sparked angst among affected Nortel employees and spawned speculation about mass layoffs in the order of thousands.
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 spokesman 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," Carney said from Basking Ridge, N.J.
Avaya bid more than US$900 million in its successful bid for Nortel's Enterprise Solutions division in a sale that's expected to close in December.
Under terms of the agreement, Avaya is also putting up an additional $15 million for a program designed to keep key Nortel employees on board.
The potential for job losses in Canada is tempered in part by Avaya's smaller footprint in this country and its desire to retain Nortel's large research and development team at its Canadian operations.
"Avaya has a need for more people in Canada... and there's a big R&D component," the source said.
Carney said Nortel's "rich Canadian talent base" was a "natural fit" for the U.S. company.
In announcing the agreement, Nortel attempted to allay fears of large-scale job losses by saying only that Avaya would employ a minimum of 75 per cent of Enterprise Solutions employees globally.
That includes the full Nortel Government Solutions workforce as well as most of those working in countries where laws require employment to transfer automatically to a business purchaser.
Nortel's enterprise unit supplies landline phone systems and other communications equipment to businesses, governments and other large organizations. The division had $2.4 billion in revenues in 2008 -- roughly one-quarter of Nortel's overall revenues last year.
A privately held New Jersey-based company, Avaya has about 16,000 workers around the world.
On Wednesday, Ottawa announced it no objections to the $1.1-billion sale of Nortel's wireless division to Swedish-based Ericsson.
Industry Minister Tony Clement said Ericsson had offered jobs to 800 of the affected workers.
Nortel still plans to auction its Metro Ethernet Networks business, which some analysts said could fetch up to $1.5 billion.
