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Nortel axes 20,000 more jobs while Xerox closes UK plant

Liz Vaughan-Adams
Wednesday 03 October 2001 00:00 BST
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Tens of thousands more jobs are set to be axed in the high-technology sector after Nortel, the Canadian phone equipment maker, last night said it would cut another 20,000 workers in an attempt to return the company to the black next year.

The move, which leave Nortel with 45,000 workers, less than half the level at the start of the year, came as the US-based office equipment company Xerox also announced a major cost-cutting exercise that will see over 2,000 jobs go, with the bulk of the cuts falling in the UK.

Nortel also warned that it will post a third-quarter loss of about $3.6bn and said that its chief executive, John Roth, would leave six months early. He is being replaced with immediate effect by the company's chief financial officer Frank Dunn. The third-quarter figures are due on 18 October.

Xerox, meanwhile, announced 1,350 job cuts at its Mitcheldean plant in Gloucestershire, as it unveiled a manufacturing agreement with the Singapore based group Flextronics designed to cut costs and improve productivity. Under the terms of the deal, Flextronics will manufacture all of Xerox's office equipment and is paying Xerox $220m (£150m) for certain property and equipment.

While Xerox said the job cuts in the UK were still subject to a period of consultation, which began yesterday, it did not envisage that any of the workers would be transferred to other sites.

Roger Lyons, the general secretary of the Manufacturing Science Finance Union, described the move as a "blow" for manufacturing and a "disaster" for the Forest of Dean.

Xerox is selling Flextronics certain manufacturing facilities in Toronto; Resende, Brazil; Aguascalientes, Mexico; and Penang, Malaysia and estimates that all 3,650 staff affected would be transferred to Flextronics.

The company also plans to stop production at its printed circuit board factory in El Segundo, California, and at another plant in New York, in a move that will eliminate an additional 690 jobs.

Furthermore, the company expects another 1,250 staff at its manufacturing operations in Venray, The Netherlands, will be transferred to Flextronics. Around 100 to 200 job losses are expected at that site, mainly in administration.

Anne Mulcahy, Xerox president and chief executive officer, said: "Our agreement with Flextronics will redefine our office manufacturing strategy through significantly improved asset utilisation, greater supply chain flexibility and cost savings as well as generating cash from the asset sales."

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