Re­quiem for Nor­tel

On 15th an­niver­sary of mas­sive job cuts at one-time tech colos­sus, ex-em­ploy­ees look back on the highs and lows.

Ottawa Business Journal - - FRONT PAGE - BY DAVID SALI david@obj.ca

Fif­teen years ago last week, fall brought a blast of chilly news through the halls of what was then Ot­tawa’s largest tech­nol­ogy com­pany.

On Oct. 2, 2001, Nor­tel Net­works an­nounced it was chop­ping an­other 19,500 jobs from its global work­force in the wake of a whop­ping $3.6-bil­lion quar­terly loss.

The cuts brought the num­ber of lay­offs at the once-dom­i­nant tech colos­sus to nearly 50,000, and with that bomb­shell came an­other an­nounce­ment that raised more than a few eye­brows: CEO John Roth, who had said ear­lier that year he would re­tire, would be re­placed by CFO Frank Dunn ef­fec­tive the fol­low­ing month.

While con­ced­ing that Mr. Dunn knew the com­pany “in­side and out,” an ed­i­to­rial in the Oct. 8, 2001 is­sue of OBJ ar­gued that many out­siders would ques­tion his ap­point­ment.

“They will won­der aloud: isn’t Dunn part of the team that created this colos­sal mess?” the col­umn read. “As CFO, Dunn was part of the ex­ec­u­tive team that didn’t bother talk­ing to the trea­sur­ers at client com­pa­nies that couldn’t pos­si­bly pay for US$100-mil­lion or­ders.”

Still, the ed­i­to­rial ex­pressed guarded op­ti­mism, end­ing with the pre­dic­tion that a “new fo­cus, a tighter hold on purse strings should re­sult in a stronger Nor­tel that will con­tinue to play a large role in the global telecom­mu­ni­ca­tions mar­ket.”

As we now know all too well, things didn’t turn out that way. Al­ready drown­ing in red ink, Nor­tel con­tin­ued to rack up bil­lions in losses over the next decade and fi­nally filed for bank­ruptcy pro­tec­tion in 2009. In June of that year, its shares – once worth more than $124 – were de-listed by the Toronto Stock Ex­change.

AS­SETS SOLD OFF

The en­gine of the Ot­tawa tech com­mu­nity at its peak, Nor­tel grad­u­ally faded into obliv­ion, par­celling out its as­sets and sell­ing them off to com­peti­tors like Ciena and Eric­s­son. Its mas­sive 370-acre for­mer cam­pus on Car­ling Av­enue, which once housed half of Nor­tel’s 16,000 em­ploy­ees in the Na­tional Cap­i­tal Re­gion, is now prop­erty of the fed­eral govern­ment and will soon be home to the Depart­ment of Na­tional De­fence head­quar­ters. Mean­while, Nor­tel’s in­ter­na­tional bank­ruptcy case is still wind­ing its way through the courts, with $11 bil­lion in as­sets re­main­ing to be di­vided up and 20,000 pen­sion­ers and ex­em­ploy­ees wait­ing for a set­tle­ment.

But on Oct. 2, 2001, no one knew what was in store for Nor­tel, in­clud­ing its thou­sands of work­ers in the Ot­tawa re­gion.

“There was a lot of con­cern, and hope that Frank Dunn would be the fel­low to lead us for­ward and break through the chal­lenges ahead of us,” re­calls local en­trepreneur Brian Hur­ley, who in 2001 was a project leader of Nor­tel’s car­rier IP busi­ness. “I think that at the time, (we) were still very op­ti­mistic about the likely out­comes, in­clud­ing my­self.”

At that point, he adds, most peo­ple at the com­pany still be­lieved Nor­tel would re­cover.

“That was one of things that was great about Nor­tel and BNR (Bell-North­ern Re­search, Nor­tel’s pre­de­ces­sor). It had a lot of very com­mit­ted peo­ple who’d been with the com­pany for a long time. When the un­cer­tainty set in later, you could tell it was caus­ing a lot of stress to a lot of peo­ple.”

Peter Becke, a for­mer vice-pres­i­dent of busi­ness de­vel­op­ment at Nor­tel who had left the com­pany ear­lier in 2001, says that al­though Mr. Dunn was “fi­nan­cially as­tute,” he was the wrong per­son to re­place Mr. Roth.

“He was not an in­spi­ra­tional leader,” says Mr. Becke, who now men­tors young en­trepreneurs and runs a pri­vate eq­uity firm called Hello Ven­tures with for­mer Shopify CEO Scott Lake.

“Nor­tel had some amaz­ing lead­ers, but ev­ery Nor­tel ex­ec­u­tive can re­mem­ber who they were and what they did for the com­pany. I would just say that Frank didn’t seem to be in that ech­e­lon of great lead­ers. It didn’t seem to me that was a pos­i­tive, for­ward step. It didn’t seem to me that Frank was go­ing to get the com­pany back on track.”

He be­lieves Nor­tel still had great prod­ucts and world-class em­ploy­ees and could have re­bounded un­der the right con­di­tions.

“I would guess that with stronger lead­er­ship at the board level, at the ex­ec­u­tive level, the fi­nan­cial sit­u­a­tion could have been dealt with and the fu­ture of the com­pany may have been dif­fer­ent,” Mr. Becke ar­gues.

“It did not need to fall apart as it did. The fact that so many of those busi­ness units be­came prof­itable, valu­able as­sets for our com­peti­tors to buy and in­vest in sug­gests that we had op­tions. They just didn’t ma­te­ri­al­ize. Far lesser com­pa­nies had a fu­ture. (Nor­tel) could have.”

Mr. Hur­ley, who went on to found two tech­nol­ogy com­pa­nies of his own af­ter be­ing laid off in 2002, takes a more philo­soph­i­cal ap­proach.

“I don’t look to place blame,” he says. “I think every­body at the end of the day was try­ing to do the best job they could. Any tech­nol­ogy com­pany, you place your bets, you make your de­ci­sions … and some­times those de­ci­sions aren’t cor­rect. The out­come was not the out­come we all de­sired, but that’s what hap­pened. I think every­body was work­ing with the best in­ten­tions.”

Both Mr. Becke and Mr. Hur­ley pre­fer to fo­cus on Nor­tel’s en­dur­ing legacy – the le­gions of ta­lented engi­neers and tech wizards who went on to launch dozens of suc­cess­ful star­tups in the Ot­tawa re­gion, many of which are still thriv­ing to­day.

“We really had an amaz­ing hu­man ca­pa­bil­ity at Nor­tel,” Mr. Becke says. “Many of those char­ac­ter­is­tics have trans­formed into other com­pa­nies and other ven­tures. There was some­thing about that time, dur­ing the good years, that really grew you as a leader, grew you as a per­son.”

BIT­TER­SWEET MEMORIES

Mr. Hur­ley shares many of the same feel­ings.

“That ca­ma­raderie and the cul­ture of Nor­tel and BNR still ex­ists to­day amongst the peo­ple who worked there,” he says. “We all tend to help each other out.”

Now CEO of a soft­ware com­pany called Pur­ple Forge, he says his memories of Nor­tel are bit­ter­sweet.

“First and fore­most, it’s pride – pride in the peo­ple, the tech­nol­ogy, what we achieved as an or­ga­ni­za­tion and what we had the po­ten­tial to achieve, and the chal­lenges we over­came along the way,” says Mr. Hur­ley, whose at­tach­ment to the firm that em­ployed him for 15 years still en­dures: He chose the name Pur­ple Forge partly as an homage to BNR, which had a pur­ple logo.

“The sec­ond (emo­tion) would be there’s a sad­ness that it came to an end. And there’s the sad­ness (about) the neg­a­tive way it af­fected some of the peo­ple who were no longer with Nor­tel.”

Mr. Becke’s con­nec­tions to Nor­tel also run deep – his fa­ther and broth­ers all worked for the com­pany at some point, and there is a hint of rev­er­ence in his voice when he rem­i­nisces about its hey­day.

“Back in those days that Nor­tel was grow­ing, noth­ing was im­pos­si­ble,” he says. “There was noth­ing you couldn’t do. That created a world of achieve­ment. You felt proud to be part of that. It wasn’t about ar­ro­gance – it was about pride. You were part of some­thing really big.”

FILE PHOTO

Ex-Nor­tel em­ployee Brian Hur­ley.

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