Mitel spins off manufacturing business

Mitel Networks Corp. Wednesday said it will outsource its manufacturing, repair and distribution operations, creating a new company.

Ottawa-based Mitel will move 350 of its 3,100 employees over to BreconRidge Manufacturing Solutions Corp., also headquartered Ottawa.

BreconRidge comprises two other Ottawa companies, an engineering firm with interests in Asia called Ridgeway Research Corp. and 4Test Inc., a company that develops equipment- testing software.

“This is all about focusing on core competencies,” said Mitel CEO Don Smith. “The thrust of Mitel Networks is to take advantage of the new wave and churn in the market globally that’s going to be caused by IP and the convergence of voice, video and data solutions around IP.”

Mitel will now focus on research and development, sales and engineering, “working closely with BreconRidge as a manufacturing solutions organization,” Smith said. “As we bring product to market through the new product introduction process, they’re the guys physically building everything.”

Outsourcing is a growing trend among telecommunications companies, said IDC Canada Ltd. telecommunications analyst Lawrence Surtees, noting that Lucent and Nortel have also outsourced much of their manufacturing. ” In the case of Lucent, in the whole space that Mitel’s in, Lucent spun that whole thing off lock, stock and barrel.”

BreconRidge will inherit Ridgeway’s and 4Test’s 50 customers, including Alcatel, Cisco Systems and Nortel. Shortly after the announcement of its formation, a new customer was added to the list. BreconRidge and Ottawa-based DragonWave Inc., an Ottawa-based supplier of intelligent millimetre wave radios, signed an outsourcing agreement.

Will the creation of BreconRidge bring new high-tech jobs to the Ottawa region? “We hope so,” said BreconRidge CEO Bruce Rogers. “Certainly a lot will depend on the success of Mitel. Mitel will be our largest customer initially.”

Rogers, a former vice-president of vice-president of worldwide operations for Newbridge Networks Corp., said working with Mitel so closely “was actually quite spooky for me.” Canadian high-tech magnate Terry Matthews sold Newbridge to Alcatel last year and bought Mitel Networks in February of this year. Matthews is now chairman of Mitel Networks and CEO of March Networks Corp. He also holds a stake in Ridgeway.

In April Matthews announced plans to merge March with Mitel in April and there will be more news on the union in the coming months, said Smith. “We’ve been doing a lot of work on what the solutions sets are in the converged marketplace in the last few months,” he said.

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