News

Siân and Mike Roberts had more than just a typical Canadian love affair with Nortel Networks Corp.

The Calgary couple first met in 1980, when they sat in adjoining cubicles in the firm's London, Ont., accounting department. In 1994, when Nortel closed the London office, the Roberts were so dedicated to the company they relocated, moving with their two children to Calgary.

"It used to be fun to work at Nortel. You worked hard and played hard," said Mr. Roberts, now 54.

Turns out, you can also fall hard.

The Roberts - like tens of thousands of Nortelites - are now watching the company's struggles, wondering if there will be anything left for them.

Two years ago, Ms. Roberts was transferred to Nortel's biggest supplier, Flextronics International Ltd., which is now in the process of closing down its Calgary operations. On Dec. 12, Nortel laid off her husband, earning him a fate made all the more uncertain by the company's step into creditor protection.

Severance payments, extended benefits and aspects of the company's troubled pension plan may all be on the chopping block as Nortel sets out to radically restructure.

"I have a feeling my retirement date won't necessarily be when I thought," Mr. Roberts said.

Nortel employees are forbidden from disclosing exactly how much severance they are eligible for. But several said that the maximum is 65 weeks' pay after 30 years of service - giving a sense of how much people stand to lose in a market where finding another job is increasingly tough.

Nortel says it has no plans to offer any relief to long-service employees who are being laid off without severance payments, some of whom now worry they may not be able to retire or keep their homes.

"It's a tough, tough, tough decision," concedes a Nortel spokesman, but the company's decision to file for creditor protection last week leaves little alternative.

Legal experts say severance payments typically rank behind other debts in bankruptcy proceedings. Nortel employs about 26,000 people globally, and in November said it would axe 1,300 jobs in its latest round of restructuring.

"Even though the company may legitimately owe them severance, the likelihood that they'll ever see the money could be slim," said lawyer Christine Thomlinson, of Toronto-based Rubin Thomlinson LLP, which specializes in employment law.

"Basically, it's the age-old problem of trying to collect on a debt from someone who is broke. You know the saying ... 'like drawing blood from a stone.' "

The Roberts aren't the only ones left in a lurch. Nortel notified roughly 400 Calgary staff last summer it would be closing the site this June. But, according to employees, the company repeatedly promised they'd be eligible for severance if they stuck it out. Some have turned down other job offers, choosing instead to remain with Nortel.

Tom White, who has worked for Nortel for 12 years, said he now fears that his home is in jeopardy.

"I've lived through the threat of being laid off for over eight years. The Nortel execs can sit at home comfortably with their millions in the bank, but people like me now have to worry about not losing [our homes]."

Plenty of warning signs indicated Nortel was a sinking ship. So why did the Roberts hang on so long? "At a certain point, it's not quite as easy to move - your pension benefits are accruing and you have your five or six weeks of holidays you've built up, and we had another week off over Christmas," Mr. Roberts said.

Morale is holding up well inside the company, Nortel spokesman Mohammed Nakhooda said. "Instead of being down and depressed, on the balance, there are people who want to see this through."

More than 200 staff converged in the central lobby of Nortel's Ottawa campus last Thursday as part of a grassroots "I believe" campaign. Some staff had tears in their eyes as they took the microphone and urged people to work together.

Michelle Ganley, a software designer, organized the rally after watching the 1947 Christmas classic Miracle on 34th Street, which sees a town launch a campaign to believe in Santa Claus. "I told my husband, that's what Nortel needs," she explained to her colleagues.

There were great hopes Mike Zafirovski would be the man to turn around Nortel when he took the helm in November, 2005. Nortel coughed up an additional $11.5-million (U.S), on top of a hefty compensation package, to settle a lawsuit with Mr. Zafirovski's former employer, Motorola Inc., over his decision to take the post at the Toronto-based company.

But Mr. Zafirovski ran out of time, and the board decided it needed to protect the company from creditors, even as it holds $2.4-billion in cash. Hefty debt payments, paired with tight credit markets, mean the company would have faced a cash crunch by the end of the year, analysts says.

"As Nortel goes through the restructuring process, there will be impacts on employees," Mr. Nakhooda said. "We know this is difficult news for employees whose contributions have been, and continue to be, key to Nortel's innovation. This is a tough but necessary step as we restructure to put Nortel on [a] sound financial footing once and for all."