Cabletron outsourcing manufacturing function

Cabletron Systems, the international networking solutions company which employs 580 people in Limerick and Shannon, is outsourcing its manufacturing operations to Celestica, the contract manufacturing and design company.

The deal involves a management services agreement for Cabletron's manufacturing facility in Limerick where 450 people are employed. Cabletron's International Services Centre, which employs 130 people in Shannon will be unaffected.

The strategic partnership agreement announced by the US parent companies involves a restructuring programme for Cabletron, designed to deliver $50 million (€45.9 million) in savings annually and involves 300 lay-offs among its US employees. Mr William Madden, human resources manager for Cabletron Ireland, said yesterday the deal would increase manufacturing opportunities for his company.

"We see the potential to grow the business in Ireland," he said. The seven-year-old Irish operation, which manages the international supply chain operation for Cabletron outside of the US, stated yesterday that all but five of the Irish jobs were safe. Under the terms of the letter of intent signed between the two companies, Cabletron is outsourcing all of its worldwide manufacturing operations to Celestica.

"Under the terms of the management services agreement in Ireland, Cabletron will retain ownership for all the assets, as well as the employees associated with the manufacturing core process," Cabletron stated.

Celestica will become the owners of the management of the business giving it "the opportunity to leverage its worldwide purchasing power and expertise in competitive manufacturing".

"The only impact expected in terms of downsizing in Ireland is with respect to five people associated with the design function which will move to the US," Cabletron Ireland stated. The agreement marks the first phase of a restructuring programme for Cabletron, allowing it "to continue to improve its time-to-market, quality, competitive pricing flexibility, and ultimately, lower its cost of goods".

"The strategic relationship with Celestica allows us to focus on our strengths and hit the ground running on fiscal year 2000 priorities," said Cabletron's president of operations, Mr John d'Auguste. Cabletron plans to consolidate its manufacturing facilities in the US in Rochester, New Hampshire.