Mitel outsources manufacturing to new company

OTTAWA - Mitel Networks Corp. yesterday hived off its manufacturing and repair business to a new Ottawa company called BreconRidge Manufacturing Solutions.

The new company was created by combining Mitel's manufacturing unit and two other assembly firms, Ridgeway Research Corp. and 4Test Inc. BreconRidge starts out with a three-year contract to handle Mitel's assembly, repair and distribution operations. Terms of the contract were not disclosed.

BreconRidge has 750 employees -- 660 of them Mitel's old manufacturing workers -- in Ottawa, the United States, the United Kingdom and China. It also has about 50 other customers that are established clients of Ridgeway and 4Test.

Don Smith, Mitel's chief executive, said the move will let Mitel executives concentrate on churning out new Internet Protocol (IP)-based communications equipment.

"We are focused on taking advantage of this new space for IP and the convergence of voice, video and data. To do that we need a management team focused on what we have to do, from developing the right solutions to marketing and selling them. We need partnerships to do the rest," said Mr. Smith. "Other people in our industry are doing this for the same good reasons we're doing it. It's an issue of focus and agility."

Bruce Rodgers, a former Newbridge Networks Corp. executive and most recently co-founder of local firm Dragonwave, becomes president and CEO of BreconRidge. He has worked before with Mr. Smith and with Terry Matthews, the co-founder of Mitel and Newbridge, and Mitel's current owner. Mr. Rodgers said the transition should be complete in two months.

Mr. Smith said the outsourcing will speed up Mitel's race to get new IP products out to customers. "Sometimes you're looking at so many things on an incremental basis, you've incremented yourself to a point where you're not spending much time on the core business. This deal will allow us to focus as a team on getting our solutions to market," he said.

Mitel Networks is the telecommunications equipment division of the old Mitel Corp., split off and purchased last year by Mr. Matthews. He is now in the process of merging it with March Networks, a communications equipment company making products complementary to Mitel's.