Merrimack Valley

Lucent leaves the Valley; North Andover plant shuts its doors today

Osgood Street plant shuts its doors today

By Bill Kirk
bkirk@eagletribune.com
Published: December 19, 2008

NORTH ANDOVER — It was once the crown jewel of Merrimack Valley manufacturing.

Since 1956, as many as 12,000 employees a day streamed into the Western Electric, later Lucent, plant at 1600 Osgood St., putting together phones and telecommunications equipment at the 1.5-million-square foot facility. Over the years, the number of employees has dwindled, until Lucent announced last year it would be pulling out all together by the end of this year.

Today, the 10 employees left will exit the building for the last time.

"The padlock goes on the door," said Gary Nilsson, president of the local branch of the Communications Workers of America union, which once represented many of the workers at the plant. "In 1980, when I started, there were 8,000 union members. You cry when you go in there now because it's so empty."

Lucent spokeswoman Mary Ward confirmed that today is the last day of work at the facility.

"Operations are essentially shut down," she said, adding that while the last of the manufacturing employees are gone, maintenance and security people will remain until the end of January, when the lease with Ozzy Properties expires.

Orit Goldstein, whose company Ozzy Properties LLC bought the facility from Lucent in 2003 for $13.5 million, said she holds no grudge against Alcatel-Lucent. "The five years we had with them was more than we had bargained for," she said. "We knew at some point it was coming."

But, Goldstein said, "It's tough when it comes. It's like a death — it's always horrible."

For others, the final days of Lucent are even tougher to swallow.

"It's amazing to me that a company of their international stature could not predict their product development better," said Joe Bevilacqua, executive director of the Merrimack Valley Chamber of Commerce. "They could not keep pace with changes in the industry to sustain the company."

He said the closure represents a tragedy on many levels.

"This has had a devastating impact on the Merrimack Valley, the employees and the citizens of the region," Bevilacqua said. "We lost over 10,000 jobs at its peak."

The ripple effect of the closure is also dramatic, he said.

"The impact on all the small businesses that supported Lucent is huge — the paper suppliers, the gas stations, the restaurants, they're all affected," Bevilacqua said, estimating that the company helped support an additional 1,000 jobs, many of which have probably disappeared along with the Lucent positions.

Further, the company for many years was the number one taxpayer in North Andover, contributing nearly $900,000 to town coffers annually. That tax bill has dwindled to just over $250,000 a year — a loss of $650,000.

A silver lining?

Robert Halpin, president of the Merrimack Valley Economic Development Council, said the company, in its heyday, was an economic engine for the region, supplying high-paying jobs and training a highly skilled workforce.

He said the company was a victim of the 2000 bursting of the telecom-Internet bubble, when companies all over the world suffered staggering losses, bankruptcies, layoffs and shutdowns in a widespread recession.

The company had been reorganizing, shifting away from being a domestic manufacturer to more of a product development company that figured out the best way to make a product, then shipped that technology overseas, where it was mass-produced in places like China for much less.

"The 6,000 manufacturing jobs were going to disappear anyway," Halpin said, "but there might have been 500 to 600 jobs left. They just couldn't survive the telecom bubble burst."

The 2006 merger between Alcatel and Lucent was a matter of survival following that collapse, he said.

But Halpin, at least, sees a silver lining in the loss of Lucent: Many of the employees who had been trained at the facility went on to work at other high-tech companies like Philips Medical, or small shops specializing in specific products.

"The legacy left by Lucent is a high-skilled, high-tech workforce," he said. "They are just working for smaller, less visible companies."

Nilsson, the union president, sees things differently, predicting that the merger will lead to continued problems at Alcatel-Lucent. Recent news out of the company hasn't been good. The new CEO announced Monday that he was making 1,000 layoffs and severing ties with 5,000 contractors as part of a global restructuring.

The cost of doing business in Massachusetts

During negotiations last year, Nilsson said the company told the union if it could find $32 million in savings over five years, the plant could stay open.

"We came back with $35 million in savings, and they said that wasn't enough," he said, noting that state and federal help was also offered in the form of tax breaks and incentives.

Congressman John Tierney, D-Salem, agreed that the labor union made a good-faith effort to help the company save money. "They put together an intelligent proposal, with serious concessions from the labor force," he said. "But in the end, it looked like they (Alcatel-Lucent) just wanted to move along."

He said his office, along with Sens. Ted Kennedy and John Kerry, both Massachusetts Democrats, all tried to convince the company to stay, but their roles were limited because they were dealing with a private company.

Instead, the company chose to move most of the manufacturing jobs to Italy and transfer the management jobs to an Alcatel-Lucent facility in Westford, Mass.

Ward, the Alcatel-Lucent spokeswoman, confirmed that most of the remaining 290 manufacturing jobs had been moved to Italy because of duplication and cost-savings.

She said that while the union did offer a cost-savings plan, "that proposal didn't address how to drop the cost enough. ... It wasn't an easy decision. They looked at it carefully."

And while the state did offer tax incentives, Ward said they were associated with expansion, which didn't address the immediate problems of the high cost of manufacturing in Massachusetts.

"The Merrimack Valley has a long and proud history with many achievements to its name," she said. "But much of the manufacturing work can be done more cost-effectively elsewhere. ... it was a decision we had to make to ensure our competitiveness in the future."

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