Semiconductor Surge Spurring Mitel
to Add 400 Engineers in Ottawa

By JACK LYNE • Site Selection Executive Editor of Interactive Publishing

PC users' ever-increasing lust for high-bandwidth interconnectivity is driving telecom player Mitel Corp. (www.mitel.com) to add 400 high-end engineering jobs at its semiconductor operations in Ottawa, the Canadian capital that's Mitel's headquarters city.

The 400 new employees, who'll be housed in a new 100,000-sq.-ft. (9,000-sq.-m.) facility, will more than double the Ottawa-based work force for Mitel Semiconductor, which is recording annual growth rates of almost 50 percent. From 1992's US$40 million in revenues, Mitel Semiconductor has grown into an $800 million business.

Mitel's latest semiconductor expansion is being fueled by what President and CEO Kirk Mandy called "the beginning of a 10- to 20-year retooling of the global telecom infrastructure." Mitel Semiconductor makes integrated circuits and optoelectronic components used in both Mitel products and systems made by other companies, including Alcatel and Cisco.

"Our growth in broadband networking, optical components and subscriber access is expected to remain strong for the foreseeable future," Mandy said. "We have to expand quickly if we are to meet increasing demand for our microelectronics products, as well as tackle emerging opportunities in optoelectronics."

But while the semiconductor division is expanding, some investors are questioning Mitel's strategy with its money-losing business phone systems division, long the company's traditional backbone. In addition, Ottawa's marked success in landing high-tech expansions has some observers fretting over strains on the region's infrastructure.

Ottawa Always Frontrunner for Expansion

Dubbed "Phase 5," the new five-story facility will sit on a 13-acre (5.2-ha.) site adjacent to Mitel's 650,000-sq.-ft. (50,500-sq.-m.) campus in Kanata, some 20 miles (32.2 km.) west of downtown Ottawa. Mitel has some 6,300 worldwide employees in 74 office and manufacturing facilities. The company has established large clusters in California, Montreal and Scotland.

Labor factors, however, made the Ottawa area the expansion frontrunner, Mitel officials explained.

"Engineering expansions are driven by available skill sets," said Mandy at the project's unveiling. "We decided that Ottawa was the best place for this expansion, given the skill sets we were looking for and our ability to attract those employees."

Project Running on Fast Track

Mitel Semiconductor's rapid growth is dictating fast-track expansion. Mitel has already secured a building permit and tapped the project team, headed by project manager Canderel Management and building architect Murray & Murray Associates.

Mitel Semiconductor's fast-track pace will continue, with revenues possibly approaching $5 billion in the next five years, Mandy predicted.

At July's annual general meeting, though, some investors criticized Mitel's efforts in its business phone system division. Said one stockholder, "Why doesn't Mitel divest itself of the systems business when every analyst believes it would lead to a higher stock price?"

Mandy responded by citing researchers' projections for 100-percent-a-year sales growth for new Internet-based business telephone systems. Said Mandy, "Why should I throw away that kind of business before it even starts?"

Rapid High-Tech Growth Raising
Concerns Over Infrastructure Strain

Combined with another 100 new communications-systems jobs, the 400 new engineering positions will bring Mitel's total work force in Kanata to 2,300.

Mitel's expansion is part of the Ottawa area's high-tech expansion surge that's raising concerns over infrastructure strain.

A big part of the area's high-tech growth is coming from Cisco Systems (www.cisco.com), which has a 230-employee Kanata development center. Cisco in February announced plans for five new Kanata facilities housing 2,400 new employees in 600,000 sq. ft. (54,000 sq. m.). Cisco has already broken ground for one facility, and will phase in the other four as business demands.

Two months before Cisco's announcement, JDS Uniphase (www.jdsuniphase.com) unveiled even bigger plans. The fiber-optics giant announced in December that it will add 3,000 new employees by mid-2001 in Nepean, southwest of downtown Ottawa.

Mitel's Mandy is well aware of the growth challenges to area infrastructure. He has called for strengthening infrastructure while advocating regional economic growth as a member of The Ottawa Partnership (www.theottawapartnership.com), a public-private economic development board.

While Mandy said local infrastructure still requires attention, he added that he was encouraged by current developments. The Ottawa Partnership, for example, is preparing its "Plan for Economic Generators," a strategic economic development plan for the region. "Ottawa continues to be an ideal location to expand," Mandy asserted. "There are few places that can match what the city has to offer: strong community support, a sophisticated high-tech workforce, top-notch education, an entrepreneurial business climate, and world-class infrastructure and quality of life."

Area's High-Tech Work Force
Increases by 132 Percent Since '93

Few places, too, can match the region's high-tech growth. The number of advanced-technology jobs in the Ottawa area's private sector increased by 132 percent between 1993 and June of 2000, according to Ottawa-Carleton Employment Surveys and the Ottawa Economic Development Corp. (www.ottawaregion.com).

Similarly, Canada's larger economy is migrating toward high tech. Statistics Canada (www.statcan.ca), for example, projects a 25 percent increase in investment this year by "new economy industries," compared to a 3.3 percent increase in other Canadian business sectors.