A legacy high-technology business in the Pittsburgh area that once employed nearly 2,000 workers will fade from existence by midsummer, as the Swedish telecommunications company Ericsson Inc. closes its plant in Marshall.
About 250 Ericsson workers learned about 10:30 a.m. Thursday that the plant in the Thorn Hill Industrial Park will close by the end of 2009. Most are hardware and software engineers, plus other staff that work in supply, sourcing and customer support services.
Ericsson's predecessors at the plant were Marconi Corp. and before that, Internet switching equipment maker Fore Systems Inc.
The world's largest maker of wireless networks, Ericsson is closing the facility as part of an ongoing consolidation, spokeswoman Colleen Rosander said.
Work done now at the Marshall plant will move to other, as yet undetermined locations, she said. The company has 70,000 employees in 175 countries, and its two major U.S. plants are a marketing facility in Plano, Texas, and a research and development center in San Jose, staffed mostly with workers from recently acquired companies.
The shutdown in Marshall will begin in February and be mostly complete by midsummer with a small staff remaining until year's end.
Employees will be offered a severance package with outplacement help, Rosander said, but relocation opportunities may be offered to some workers.
Meanwhile, Hans Vestberg, Ericsson's chief financial officer, told an audience yesterday at a Morgan Stanley conference in Spain that the company sees "flat" demand for its wireless networks next year.
With its three generations of high-tech occupants, the distinctive Ericsson complex that looks like a group of tilted blocks once was a symbol of high-tech growth in the region.
Four Carnegie Mellon University computer scientists -- Francois Bitz, Onat Menzilcioglu, Robert Sansom and Eric Cooper -- founded Fore Systems in the early 1990s, using their first initials to create the name.
"Fore Systems in some ways was our first really large university-related success story," said Donald Smith, director of economic development for CMU and the University of Pittsburgh.
In its early years, "it was acquiring other companies and rolling them into Pittsburgh, which is part of how they grew so quickly and built such a large company."
Ericsson's phaseout is disappointing, Smith said, but talented people there will make their way to other companies in the region and to startups. "It's also important to remember that Fore spawned a whole generation of other startup companies in the region," such as Co-Manage, Laurel Networks and Spinnaker Networks, he added.
Around the peak of the dot-com bubble, London-based General Electric PLC bought Fore Systems for $4.5 billion to complement its Marconi Communications business and boost its presence in North America.
Marconi struggled in later years, and its local work force shrunk to 500 from a peak of almost 2,000. It had financial troubles, and it later relaunched as Marconi Corp. with creditors receiving almost all the new company's shares.
Ericsson bought out most of Marconi's business units in 2005 for $2.1 billion, including the Marshall division.
Ericsson further cut the work force, and nearly two months ago it sold the local property to a private equity company, Keystone Property Group of Bala Cynwyd, with plans to lease 180,000 square feet.
H.J. Heinz Co.'s Global Innovation & Quality Center and other companies occupy part of the complex.
Michael Langley, CEO of the Allegheny Conference on Community Development, said while Ericsson is closing, Pittsburgh at times gains from consolidations of other companies elsewhere -- such as Lanxess' plans to consolidate its Canadian and U.S. services here.
"It is important to keep in mind that the information technology and research and development sectors of our regional economy remain strong," he said.
Bruce Haney, chief financial officer at Fore Systems from 1998 to 2000, was sad to hear about the demise of what once was a forward-looking company here. Haney previously worked at the Gustine Co., which developed the Marshall complex.
"My short tenure there was probably the highlight of my business career. The energy that came out of those buildings and the people in them was very, very rare," said Haney, managing partner of O'Hara-based Echo Development.
Tech firm's timeline1980s: Carnegie Mellon University students create a Squirrel Hill startup to work on a switch and network interface that uses asynchronous transfer mode, or ATM, technology.
1990-91: Fore Systems is incorporated, obtains Naval Research Laboratory funding to design ATM switches that move packets of information over a computer network at high speed.
1994: The company ships its 10,000th ATM switch port, starts trading on the Nasdaq stock market.
1999: General Electric PLC of London buys Fore Systems Inc. for $4.5 billion, renames itself Marconi. It employs nearly 2,000 here at the height of the dot-com era.
2006: After several restructurings that pare jobs to about 500, Marconi's Data Networks division becomes part of Ericsson AB. Ericsson acquires Marconi for $2.1 billion to gain a foothold in the broadband equipment sector.
2008: Ericsson sells the Marshall building to a private equity firm, announces it will close by the end of 2009.
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