Tellabs leaving manufacturing with plant sale

Naperville-based Tellabs Inc. sold its last plant, leaving behind its 28-year history of manufacturing and relying on outsourcing companies to make its telecom infrastructure equipment.

“We are exiting the manufacturing part of our business to focus on research and development and customer relationships and services,” said Tellabs spokesman George Stenitzer. “We want to get to the right size so we can again grow profitably.”

Tellabs said Friday that Helsinki, Finland-based Elcoteq Network Corp., Europe’s largest contract electronics manufacturing company, will buy Tellabs’ manufacturing operations in Espoo, Finland, for an undisclosed amount. Elcoteq also will make telecom products for Tellabs.

Two hundred Tellabs plant workers and 100 Tellabs research and development workers will move over to Elcoteq. Tellabs will have 3,150 employees left, including 1,400 in the Chicago area, after the deal, which needs European Union approval.

Tellabs will still own the building in Espoo and will lease it to Elcoteq.

Stenitzer said Tellabs is reducing its international research and development.

As a result of the telecom recession, Tellabs has been downsizing over the last two years. Steve Levy, managing director of wireline equipment research at Lehman Brothers in New York, said Tellabs had telegraphed its move away from manufacturing back in August. He said the company’s move to outsourcing lagged behind competitors, such as Nortel Networks and Lucent.

“This was an operational decision to reduce costs and not get tied up with inventory. All telecom companies have moved to outscourcing. Tellabs is positioning itself to get back to profitability,” he said.

Tellabs last month closed its last remaining United States plant, in Bolingbrook.

Elcoteq has said the acquisition is worth more than $100 million in revenue a year.

The Espoo plant made advanced equipment to carry data for telecom companies in Europe, Asia and Latin America and also equipment used to connect landline and wireless companies to their business customers.

More than one-third of Tellabs’ revenue comes from its international operations.

Tellabs shares closed Friday at $8.15, down 25 cents.