Old World Barn: Cisco Gets Set to Open Manufacturing Plant

Shifting to optical networking products is a do-or-die proposition for New Economy powerhouse Cisco(CSCO Quote). Now, to make sure it can provide the right stuff for the next phase in network building, it's reaching back into the Old Economy to get a grip on its future: It's getting ready to manufacture its own optical gear in a massive plant one hour north of Boston that was once used by Digital Equipment Corp.

The plant will be Cisco's largest manufacturing facility -- a 674,000 square-foot facility that should be up and running by year-end. And, while it's a logical response for a company that needs to catch up in a hurry, it represents a dramatic strategic shift for Cisco. A vaunted near-virtual corporation, the data-networking equipment leader has often boasted about its ability to outsource much of its manufacturing and its skill at buying, rather than building, the cutting-edge technology it needs.

That strategy has created rapid growth and healthy margins. But it hasn't been enough to keep Cisco ahead in the new field of optical products, where such rivals as Nortel(NT Quote), Lucent(LU Quote), Corning(GLW Quote) and Ciena(CIEN Quote) have raced ahead. ...