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Lucent was created in 1994 as part of AT&T’s tri-vestiture. This case focuses on the dilemma faced by a new company that inherited a labor-management consultation structure developed by AT&T, a structure that has broken down in many respects, and that does not seem adequate to the challenges of the new company in a new and highly competitive market. Given the need to compete with companies that out-source much of their work to relatively low-cost companies, it is especially in the area of labor relations with the Communications Workers and the International Brotherhood of Electrical Workers, the unions representing Lucent’s hourly workers, mostly in manufacturing, that Lucent faces difficult challenges. While the company’s relations with its professional, technical and managerial workers is quite good, technological changes in the industry, and the need to invest in R&D – rather than manufacturing capacity – put further pressures on already strained labor-relations. Among other things, the company and the unions face the daunting challenge of finding new structures for consultation and representation, as well as new ways of training and retraining workers to keep up with rapid and ongoing technological changes.