(photo credit: Ariel Jerozolimski)
Local industry is in a deep recession that will lead to 14,000 layoffs this year, Manufacturers Association of Israel president Shraga Brosh said Thursday. He placed much of the blame on Finance Minister Ronnie Bar-On, who he said was one of the biggest failures of the government.
"It is incredible that in a situation of a recession in industry, Bar-On is saying that the policy of governmental noninterference has proven itself," Brosh said at a press conference in Tel Aviv before the association's annual meeting. "Bar-On's policy of noninterference will cost us billions, and at the end we will get the bill."
"Bar-On is one of biggest failures of this government and one of the worst finance ministers that the State of Israel has seen," he said.
Citing an annual survey of local industry, Brosh said it had fallen into a deep recession, forcing the industrial sector to lay off 6,000 workers across all sectors since the second quarter of 2008.
"We are not yet officially in a recession, which is defined by two consecutive quarters of negative growth," he said. "But our figures show that there was no growth in the fourth quarter of last year, and there is no growth this quarter."
The association expects 14,000 layoffs this year, reducing the industrial workforce by 4 percent, from 362,000 employees in 2008 to 348,000 in 2009. In the economy as a whole, 65,000 jobs will be lost this year, according to the survey.
"We have been hearing that Israel is in a relatively good position to weather the global economic situation," Brosh said. "But this is not true for industry. Prior to the outbreak of the crisis, industry was already hit hard by sharp devaluation of the dollar against the shekel stretching over the course of the past two years, hurting profits and exporters' competitiveness."
Last year, local industry grew by 6%, of which 70% was generated by the chemicals sector, while growth in other sectors experienced a slowdown. Industrial exports grew 7%-8% to $40.1 billion.
Following five years of growth, exports are expected to decline by 2.5%-3% in 2009, mainly due to the start of export activity from the new Intel factory in Kiryat Gat, Brosh said. Neutralizing the effect of Intel, exports are expected to fall by 6% in real terms this year, he said, while industrial output level is estimated to fall by 5%.
Leading industrialists speaking at the press conference called upon the government to accelerate investment into infrastructure projects and increase the volume of loans to factories in an effort to ease the credit crisis and avert further layoffs.
"There is a dire need for investment into infrastructure," said Moshe Cohen, chairman of the Metal Industries Association. "There are factories, and in particular metal factories, on the brink of a crisis situation having to weigh up what choice is cheaper: closure or continuing to operate making losses."
Elisha Yanai, CEO of Motorola Israel, called upon Bank of Israel Governor Stanley Fischer to improve the shekel-dollar exchange rate.
"The governor should intervene in the shekel-dollar exchange rate and fix the rate at NIS 4.6, which in turn would secure us with billions of shekels of revenues a year, without having to negotiate with Bar-On or anyone else," he said. "I understand the officials in the Finance Ministry's budget division. I don't understand why they are being attacked. They are in a panic and they have no control over the current situation. Just leave them alone."
Speaking at the association's annual meeting, Likud chairman Binyamin Netanyahu laid out his economic program to cope with the crisis. He unveiled a tax-cutting plan and other measures, which he promised to implement if he wins the upcoming election.
"Over the period of four years, we will lower the personal tax rates from the current 46% to a level of 35%, and we will lower corporate taxes from 27% to only 18%," Netanyahu said. "We will significantly increase the chief scientist's budget to secure proper training of scientists and engineers in the area of hi-tech and attract hi-tech professionals from abroad."