If current trends continue, no new factories will open in Israel by 2020, the Manufacturers Association of Israel warned Monday, ahead of its annual conference.
“If the trend of factory openings and closings continues at the rate of the last four years, from 2020 no new factories will open in Israel,” Manufacturers Association president Zvi Oren said.
Every year, 40 factories close, each comprising some 20 jobs, he said. At that rate, by 2020, the proportion of Israeli companies with operations overseas will jump from the current 27 percent to 46%. That would result in 63,000 lost jobs, 21,000 directly lost from the manufacturers and 42,000 more indirectly, he added.
The lobby group recommended that the government avert the disaster by adopting a program to increase the share of manufacturing in the economy through setting goals of increasing productivity, manufacturing growth and factory openings.
The program included policies from a well-worn wish list that has both realistic goals such as providing export aid, increasing investments and cutting red tape, and less-feasible ones such as lowering government-controlled input prices and pushing the Bank of Israel to restore the shekel-to-dollar exchange rate to 3.8.
When Finance Minister Yair Lapid and Economy Minister Naftali Bennett recently announced export aid, the Manufacturers Association scoffed that it was not enough to counter the effects of the strong currency.
Although the Bank of Israel lowered its interest rate to 0.75% on Monday, which will help moderate the shekel’s strengthening, the shekel, currently hovering around 3.5 to the dollar, has not been worth 3.8 for some 14 months.
Merrill Lynch estimated that the central bank would have to spend about $1 billion in foreign-currency interventions just to keep the shekel from further appreciating.
Lapid, Bennett and Prime Minister Binyamin Netanyahu are each slated to address the Manufacturers Association later this week.