500 more businesses at risk to close

Problems in North could have domino effect on overall environment.

By SHARON WROBEL
August 17, 2006 07:34
2 minute read.
going out of business 88

going out of business 88. (photo credit: )

 
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Business Data Israel warned on Wednesday that the risk level of businesses on the brink of collapse was expected to grow over the next few months due to the war, while already in July an additional 500 companies were at risk of closure. Although, the level of risk in the economy as a whole rose modestly during the month of July to 5.86 from 5.81 in the previous month, BDI expects the repercussions of the war to weigh more heavily on the risk level of the majority of the business sector in the coming few months. A special survey on the impact of war conducted by BDI, found that a significant proportion of businesses and companies across various sectors are located in the area of Haifa and further north, of which the majority were closed over the past month. Economists at BDI warned that this situation would heighten the risk level of the businesses themselves as well as the business environment overall - similar to a domino affect. Already during the month of July, the research showed, that the risk level of businesses in the tourism and hotel sector, which is expected to be one of the groups hardest hit by the war, rose from 6.18 in June to 6.30 in July. The risk level of the agricultural industry, which is directly affected by the conflict in the North, experienced a 3.8% increase in July to 6.49 from 6.26 in the previous month and was expected to rise further over the next few months. Still, the overall figures for July showed that the situation of many businesses and companies was good compared with the same period last year, when the risk level stood at 6.09 on a scale from 1 to 10. The number of companies at high risk of closing their doors rose from 44,300 in June to 44,800 in July. About 14 percent of businesses in Israel were ranked by the BDI risk index to be at a particularly high risk. According to the latest survey by the Manufacturers Association of Israel, about 48% of the 30 factories reviewed in Haifa and the North suffered from a lack of new orders during the conflict period, while 21% had to handle cancellations of orders. The Manufacturers' survey included factories within the food, textile, hi-tech, chemical and construction and building tools industries. Meanwhile, the Association found that 19% of the factories exceeded their bank credit framework, while 24% of the factories moved part of their activities into the center of the country. Furthermore, about 72% of the factories reported that the country's banks were indifferent to their situation, while 20% said they had received assistance from their banks. Seven percent said they experienced problems with their banks. Eli Yishai, Minister of Industry, Trade and Labor has ordered the divisions and bodies of his ministry to give priority to assisting the rehabilitation of the North on the day after the war. The division for small businesses, for instance, is planning to establish a loan fund for small businesses to fund returned capital. Yishai also named MK Ehud Yatom to help in the campaign to bring the North back to normal and map out the needs and immediate problems that have arisen because of the war, while also offering solutions, in particular for small businesses.

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