Credit crunch squeezes factories

70% of 1,400 small- and medium-sized factories struggle to survive.

February 26, 2009 07:22
2 minute read.
Credit crunch squeezes factories

bagir factory 224.88. (photo credit: Courtesy)


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Seven out of 10 small- and medium-sized factories are struggling to survive as a result of the credit crunch, according to the Israel Manufacturers Association. "We are talking about 1,400 small- and medium-sized factories employing between 20 to 100 workers," Oren Harambam, head of the association's business economics division, said Wednesday. According to the association's estimate, a credit shortage of NIS 700 million was causing the factories problems, Harambam said. "If the credit was available to small- and medium-sized factories, it would minimize the wave of layoffs and collapse of factories, while helping hundreds of factories to overcome this crisis in better shape," he said. Harambam said the association would hold a special meeting on Monday in Tel Aviv that will focus on financing solutions for small- and medium-sized factories. According to the association, 17 factories were closed or broken up in 2008, including six in hi-tech, five in the textile industry and two in the chemicals and pharmaceuticals sector. Some 2,000 factories are members of the association. On Tuesday, Vita Pri-Hagalil, the Hatzor Haglilit food company facing the threat of liquidation, was granted a temporary reprieve of a week by the Haifa District Court. The court ordered all proceedings to be frozen until March 1 in an attempt to prevent the factory's closure. The court will reconvene on March 5 to see if an alternative solution has been found. "The Vita Pri-Hagalil fruit plant in Hatzor Haglilit is not the only one," Histadrut chairman Ofer Eini told Army Radio on Wednesday. "I cannot give names, but there are other factories in the periphery that are on the verge of economic collapse and mass layoffs. It's no longer just about the Vita Pri-Hagalil factory; it's a national issue about factories in towns in the periphery." The Histadrut was in talks with factories at risk of collapse, Eini said. "The government has a moral duty," he said. "The situation of employees in the periphery must be taken care of. The workers are the only ones paying the price. I call upon the finance minister and the prime minister to do everything necessary to avert the closure of factories. This is a national issue; if the factory shuts tomorrow, the workers have no alternative." Eini is scheduled to meet with Prime Minister-designate Binyamin Netanyahu on Thursday in Tel Aviv. Netanyahu has promised to develop a plan to avert the closure of factories under threat in the periphery.

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