Industrial companies and factories are instituting sweeping cost-cutting and efficiency measures in preparation of a slowdown in the growth rate of the economy, according to Pinchas Kimmelman, chairman of the Forum of Financial Officers at the Manufacturers Association of Israel and deputy general manager of Osem Investments. A survey conducted by the association among financial officers in industrial companies and factories showed that 60 percent of the respondents are already taking efficiency measures, about 44% are in the process of cutting management costs and general expenditure, 36% are reducing head count and about 36% said they were cutting inventories. The survey found that in recent months 30% of the factories decided to cancel or postpone 40% of the volume of their planned investments, Kimmelman said. Last week, Bank of Israel Governor Stanley Fischer warned that the slowdown in the rate of manufacturing growth in the March-May period was the first "serious signal" that economic expansion is beginning to ease. Industrial production rose an annual 6.8% in the three-month period, slowing from 11.9% in the December- February period, according to figures released by the Central Bureau of Statistics. The index of leading economic indicators fell 0.3% in June, the first drop in more than three years, the central bank said last Sunday, indicating a slowdown in the economy. Local industrial companies and factories, who generate the majority of their revenues from exports, are feeling the pains of a weak dollar, rising commodity prices and the repercussions of the US subprime mortgage crisis. In terms of local industry's exposure to the US credit crisis, the survey found that 7.5% of industrial factories were affected by the crisis in terms of their financing. Kimmelman said one of the reasons for the relatively low number of factories affected by the crisis was that many decided to lower their investments. "Lower investments demand lower financing," he said. Sixty-nine percent of financial officers said the most worrying factor weighing on company activity was the increase in the price of raw materials, not including fuel, 67% said it was the continued weakness of the US currency against the shekel, 37% cited spiraling fuel prices and 33% said it was lower demand for exports. About 53% of the respondents believe the government needs to take affirmative steps to help industry, such as lowering direct taxes, 45% believe the government should assist industry by supporting exporters in marketing their goods abroad and 33% said the government should invest in infrastructure.