Paint production, printing, and flower cultivation are among the largest industries in the Gaza envelope region of Israel. The businesses in the area employ many Israelis and supply products domestically and internationally. When Hamas attacked Israel on Oct. 7, murdering around 1,200, taking more than 240 hostages, and burning buildings to the ground, the businesses of the Gaza envelope were not spared.
The Nirlat paint factory on Kibbutz Nir Oz, just a few miles from the Gaza Strip, was one business burned to the ground that day.
“When you talk about it, it sounds bad, but when you walk there, then you understand what the Holocaust means," Nirlat CEO Omri Lotan told The Media Line.
Despite the terror they experienced on Oct. 7, businesses in the region are moving forward with determination and creativity.
Lotan was not ready to give up on Nirlat, which, with more than 400 employees, is one of Israel’s largest paint producers. “We put it all aside, and within six weeks we are ready to go to market again,” he said.
Hamas targeted the Nirlat factory on Oct 7
Idan Ben-Ari is the CEO of Synergy Cables, a 150-employee global supplier of power cables located in the hard-hit Shaar Hanegev region, near Sderot. After the terror attack, the company began printing the phrases “Made in Sderot” and “am yisrael chai”—Hebrew for “the nation of Israel lives”—on the cables.
The Crystal Dome firm has been in the branding and industrial printing business for 40 years and has had a plant in Sderot for the last 20. CEO Eran Shalish told The Media Line that most of what’s produced by the company’s 50 employees is exported to the US and Europe. In the wake of the attack, Crystal Dome has struggled to get its employees back to work.
All three of these companies were affected by Oct. 7, with Nirlat facing the most direct impact. “We had a big factory, and the factory is gone,” Lotan explained. “We had a distribution center, which is also gone, including all the inventory in it, whether it is raw material or packaging material or products that were supposed to be shipped.”
He noted that terrorists were seen on security cameras playing around the factory before burning it down in an apparently targeted act.
“It was in their plans,” Lotan said. “We know that the army found plans that they had where they said: You have to clean up the Nirlat factory.”
He explained that destroying the factory could be presented by Hamas as a great victory. Framing it as a destroyed chemical factory makes it sound like the group “ruined an army strategic factory,” he said.
Workers of many companies are facing ongoing trauma from the Oct. 7 attack as well.
“Many of my employees saw the animals, saw them from the windows,” Crystal Dome CEO Shalish said. “They came almost to their living rooms, to their balconies. They heard all the gunshots. They were in a nightmare; nobody was there to save them.”
According to Lotan, one of Nirlat’s employees is among the kidnapped. She is believed to be alive, having appeared in one of Hamas’ propaganda videos of abductees during the first days of the war.
“We have other employees with a lot of traumas, or families that are in Nir Oz or other kibbutzim around, which are either murdered or have been taken hostage,” Lotan added.
Region is suffering from lack of foreign workers
Dan Catarivas, senior adviser at the Manufacturers Association of Israel and president of the Israeli Federation of Bi-National Chambers of Commerce and Industry, told The Media Line that the region is also suffering from a lack of workers. Much of the region’s agriculture relied on foreign workers, mainly from Thailand, many of whom were kidnapped, murdered, or injured during the attack. Many others decided to go back to their country after Oct. 7, creating a serious workforce problem, he said.
Other factors limiting the workforce in addition to traumas suffered by workers include the evacuation of citizens from the area.
Shalish said that Crystal Dome is struggling to convince its employees to return to work. “They don't want to come back to Sderot,” he said. “They are very far away. We try to convince, to pay bonuses, to do everything, but they do not want to come back.”
“They made an impossible reality for us, the industry in Sderot, to work,” he said.
Catarivas pointed out that the military reserves call-up has also affected the workforce, with many workers currently serving in the military. Around 360,000 people have been called to reserve duty since the beginning of the war.
As many businesses took time to get back on their feet, some of their international clients started looking for alternatives. “We work so hard to build this market and it is very fast that we are losing it,” Shalish said.
Some foreign clients are skeptical that the companies in the Gaza envelope will be able to deliver according to their contracts due to the war, Shalish said, noting that he has experienced such skepticism himself.
Israel’s Finance Ministry is providing compensation so that businesses can survive in these hard times. CEOs have said that, while helpful, the payments will not be enough to carry them through. They have sought out creative temporary solutions to stay afloat.
Synergy leased houses in nearby towns for its workers and arranged all the logistics for them to be able to continue working, Ben-Ari told The Media Line.
Lotan said that Nirlat has two subcontractors producing two different products for them in the wake of the factory’s destruction. The paint company is also in the process of buying a smaller company to produce another one of its lines. It also rented a large distribution center in Beersheba, an accessible place for its workers.
Nirlat looked outside the box to find an additional solution overseas. “We sent a team, including myself, to Greece, to the market leader in Greece, by the way. They agreed to produce our products, not theirs. They are not dramatically different, but we have our own formulation, under our brand, not their brand, and import it from there,” Lotan said.
'Uncertainty is the mother of creativity'
Shalish said that due to the diminished workforce at Crystal Dome, the few employees they can count on are working around the clock. Even Shalish himself is working on the production line.
Some of these creative solutions are leading to good results.
“Usually the factory works 24/7, 365 days a year, and now we are doing the same,” Ben-Ari said of Synergy, which is currently producing cables for Intel’s new Israeli plant.
These results reflect the general attitude of Israeli businesspeople. “Uncertainty is the mother of creativity,” Catarivas said. “This is what we say in Israel. The start-up nation has been there because we didn’t have any other choice but to use our minds, because we do not have anything other than what is between our right and left ears.”
From a macroeconomic point of view, Catarivas continued, this is a bump in the road that Israel’s economy can overcome. He noted that Israel has over $200 billion in reserves and a debt-to-GDP ratio of around 60%.
The companies from the breached and terrorized border are resolved to return, rebuild, and recover together with the communities that are temporarily hosting them.
“If we move away from there, the border is going to move with us,” Lotan said. “So then it is going to be scary to be in Beersheba. So, we should build, or the country should build secure borders for us.”
“The Israeli government has made a very strong commitment to destroy the infrastructure of Hamas, not to let the Gaza Strip become an area that could endanger the adjacent villages for the Gaza Strip or the people around the Gaza Strip,” Catarivas said.
Shalish expressed his sense that the survival of Crystal Dome is crucial for the survival of Sderot. Its existence ensures that the residents of Sderot will have a place to work when they return to the city, he said.
“This is why we are working 24/7, very few people: to save the business, to save the future of Sderot,” he said. “It is part of our strength, while they kill, we build.”
"Resilience is the name of the game,” Catarivas said. “We are going back, and we’re going to go back so those places continue to grow over there, rebuild the villages, the kibbutzim, and continue to make the industry function.”