Cutting tools sector grows faster than hi-tech but lacks skilled staff

From the beginning of the 1990s to date, the cutting tools and whetting industry has grown by 300%, on average.

isscar facility 88 298 (photo credit: Courtesy Photo)
isscar facility 88 298
(photo credit: Courtesy Photo)
Although the cutting tools and whetting industry in Israel has been growing at an annual average rate of 20 percent - faster than the average growth rate in the hi-tech industry - the business, which grabbed the spotlight last month after Iscar Ltd. agreed to a buyout by Warren Buffett's Berkshire Hathaway, is facing a shortage of skilled technical staff. From the beginning of the 1990s to date, the industry has grown by 300 percent, on average. Yet, despite the high growth rate, Yair Weinberger chairman of the Metal and Electrical Industries' Association, which is part of the Manufacturers Association of Israel, said the government was not investing in education of the next generation of skilled staff and that technological infrastructure was missing in the cutting tools industry. Furthermore, only recently, relevant specializations in technical colleges and academic institutions were cancelled. Weinberger who is also President of Elektrotherm added that the average age of workers in the cutting tools industry was between 45 and 50 years old. Apart from Iscar, the leader in the cutting tools industry, there are an additional nine Israeli cutting and whetting tools companies, which, according to Weinberger, suffer from a shortage of 100 skilled workers mainly metalworking engineers and technicians. As a result of this shortage, Weinberger said experts in the field are being imported from the Commonwealth of Independent States. Of the nine local companies, six are located in the Upper Galilee exporting a total of $480 million annually, mainly to the U.S. and Western Europe as well as to Japan, China and East Asia. Exports, not including Iscar, which grew by 17% from last year, are expected to increase by between 17% and 20% to $565m. Cutting tools sales to the local market counting the nine companies grew by 14% in 2005 to NIS 600m. and are expected to increase by 15% generating NIS 685m. in sales in 2006. The nine local companies currently employ some 1,500 to 2,000 workers in their factories earning an average salary of NIS 11,000.