Industry minister urges government to help exporters in dollar crisis

One in three restaurants is in danger of immediate closure.

restaurant 88 248 (photo credit: Ariel Jerozolimski)
restaurant 88 248
(photo credit: Ariel Jerozolimski)
Industry, Trade and Labor Minister Binyamin Ben-Eliezer on Wednesday urged the government to prepare emergency measures to help exporters, avert further layoffs as the value of the shekel vis-a-vis the dollar continues to rise. "On Sunday I will raise the issue to the cabinet to call the government to prepare emergency steps in case the depreciation of the dollar continues much further. I am aware that alternative solutions for intervention, should they become necessary, are problematic, but we should be prepared for the worst," said Ben-Eliezer. "At the same time my ministry will suggest a basket of immediate solutions mainly to reduce exporters costs." Since April, when the dollar exchange rate stood at NIS 4.26, the greenback has continued to fall, dropping below NIS 3.80 this week. The appeal came after Ben-Eliezer on Wednesday convened an emergency meeting with senior officials at the ministry's office, including Boaz Hirsch, head of foreign trade, Hezi Zeig, head of the Investment Center, Benny Pfefferman, head of the economic research division and Mordechai Shmuel, head of the diamond division. In the first five months of the year, exports of goods plunged 32 percent and industrial exports dropped 34%. Industrial exports not including diamonds fell 26%. "The problem starts and ends with jobs," said Ben-Eliezer. "My concern is that exporters forced to bring costs down will cut jobs." Economists at business information company Dun & Bradstreet Israel said Wednesday that most recent data on the risk-level of the business sector found that since the beginning of the economic crisis, almost all of the hi-tech companies reduced head count, leading to 7,000 lay-offs in the industry. "One of the main export sectors and growth engines of the economy, the hi-tech sector is getting hit twice," said D&B Israel economists. "The global downturn in demand is hurting export volumes and the devaluation of the dollar is damaging revenues from exports. There is still a real threat to the survival of some of the exporters in the economy and top of the list are hi-tech exporters." One in three restaurants and pubs is in danger of immediate closure, dampening prospects of a recovery in the near future, following positive economic data, D&B Israel said in the report. "We are possibly past the panic this crisis has created, but it is too early to talk about a recovery in the economy when 65,000 businesses are still under threat of closure," said Reuven Kovent, CEO of D&B Israel. He added that data from the first six months of the year showed that the restaurant and pub sector was the riskiest in Israel, as 29% of the businesses were in danger of immediate closure. Food shops are in second place, as 26.7% are under threat of immediate closure. As food businesses are struggling for financial survival, only one in three deals is being paid for on time, according to the survey. The D&B Israel figures on the average business risk level in the economy as a whole showed a modest slowdown in the proportion of businesses at very high risk, which stood at 14.2%, compared with 15% at the beginning of the year. "However, today the percentage of high-risk businesses is still high compared with the 12.8% in the same period last year," said D&B Israel economists. Kovent added that starting with the outbreak of the crisis last year, until the first quarter of 2009, the majority of companies switched to crisis management and to work force reduction encompassing all areas. "Since May we are seeing a slow 'release of budgets.' The data we are presenting do not point to a change in the trend at this moment," said Kovent. "What we are seeing is a move away from 'crisis panic' to more rational management."