Kibbutz export growth now in doubt [pg. 18]

If kibbutz industry exports had continued to develop as they were on the eve of Hizbullah's attacks, they would certainly have grown 6 percent to 7% in the third quarter against the same period last year, estimated Kibbutz Industry Association export director Amos Shalev. "In light of the situation, we can no longer say that for sure," Shalev said. "If the situation continues for another week or two, it is clear that we'll have to update the forecast. But to date, there has been great optimism that the damage to factories' exports in the second half of the year would be minimal." Although the indirect damage has been slow to show up in the businesses' accounting ledgers for now, greater damage could occur in less visible ways, Shalev said. "With destruction of property, the amount is known, but when a client is lost, there is no compensation and we don't know how to quantify the extent of the damage," he said. Though some factories have decided to take the relatively expensive step of sending their goods by air - which could cost up to ten times marine shipment - others are having to consider moving at least part of their production abroad to satisfy clients and keep supplies running. Kibbutz factories providing industry abroad with components - such as the auto industry - must be particularly sensitive to clients' concerns, Shalev added. Kibbutz industry exports in the first half of the year totalled $1.2 billion, or 5.2% above the same period of 2005. A 12.9% surge in exports in the second quarter accounted for the bulk of the growth. Some factories' profits, however, were hurt by the dollar's devaluation in the first six months of the year, and rising prices of raw materials.