Polgat to shut Kiryat Gat factory

This marks another blow to the local textile industry, which has been hard hit by the continued weakness of the US dollar.

sewing 88 224 (photo credit: Ariel Jerozolimski)
sewing 88 224
(photo credit: Ariel Jerozolimski)
Polgat Textiles Ltd., Kiryat Gat's oldest factory, is to close down next month. It marks another blow to the local textile industry, which has been hard hit by the continued weakness of the US dollar and the rise in energy prices. "The weakness of the dollar, competition from the Far East and the rise in energy and wool prices are the conditions under which the production of wool fabrics in Israel is not worthwhile," Polgat CEO Yossi Danziger said Sunday. "The bulk of our orders of about NIS 3 million will last for production until the middle of April." The continued weakening of the US dollar against the shekel had harshly damaged Polgat's revenues, he said, because 90 percent of the company's sales revenues were dollar-denominated. Polgat Textiles, which was established in 1961, creates worsted wool fabrics from the thread to the finished material. "Wool prices, the main raw material of Polgat Textiles, rose by 40% last year, while oil prices leaped to $100 a barrel," Danziger said. "These extreme changes forced the company to raise the price of products that were not competitive with the rest of the market, which produces in cheaper countries such as China." Due to the rise in prices, a significant number of clients had stopped ordering from Polgat, he said. Among Polgat's customers were high-fashion designer Calvin Klein, which accounted for 20% of sales last year, and Gap, with 30% of sales, Danziger said. But this year the two companies did not renew their orders, he said, preferring to buy in the Far East. The 300 employees at the Kiryat Gat factory have been promised they will receive compensation of up to 175%, depending on their position and seniority, according to the terms of a collective bargaining agreement 18 months years ago, Danziger said. They will receive all social entitlements, such as recuperation and holidays, he said. Last week, the Manufacturers Association of Israel reported that 25 of the largest textile factories in Israel have transferred parts of their production activity to the Far East, Eastern Europe, Jordan, Egypt and other countries as the continued weakness of the dollar and rising production costs have hurt profits. "Our forecast that the dollar slump will hurt workers in the periphery is unfortunately starting to show its first signs," Histadrut chairman Ofer Eini said. "I call upon the government to assist factories in their plight, in particular those in the periphery, to avert the recurrence of such incidents."