Bet your bottom dollar?

85% of Jerusalem's manufacturers have lost revenue due to fluctuating currency.

ran tuttnauer 88 (photo credit: )
ran tuttnauer 88
(photo credit: )
Members of the Israel Manufacturers Association are worried about the fluctuating dollar and its impact on Israeli exporters, IMA Jerusalem district chairman Ran Tuttnauer said at a meeting of the group last week. Industry in Jerusalem will lose NIS 350 million this year, he cautioned, due to the practice of citing prices in dollars. Dollarization became widespread in Israel during the hyperinflation of the 1980s as a means of achieving price stability even as inflation soared to 454 percent in 1984. But with the American currency slipping from NIS 4.90 in January to NIS 3.90 last month and now bouncing back to NIS 4.20 following intervention by the Bank of Israel, manufacturers are experiencing an erosion of profits, he said. Nevertheless, "last year was a very good year for Israeli industry, and in Jerusalem as well, despite the war [in Lebanon]," Tuttnauer said. Fully 85% of manufacturers in the capital have lost revenue due to the shrinking dollar, 6% have halted planned investment, and 6% have not hired additional employees because of the dollar erosion, Tuttnauer said. Citing data from research carried out by the Jerusalem district branch of the IMA, Tuttnauer said 45 factories in the capital are planning to establish a branch plant overseas, 86 local factories have foreign partners, and a further 5% are seeking to introduce an overseas partner. As for the labor force in Jerusalem, Tuttnauer noted an 8% increase in haredim leaving full-time Torah study to earn a living through salaried employment. Today 2,400 haredim are employed in 175 plants across the Jerusalem region - which extends from Mishor Adumim in the east to Beit Shemesh in the west. Tuttnauer called on rabbinic leaders to encourage a 10th of their followers to obtain both a Torah and technological education to enable them to earn a living in hi-tech. Tuttnauer plans to submit a plan for advancing hi-tech in the capital to Jerusalem Affairs Minister Ya'acov Edri. The city faces both an acute shortage of land for further industrial development and a manpower deficit of 300 experienced engineers and manufacturing staff, he said. Tuttnauer called on the government to allocate a further 250 dunams for hi-tech manufacturing in the Jerusalem region. Jerusalem is home to 180 hi-tech companies, employing 12,000 people. Their sales totaled NIS 6.3 billion last year, of which NIS 4.5 billion was export revenue. Ehud Marani, chairman of the IMA's finance committee, called on the government to appoint a full-time finance minister. He cautioned that the collapse of the economy in the Palestine Authority-controlled areas could negatively impact Israel via the back door. For example, 2,000 Palestinian workers enter Jerusalem daily through the Kalandiya checkpoint at the city's north end. A closure order there would severely disrupt the manufacturing, tourism and service sectors, he warned. While industry pays 40% more than the public sector, it would be difficult to attract workers from the center of the country to replace those Palestinian employees because of Jerusalem's high rental costs, Marani said.