Jerusalem (Nov. 4)
Arab Boycott Cited As Major Reason
The Israel subsidiary of the British Leyland Motors Corporation, which went into receivership yesterday, may have been abandoned because of pressure from Arab countries, some commentators said today. Since establishing its assembly plant in Israel, Leyland had been on the Arab boycott list. But sales in the Arab world had been small anyway, and Israel buys sophisticated automobiles in greater quantity than all the Arab countries combined.
Observers noted that since the British firm owned 20 percent of the shares of the Israeli plant and controlled 45, the additional 6 percent needed for majority control should have been easy to obtain, considering that the government and the creditors were willing to underwrite loans.
Political motives are thus being cited by commentators–and, privately, by government officials–as the explanation for yesterday’s decision. Another explanation being offered is that British Leyland did not believe its cars could compete on the open market; the government is gradually reducing the tariff protection granted to locally assembled cars, which in the near future will have to be sold on their merits instead of on their inexpensiveness.
1,500 WORKERS GIVEN LEAVE
Despite the development, the directors general of the Transportation and Commerce-and-Industry Ministries expressed the belief that the plants in question–in Haifa and Ashdod–can be reactivated. They said some of the debts could be paid off if more efficient methods were introduced and superfluous expenditures eliminated.
The three plants were closed this morning to allow for inventories by the three receivers–two accountants and a lawyer–appointed yesterday on behalf of the creditors by a district court. The more than 1,500 workers were given a week’s leave following which decisions will be made on how many to reemploy. Histadrut, Israel’s labor federation, demanded that there be no dismissals while the receivers try to reactivate the plants, as is their apparent intention.
British Leyland has a monopoly on truck-selling in Israel that will be in force for another year. That part of its operations is said to be profitable. But the car-assembly operation, which produces the Triumph 1300 and 1500, became almost idle two years ago when locally assembled Ford Escorts appeared on the market and became overwhelmingly preferred by Israeli consumers. Leyland’s debts run to more than IL 40 million ($9.8 million) on annual sales of IL 180 million ($42.9 million).
A representative of British Leyland, Jack Plane, left Israel yesterday after informing the government and the creditors that Leyland could not provide IL 5 million ($1.2 million) for working capital and buy a controlling interest, as the creditors–five banks–and the government have demanded. The subsidiary is controlled by Itzhak Shubinsky, its managing director. Shubinsky, a 57-year-old native of Poland, holds 55 percent of the shares, and is also active in food and shipping.