Israel’s Economic Scene: an Uncertain Future for Two Major Enterprises

The Zim Lines, Israel’s worldwide shipping company owned jointly by the government and the financially troubled Eisenberg industrial conglomorate, has been added to the list of major Israeli enterprises with an uncertain future.

Although Zim, which owns or charters 100 oceangoing vessels and has some 2,000 employes ashore and afloat is said to be basically sound, it is short of working capital. Because of the prolonged world-wide shipping slump, Zim finds it difficult to raise capital.

But economists stress that the company’s troubles are not immediate. While its long term debts amount to about $510 million, its short term obligations total only about $40 million, lower than last year, a sum that can be managed with a year of good earnings.

DESPERATE CONDITION OF HAIFA SHIPYARDS

Far more desperate is the condition of the government-owned Haifa Shipyards whose orders have dwindled to a point where it may have to lay-off half of its 800-member work force.

The yards have already agreed to reduce its payroll by arranging early retirement for veteran employes and some dismissals. The Haifa Labor Council and the shipyard workers committee are pressing the government to place new orders for naval vessels.

The shipyards were hard hit recently when the Defense Ministry cancelled orders for two large landing craft for the navy. This followed cancellations by commercial shipowners and the order books are down to two tugboats for the Israel Ports Authority.

Spokesmen for the shipyard said that if new orders sufficient to keep it busy for the next 2-3 years are not forthcoming, there will have to be large scale dismissals. The yards will be reduced to repair and maintenance work that will require no more than 350 employes.

PROBLEMS FACING ZIM AND ATA TEXTILE COMBINE

The problems of the Zim Lines, on the other hand, are linked to the downfall of the giant Ata textile combine, a much larger enterprise in terms of employes, which is part of the Eisenberg group. Ata, the largest single employer in the Haifa area, has been, for several months, in the hands of a government receiver who is seeking to find a suitable buyer.

If none materializes within the next month, Ata will be declared bankrupt. It survives today only because a Haifa district court, which had ordered the mills shut down on December 31, granted a 30-day reprieve at the 11th hours.

Both Ata and Zim are heavily in debt to local banks and should either or both go under, the banks would suffer a major blow as would Israel’s already staggering economy. Observers pointed out that Zim, though not itself in crisis, could be pulled under by the collapse of Ata.

The shipping company is a major earner of hard currency for Israel. In addition to carrying the bulk of freights to and from Israel, its fleet of container ships, one of the largest in the world, maintains a wide range of services between non-Israeli ports.

Concern for the future of Ata, the shipyards and the Zim Lines is growing in Haifa. It was announced today that unemployment has risen by 15 percent in that port city. There are now 6,600 jobless workers registered at the labor exchange searching for new jobs.