More than 5,000 workers are expected to lose their jobs during the next few months as reorganizations and belt-tightening measures are implemented to save some of Israel’s major in descries from financial collapse.
That figure was estimated by government officials, economic and financial experts who are mounting a rescue operation for Histadrut-owned and other publicly held enterprises saddled with massive debts and severe losses.
The bad news compounded a report released by the Central Bureau of Statistics Monday that nearly 100,000 Israelis are presently unemployed, representing 6.7 percent of the work force. Unemployment rose by 16 percent in 1985, the report said.
The industries affected are bellwethers of the Israeli economy, ranging from hi-tech to globe-girdling shipping services. Prominent among them are Kupat Holim, the Histadrut sick-fund; Solel Boneh, the Histadrutowned construction company which is the largest in Israel; the Elscint Medical Imaging Co., which manufactures sophisticated diagnostic equipment; the Zim Israel Navigation Co., the Vulkan Foundries in Haifa; and the Beth Shemesh engine works. The rescue operations are expected to give the banks a larger say in running the firms and in the public bodies concerned. They will involve substantial reductions of the labor force in every case. An important feature of the plan is to convert indebtedness into stock shares. The government is also expected to approve bond issues to finance the rescheduling of short term debts.
PERES TAKES A PERSONAL HAND IN HI-TECH INDUSTRIES
Premier Shimon Peres, a firm believer in the development of hi-tech industries, has taken a personal hand in working out a rescue package for Elscint, which generates some $10 million in exports each month.
The company, which only a year ago was being hailed as a model of its kind, is $80 million in debt to commercial banks. About $50 million in short term loans will be rescheduled to four-year loans. A management shake-up, the closure or sale of some of its subsidiary plants in Israel and abroad, and new investments by the parent company are elements of the package.
The Kupat Holim recovery plan also involves the rescheduling of debts, which are said to have grown from about $20 million to more than $200 million a year because of high interest rates and delays in the payment of government subsidies. Some of its assets will be sold. Staff will be cut and subscriber fees will be raised.
SOLEL BONEH GIVEN AUSTERITY BLUEPRINT
A joint Finance Ministry-Histadrut committee has given Solel Boneh an austerity blueprint which requires it to dismiss one-third of its 10,000 employes. There will be 2,200 lay-offs in the next six months and another 1,000 by mid-1987. The 3,200 dismissed employes will get part of their severance pay in the form of company bands.
Solel Boneh was also told to halve the size of its Board of Governors, increase its capital, divest it self of money-losing units and pledge shares of its Shikun Ovdim housing company as additional collatoral for bank loans. Solel Boneh is the pre-eminent builder in Israel and has undertaken extensive construction projects abroad.
According to the joint committee, some of its troubles are attributed to a policy of launching projects to provide work for its various units rather than on the basis of their profitability.
ZIM LINES IS HEAVILY IN DEBT
The Haifa-based Zim Lines, which operates one of the world’s largest container fleets under single ownership, is $456 million in debt. The Israel Corporation informed the Securities Authority Tuesday that it will transfer its 50 percent holding in the Zim company to the government which already holds 40 percent of the shares. The balance is held by Histadrut, one of the founding partners of Zim in 1945.
The Israel Corporation, which channels overseas Jewish capital into investments in Israeli enterprises, was founded by Jewish industrialists and businessmen from the U.S. and other countries who attended the Economic Conference in Jerusalem in April, 1968. They acted on the initiative of the then-Premier Levi Eshkol. Its initial investment was the acquisition of 50 percent of Zim Lines shares in 1970. These are about to revert to the government which is expected to seek a buyer as speedily as possible.
Zim lost $45 million in 1984. The 1985 balance sheet is expected to show a small profit or, at least, break even.
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