Conflict between the Alliance Tire and Rubber Co. of Israel, a “collective” tire factory of which Histadrut is 50 percent owner, and the General Tire and Rubber Co. of Israel, a “capitalist” tire factory of which the Palestine Economic Corporation is majority stock owner, “proves that orderly development of foreign investment can get badly balled up – even in a nation that welcomes outside capital with open arms,” the current issue of Business Week, prominent business organ, reports.
The article declares that the two enterprises have been struggling for years in a country whose market can support only one. It declares that for the past few weeks, Histadrut has been putting mounting pressure on the Israel Government to wipe out controls on tire and tube sales. Behind this, it asserts, is the fact that Histadrut owns half the nation’s vehicles and controls 75 percent of all Israeli road transport.
“It’s officials say,” the magazine report adds, “that if tire controls are lifted, Histadrut vehicles will use Alliance tires only – which they term the production of a ‘collective’ as opposed to ‘capitalist’ General. Histadrut people sometimes fail to mention that Alliance is 50 percent owned by 600 Americans, including the Dayton Rubber Co., capitalists all. “
Business Week said the trouble started in 1949 when Histadrut found it could not purchase a majority interest in General. It thereupon joined with some other U. S. investors and formed Alliance. “The government gave a reluctant O.K. to the second tire plant – though the market didn’t warrant another, ” the article reports.
It points out that General had a government promise of exclusive rights to the market and Alliance said it would concentrate on exports. The arrangements did not work out and both have been scrambling for scarce foreign exchange to finance raw material imports. Neither plant is working at anything near capacity, according to the article, and sales are determined by government purchase permits which split the available market.
The only hope, if both are to remain in business, the magazine reports, is to expand tire exports, which is hand to do because Israel prices are high. “Meanwhile, the government is nursing a giant-sized headache – hating to annoy the potent Histadrut and fearing that General will some day throw in the sponge,” Business Week concludes.
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The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
