Nissan Medical Industries Ltd. (TASE: NISA) today announced that has been forced to cease its production of bandages in Israel and will close the plant in Sderot that manufactures them. The plant, which employees 100 people, lost more than NIS 10 million in four years, after an owners' injection of NIS 12 million.
Nissan cited several factors for closing the factory, including rising international competition, a sharp increase in the cost of production inputs, and falling exports to Europe. Although Nissan dominates the domestic market, rising prices for raw materials, pressure on prices by healthcare institution customers, and rising imports of competitors' products from Asia resulted in the Sderot plant having no real economic prospects. Keeping the plant open in its current format was liable to cause further severe deterioration beyond the accumulated losses.
Nissan Medical controlling shareholder Hezi Nissan said, "As an industrialist, I make this decision with a heavy heart, but I accept that the board of directors made the decision only after it was proven beyond a doubt that there was no business horizon for the activity in the present format."
Nissan Medical's share price fell 4% by early afternoon to NIS 8, giving a market cap of NIS 75 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2010
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