IMI to sell prime land to fund layoffs

Hundreds of acres of land at the company's Ramat Hasharon premises will be vacated within four years.

Israel Military Industries Ltd. (IMI) is trying to put into effect its emergency plan decided by its board of directors last week fast. The plan calls for the vacating of hundreds of acres of land at the company's main premises in Ramat Hasharon within four years.

Within six months of obtaining government approval for the plan, IMI will vacate the first 100 dunam (25 acres) at its Ramat Hasharon premises. IMI said that vacating the land is relevant under every business scenario, and that the company owns hundreds of acres of land that it does not need.

IMI is due to move its operations to the Negev, and its executives believe that there is no point in owning land if returning it to the state can finance implementation of the company's recovery plan. This plan includes laying off 950 employees, which IMI has said "are redundant to the company's business."

Some of these employees work on "strategic production lines", which produce munitions, and which IMI operates at the order of the Ministry of Defense, even though they are not profitable. Other employees work in jobs under previous agreements, even though these jobs are irrelevant to the company's current operations.

The estimated cost of laying off these employees is NIS 1 million per employee. IMI believes that the gradual release of its land for construction, in one of the areas in Israel where demand and prices are highest, could generate NIS 2 billion in profits for the state, and pay for the estimated NIS 1 billion to finance the layoffs at the company.

Before marketing the land, the state will have to decontaminate the areas contaminated by IMI's past manufacturing operations. This contamination occurred at several sites at the Ramat Hasharon site until the early 1990s. Sources close to the issue estimate that 8% of the land is affected, but that decontamination is still worthwhile for the state.

The plan that IMI submitted to the government estimates that the land slated for return to the Israel Land Administration within six months can be zoned for the construction of 5,000 housing units. It estimates that 21,000 housing units can be built on the entire area of land, which is slated to be vacated within four years.

IMI believes that its plan fits in with government plan to increase the supply of homes. But IMI is not worried about Israel's housing shortage; its emergency plan was formulated as the company's future is shrouded in fog, largely because of the stymied plan to merge it with Rafael Advanced Defense Systems Ltd.

Published by Globes [online], Israel business news - www.globes-online.com - on May 11, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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