The Knesset Finance Committee held a session this morning on the subject of the tax breaks that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has received, and the possible layoffs in the company. Finance Committee chairman MK Nissan Slomiansky (Habayit Hayehudi) said, “Given that there are close ties between the company and the government, and the government gives the company preferential treatment, and the grants amount to a significant sum, I presume that this creates a strong relationship between the company and the government. Where there are benefits there are also obligations, therefore, the government has a right to be involved in the matter of the layoffs.
“We must be careful not to throw out the baby with the bathwater. Teva is a powerful company, which provides many jobs and, because of this, there are other companies dependent on it, second and third circles, and even if it is exempt from the companies tax, it still pays taxes. Overall, the government can be proud of the company, and also benefit from it. On the other hand, layoffs are a matter of life and death. The chances of someone who has been laid off finding a new job are close to zero. It’s terrible. That’s why we want to get involved in this matter."
Teva SVP Ika Abarbanel told the Finance Committee, “We cannot regard Israel as completely set apart from the company as a whole. In December 2012, we announced a new strategy that stems from the changes in the pharmaceutical industry. The change is profound, and it is shaking up all the companies in the world. We have concluded that if we do not change our strategy, we will lose our competitive edge, and therefore we have based everything on over-the-counter drugs and pharmaceuticals. This is a structural change deep within Teva, in terms of training, human resources, everything.
"Making such a change has massive repercussions, and we began planning, and said nothing about personnel. We decided to review this matter last, because we're talking about people, and we invest in them. So we opened a deep process of 100 projects. We're changing procurement, real estate procedures; instead of many units spread around the world, as a result of Teva's acquisitions, we're consolidating locations to save costs. Everything is undergoing global change, concentration instead of dispersal, resulting in huge savings of money. We've set a target, $2 billion, and unless it is reached, we'll close the window to the market."
Asked by Slomiansky whether Teva would fire employees in Israel, Abarbanel said, "Employees will be fired, definitely, but not in the numbers mentioned. I don’t know where the number of 800 came from. I cannot say how many; we're in the planning stage. At the end of that stage, there will be numbers, how many will take voluntary retirement, and how many managers will be fired at each level. The process is very professional, there will be no plan before January. Until then, nothing will happen."
Published by Globes [online], Israel business news - www.globes-online.com - on October 16, 2013
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