A day before Israel Chemicals Ltd. (TASE: ICL) will publish its financial report for the third quarter of 2013, in which it will, for the first time, report losses by the phosphates segment, carried out by Rotem Amfert Negev, the company is apparently trying to take preemptive action and calm the analysts: Rotem Amfert's management today announced that it will issue an "emergency plan", which will include streamlining measures and reductions in the workforce.
"The company will offer veteran employees who take early retirement improved severance terms that are among the best in the economy, and which will include a fixed monthly payment in addition to compensation and special bonuses," said Rotem Amfert.
However, it turns out that Rotem Amfert has set a target for retiring 100-130 employees and that it intends to implement the plan "either voluntarily or through compulsion". A management source said that the company would implement an existing retirement plan, under which scores of employees have already retired in the past year, but at allegedly much better additional terms. For example, employees who take early retirement will receive a gross monthly salary of NIS 18,000 until they retire and the company's pension provision will continue until the official retirement age. These employees will also receive increased compensation and bonuses worth NIS 1 million per employee.
Ostensibly, these appear to be good terms, but in practice, it applies to employees over the age of 58 who already receive very high salaries. The Central Bureau of Statistics reports that the gross monthly salary of mining and quarrying workers (essentially only employees of Israel Chemicals) is NIS 25,000-27,000, a figure that includes younger employees who earn half the salary of veterans.
Veteran employees earn well above the average salary cited by the Central Bureau of Statistics, which means that the NIS 18,000 offer by Rotem Amfert will slash the earnings of the veteran employees, who will probably find it hard to reenter the labor market, especially in the Negev. The company made it clear that, in contrast to the past, new employees will not be hired to replace "retiring" workers.
A few weeks ago, the managements of Israel Chemicals' subsidiaries met the workers committees, each one separately, and showed them the company's business results. At the same time, the workers committees were told that a streamlining plan was being prepared that would include personnel.
Israel Chemicals' management says that the main problem is at Rotem Amfert, and that there are no plans to fire employees or force retirement at the other units. This did not prevent the unions at five of the company's six plants to call shop meetings and launch labor sanctions on Monday. The unions sought to signal management that they would not agree to measures that would harm the workers, and said that they would continue the protest in the coming days.
Israel Chemicals says that Rotem Amfert has swung to losses because its production costs are higher than 90% of its competitors, most of which are in Morocco, Kazakhstan, Russia, Brazil, and Saudi Arabia. Even as labor costs are rising, phosphate prices are falling, affecting the company's ability to compete.
"Rotem Amfert is going through one of the worst crises in recent years," said Israel Chemicals in a statement. "The company, which exports most of its products, is exposed to the global phosphates fertilizer market which is at a low, and Rotem Amfert's production costs are high compared with its foreign competitors.
"All these factors force the company to undertake an immediate streamlining plan to preserve its economic right to exist and to allow it to successfully compete against its large competitors in international markets, while saving the jobs of more than 1,200 direct employees and the livelihoods of another 8,000 indirect workers."
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2013
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