"The late Eli Hurvitz founded and consolidated the activity of the Migada plant in Kiryat Shmona. This plant was his baby. He visited here twice a year. We even made him an honorary resident and named a street after him. Now, if this plant is shut down, he will turn over in his grave," Kiryat Shmona Mayor Nissim Malka told "Globes" today, following reports that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) was planning to close down its plant in the town, which employs 250 workers in the manufacturing of disposable medical equipment.
Economic leaders who spoke in recent days with senior Teva executives about the huge layoffs planned by the company in Israel and at its sites throughout the world, told "Globes" that the plant in Migada may be put up for sale, because it is a profitable factory.
"We know nothing officially about Teva's intentions," Malka complained. "Rumors have been flying recently among the plant's workers about the plan to close it. I asked to meet with Teva's representatives to get information, and possibly to combine forces to work on getting state aid. As of now, they don't want to go ahead with a meeting, and didn't return my call."
A senior Teva executive told "Globes" yesterday that in addition to considering the continued activity of the Migada plant, about 500 headquarters workers, most of them medium-level, would be laid off in the framework of the company's emerging recovery plan.
The company's board of directors is scheduled to convene towards the end of next week and approve the plan: "The activity of every unit in the company is now being scrutinized with an atomic microscope. Teva's debt is huge, and it has to pay the banks $10 billion within two years. The situation there is really not good, tension is high, and it is reasonable to assume that we'll all be much wiser in the coming days. Meanwhile, there is a lot of uncertainty, confusion, anxiety, fears, and a lot of disinformation about the approaching measures. Many figures have been mentioned, some of them accurate and some not," an informed source said.
With the deliberate fog created by Teva about its planned measures in the background, company executives will meet next week with Histadrut (General Federation of Labor in Israel) chairperson Avi Nissenkorn. It is believed that they will discuss the recovery plan. Teva has 6,400 employees in Israel at several sites, and most of them belong to Histadrut unions. Market sources believe that Teva's representatives will unveil the emerging recovery plan, which is meanwhile being kept secret, to Nissenkorn. Furthermore, Teva's representatives are regarded as likely to ask him and several politicians to refrain from attacks in the media against the company involving its imminent recovery measures.
"Teva got extraordinary tax benefits amounting to billions of shekels from the state for many years, and the company's executives realize that it is likely to attract public criticism for laying off many hundreds of workers throughout Israel. The company's main concern is that the severe criticism leveled against it will affect its investors everywhere in the world. There is no doubt that the company is preparing for an attack against it, and realizes that the coming days will be difficult ones," a senior source told "Globes."
Another source involved in the matter added today, "From the perspective of various government ministries, doing things harmful to the outlying areas is a kind of red line. We cannot stand idly by if mighty Teva decides to cut back, reduce, and even close a plant in the north."
Teva has had the Migada factory in Kiryat Shmona since the mid-1980s. Malka says, "This plant is an anchor for us, and the late Hurvitz did everything in order to maintain the dignity of its employees and the future of this site. If Teva wants to streamline and cut its expenses, there are other places in which it can make cuts. With all the sorrow and pain, if the company closes activity in the central region, a laid off worker can easily find another job. Here in Kiryat Shmona, a worker fired from Migada, will be unable to find another job. He'll go to the employment bureau office. Kiryat Shmona will sink into a deep crisis. The plant's employees include many engineers and young people, who will move to other areas of Israel if there is no work, after we succeeded in stemming the negative migration that was such a tough problem here.
"It hurts me that instead of continuing to develop the supply of employment here, we're likely to go back to fighting. We marketed 70 dunam (17.5 acres) of land for new plants through five different developers in our industrial zone. Developing Kiryat Shmona is Israel's answer to Nasrallah and Assad."
Published by Globes [online], Israel Business News - www.globes-online.com - on December 13, 2017
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