The Knesset Finance Committee held a session today on the planned layoffs at Teva Pharmaceutical Industries Ltd. (NYSE: TEVA ; TASE: TEVA ), a continuation of the one that took place a month ago on the major tax benefits received by the company. Today, the committee focused on the State Comptroller's October 2013 report, which dealt with the connection between the Law for the Encouragement of Capital Investment and the conditions that companies were required to meet under that law. This time, State Comptroller Judge (retired) Joseph Shapira also attended the discussion, where he said, "The report written in 2013 speaks for itself. It is impossible to remain indifferent when faced with the huge scope of the layoffs, which will affect thousands of workers, their families, and additional employment circles. This is particularly true in view of the extent of the benefits received by the company from the state for years. The report in 2013 stated that providing unlimited benefits without an examination of the cost versus the benefit, and without considering alternatives, is an anti-economic policy that harms the public interest. The result is that there is no certainty that the benefits granted really contributed to the advancement of the economy as a whole."
Shapira added, "A new look at providing benefits in order to encourage investment is required, so that an effort is made to ensure that the benefits will achieve general economic benefit, rather than remaining mere benefits for the financial profit of the companies."
"A decree too harsh for the public to bear"
Teva's representative at the meeting was senior VP global operations David Lustig. He said, "I've been working at Teva for 24 years. The company is important to me, and the workers are of course important to me. We are in sad and difficult straits, and what is at stake is saving the company."
Lustig went on to say, "We are faced with a very heavy $35 billion debt, including $5 billion a year in the next two years. Teva is a global company. 90% of its shareholders are not Israelis. Our commitment is to save the company and to save the company in Israel. It’s a restructuring process. We're going to let 14,000 workers go worldwide, and 1,200 in Israel in 2018. 500 more will be laid off when we finish closing the plant in Jerusalem at the end of 2019.
"A realistic view of our situation shows that we'll have to close the plant in Jerusalem. It may seem harsh right now, and it's a thousand times as hard for the workers, but we see that the plant in Jerusalem will have to close down at the end of 2019. The factory isn't profitable, and never will be profitable." Lustig emphasized that Teva would look for a buyer for its plant in Kiryat Shmona and the activity of SLE, its distribution company. He stated, "There is a total commitment here to operate the plant in Kiryat Shmona," adding, "Teva is above all cutting its management and general expenses, and that's not the same as what's happening on the production floor," including laying off 500 headquarters workers.
Kiryat Shmona Deputy Mayor Yigal Buzaglo also participated in the discussion. Teva plans to sell its plant in Kiryat Shmona, which is arousing concern in the northern town. Buzaglo said, "The feeling is very depressing. There are entire families with the sword at their throats, and they are in a desperate state. 300 families in Kiryat Shmona is a decree too harsh for the public to bear. It means turning the lights off there and leaving."
Published by Globes [online], Israel Business News - www.globes-online.com - on December 19, 2017
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