Against the background of the layoffs planned by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), at 14:00 tomorrow Prime Minister Benjamin Netanyahu, Minister of Finance Moshe Kahlon, Minister of Welfare and Labor Haim Katz, and Minister of the Economy and Industry Eli Cohen will hold a meeting with Teva CEO Kare Schultz, who is flying to Israel to discuss the severe crisis at the company. The main aim of the special ministerial team headed by the prime minister is to demand of Schultz that he should reduce the number of people to be laid off in Israel and cancel the plan to close Teva's two plants in Jerusalem, one of which produces pills and the other inhalers. About 800 people are employed in the two facilities.
A senior government source told "Globes" today that at tomorrow's meeting with ministers, "the Teva CEO's statement about the company's commitment to the State of Israel will be put to the test."
The source also said that the prime minister and his colleagues intended to put a series of demands to Schultz, the aim of which, as mentioned, is to reduce substantially the number of employees who will lose their jobs in Israel, and to ensure the continued operation of the two facilities in the capital. "Teva has many production sites in Israel and around the world, such as in the US, Germany, India and Ireland, but it is more Israeli than Indian or Irish. If the company declares proudly that it intends to preserve its Israeli character, it should prove it in its actions."
The source added that at tomorrow's meeting a demand will be made that the company should close or cut back its pill manufacturing activity in Ireland in order to preserve pill production in Jerusalem. "Production in Ireland may be $10 million cheaper for Teva than production in Israel, but that's not such a dramatic number for a company like Teva that it can't absorb it, for all the deep crisis it finds itself in," the source said, adding, "In Ireland, Teva is not a symbol, but in Israel it is a symbol, as shown by the fact that the whole country has been up in arms for days and the prime minister is dealing with the matter personally. That wouldn't happen anywhere else in the world. At the meeting we'll hear Schultz, we'll form an impression of his plans, but in the immediate term there isn't anything new that we can pull out of the hat for Teva. Nevertheless, we shall make clear to Schultz and to the heads of the company that it's time to restore or maintain production plants in Israel, and not the reverse."
Another government source told "Globes" today: "We are entitled to expect a different approach from the Teva management given the huge benefits the company has received from the state over the years. It’s no coincidence that the prime minister is intervening in this crisis. After government pressure prevented the blow to Teva's activity in the periphery, such as at its sites at Ramat Hovav and Kiryat Shemona, we want Jerusalem to be excluded from this cutbacks program. All of us, both the government and Teva's management, have an interest in reaching an accord on this matter."
This morning, Netanyahu convened the ministerial team to prepare for the meeting with Schultz and to formulate a position. Government sources say that the government ministries have no real means of bringing pressure to bear on Teva, among other things because the tax benefits given to it in the past were not made conditional on any commitment on its part concerning employment in Israel or maintaining production here. Moreover, the sources add, Teva has no real obligation to ensure that in the near or distant future its facilities in Israel will continue to operate. Nevertheless, government sources have made clear in recent days that every company that currently receives tax benefits on the various aid tracks that the government offers is obliged to make an employment commitment.
Meanwhile, Histadrut (General Federation of Labor in Israel) chairman Avi Nissenkorn has ordered a complete shut-down of all Teva sites in Israel tomorrow. The Knesset State Control Committee will convene tomorrow to discuss the crisis at Teva, with State Comptroller Joseph Shapira attending.
Earlier today, Kahlon and Cohen met Nissenkorn and Teva workers committee representatives from around Israel. "The government of Israel stands behind the Teva workers and will not abandon them," Kahlon declared. "The demand from Teva's management and its CEO is that they should fulfil the commitment to the State of Israel they declared last week, and avoid closure of the Jerusalem plants and reduce the number of layoffs," Cohen added.
"Where has the government been"
At the start of the Knesset Labor Party meeting today, party chairman Avi Gabbay said that the government had neglected the Teva issue despite being aware of the crisis for five months. "Teva's management makes risky deals and its board of directors behaves like the House of Lords. The government of Israel has known for five months that this was coming, but where were they? Where was the prime minister? Where was the finance minister? Why haven't they sat down with Teva's management previously? When these things are done after the fact, it's very hard to fix anything."
Gabbay referred to the upcoming meeting between Netanyahu and Schultz, and said, "He can come and give a fine speech about what a startup nation we are, be photographed, and leave with nice statement to the media. And there's another possibility - the right one - which is that the prime minister leans forward, looks Teva's CEO in the eye, and says in street language, 'No way. You will not fire 1,700 people and leave thousands more jobless.' The government has plenty of powers and the time has come to exercise them. Teva can fire people in other countries, and not in Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on December 18, 2017
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