Over 800 to take voluntary retirement at IAI

IAI CEO Joseph Weiss
IAI CEO Joseph Weiss

The plan also includes a 5% across-the-board cut in salary costs for all Israel Aerospace Industries employees.

Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) management and the company's workers' organization today announced the signing of a new collective agreement "constituting a key element in IAI's growth plan," the announcement said.

The new agreement includes significant cuts in the company's personnel and salary costs, together with structural changes and increased investment in marketing of its products, R&D, and infrastructure.

Under the agreement 730 of the 16,000 employees of the company and its Elta Systems subsidiary will enter retirement tracks agreed on in the framework of the streamlining plan, and will get either early retirement or retirement with increased compensation. According to IAI's reports to the TASE today, the program will cost NIS 150-250 million. Sources close to IAI said that financing for the program was still being discussed with the Ministry of Finance, one possibility under consideration being financing from a reduction in the dividends paid by the company into the state treasury in the coming years.

The 730 workers retiring are tenured workers. According to IAI management, thousands more workers are expected to retire in the coming years upon reaching retirement age. At the same time, the company is due to discontinue its agreement with non-tenured workers, whose number is unlimited, probably no more than 70.

Senior Ministry of Finance sources have previously said that their attitude towards IAI's request for financing to pay for the workers' retirement was negative, and that the company could pay for it by itself.

The plan also includes a 5% across-the-board cut in salary costs for all IAI employees, together with structural changes in company management and headquarters, while reducing the number of external advisers with whom IAI does not have regular contracts. 10 senior management posts have been eliminated in recent months

The joint announcement by IAI and its workers' committee said that the agreements to cut salary costs also affected overtime pay, recreation pay, vacations, holiday gifts for workers, and more. The agreement also includes a three-year postponement in implementation of the recently signed public sector wage agreement.

The IAI agreement also includes understandings concerning consolidation of redundancies and functions in the company, while cutting overhead and increasing operating efficiency in the company divisions and its headquarters. It was also announced that the new agreement would settle disputes between the company and the Ministry of Finance concerning alleged salary irregularities at the company.

"IAI is Israel's largest and leading defense company, and its foundations are solid, but it is facing difficult internal and external challenges," IAI CEO Joseph (Yossi) Weiss said today, referring to the historic agreement with the workers. "We decided to carry out the necessary strategic measures in order to maintain our leading position and adapt the company to the dynamic market conditions. The agreement reflects the commitment by management and the workers to act together and decisively to ensure the future of IAI. This agreement is a key element, although not the only one, in realizing the company's business vision of continuing and strengthening its status as a global leader in its field of business."

Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

IAI CEO Joseph Weiss
IAI CEO Joseph Weiss
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