Tech giants seek assurances about war scenarios in Israel

Philips HQ, photo: Reuters

Companies like HP and Philips want priority status on electricity and food supply and are asking for executives to be excused army reserve duty.

Will the state support the activity of high-tech plants of international companies in wartime, and if so, how? Sources inform "Globes" that the companies recently contacted state authorities via the Manufacturers Association of Israel and demanded state assurances in emergency situations, such as missile attacks, large-scale terrorism, and natural disasters. The sources added that the Ministry of Economy and Industry and the Manufacturers Association recently devised a business continuity project for the companies with participation from the Ministry of Defense through the National Emergency Management Authority. The government is planning to invest NIS 50 million in this project over five years.

The National Emergency Management Authority was designed to coordinate between various authorities in time of war, natural disaster, plague, and large-scale terrorism. The Authority focuses on maintaining activity essential for the economy, such as food plants, hospitals, the electrical grid, etc. Concern about the international companies, however, involves a different problem - the need to keep the companies' management from moving their development centers to other countries and refraining from establishing and acquiring activity in Israel out of concern that they will not be able to function in an emergency.

In an internal document obtained by "Globes," the high-tech companies express concern that a war or missile attack against Israel is liable to paralyze their activity here. This concern has been exacerbated recently by the increased fighting in southern Israel. The companies involved include  Applied Materials, Philips, HP, Stratasys, Spectronix Emerson, Avaya, KLA Tencor, and others whose Israeli branches are located in the north or the south.

Although sources inform "Globes" that Intel took part in the discussions about the initiative, the Israeli Hi-Tech Association in the Manufacturers Association of Israel said, "Intel was not a party to the document that was formulated and passed onto the authorities." 

"Israel needs to realize that the business continuity of the international companies in Israel is a critical asset in the continuous functioning of Israel and the maintenance of an orderly way of life," the document states, and lists a long-term goal: granting the foreign high-tech companies the status of essential enterprises, even though they do not produce products that are essential for the economy. The companies say that they can move their production centers to other countries, "in view of the current uncertainly about the problem of a national emergency in Israel."

An individual strategic plan for each company

The writers of the document are seeking to present the companies with the possible scenarios outlined by the Ministry of Defense, above all "military conflicts" such as a general war and a limited military operation. This will require "clarification of the national reference scenarios, i.e. the translation of security information, some of which is classified into a series of business and operational measures to preserve part of the production process and provide services. The document emphasizes that the goal is to devise an "individual strategic plan" for each company in order to prove to the management of the international companies that their management in Israel is in command of the situation and can insure that any damage will be minimal."

The Israeli Hi-Tech Association in the Manufacturers Association is coordinating the high-tech companies' contacts with the government ministries. The consultant for the project is former Ministry of Home Front Defense director general Alon Rosen. Hi-Tech Association CEO Merav Kenan told "Globes," "Up until now, high-tech companies in Israel have had no business continuity plan for an emergency, which is liable to result in a situation in which the development centers shut down in wartime with destructive results for the companies continued existence; the resilience of the Israeli economy, which relies on the high-tech sector; and anxiety on the part of international companies about undertaking major production and development activity in Israel. Business continuity of high-tech companies is a critical asset for the country's continuous functioning. I thank the government ministries for tacking this matter."

Concern that employees will be called up for reserve duty

The emergency plan for the high-tech industries will be based on principles of the reference scenario for essential enterprises formulated by the National Emergency Management Authority according to the potential threats to Israel. In the process that will begin now, which will be managed by the Hi-Tech Association, questionnaires will be sent to companies in order to assess their needs in an emergency, after which generic solutions will be devised and war scenarios will be written in standard terms recognized by the international companies.

Kenan says, "The companies in Israel can use these solutions as a tranquilizer for their overseas management to help them understand the threat and the scenario that is liable to develop. Each company will take this in order to map its needs and its specific solution."

Yoram Krivine, VP operations responsible for business continuity plans at HP Israel, told "Globes," "We have 8,000 customers worldwide who have no alternative source of ink that they can buy from. If the supply stops, our customers will fall and the damage is liable to be huge."

He said that the company's global management was demanding constant reports about the situation in Israel, and among other things had ordered construction of a backup plant in Singapore and the maintenance of inventories in various places around the world. "If there is a situation in which the government takes measures to make things easier for major international companies, it will be welcomed and will help dispose of the idea of taking production out of Israel."

Krivine says that the main problem that companies are afraid about is damage to infrastructure in Israel and restrictions of resources like electricity and water. "If there is electricity rationing, we need a promise that we will receive priority for electricity and water, so that we can continue producing. It is also necessary to make sure that the ports will remain open, so that we will be able to deliver." A second problem of concern to the companies is the availability of essential personnel, who are liable to be called up for reserve duty in the IDF in an emergency. The high-tech companies are sending the IDF the names of older employees they want exempted from a call-up as "employees kept at their place of work."

No response to the report was available from the Ministry of Economy and Industry.

Published by Globes [online], Israel business news - - on August 13, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Philips HQ, photo: Reuters
Philips HQ, photo: Reuters
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018