"Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA may rethink where it produces the world’s biggest supply of generic drugs as a rally in the shekel increases production costs," a Bloomberg article states today.
The assessment follows an interview Bloomberg conducted with Teva CFO Eyal Desheh, who put it delicately but clearly enough: “The fact that the shekel will continue to be a strong currency makes us take a very close look at the impact of currency on costs. We need to look very, very carefully at our cost structure around the globe and where we should be making things.”
Nevertheless, in response to a query from "Globes", Desheh said that "there is no intention of shifting production out of Israel."
Desheh apparently failed to realize that, in the Internet age, his remarks would re-echo loudly and quickly in Israel, after being quoted on the "Globes" website. "I find it hard to believe that Eyal Desheh meant what he said, given that the chairman, Eli Hurvitz, is a patriot who sees the company's activity in Israel as Zionism in every respect," the chairman of the workers committee at one of Teva's main plants in Israel told "Globes" today.
Benny Kimhi, chairman of the workers committee at Teva-Tech at Ramat Hovav, where Teva's flagship drug, MS treatment Copaxone, is produced, told "Globes", "It looks like a lot of nonsense to me. This is another of those statements from members of management, just like the threats they made against them when we were in a labor dispute. Then they claimed that they would transfer production to China or India, but these are just empty statements. Do you think anyone would let it happen? I'm not getting excited over it." At the same time, Kimhi made clear that he would review Desheh's remarks together with his colleagues, and that he would even turn to the Histadrut (General Federation of Labor in Israel) to consider an official response.
Teva has 13 production plants in Israel on eight different sites. The company employs about 6,000 people in Israel, of whom about 4,500 work under a collective agreement and are unionized with the Histadrut. Each of the company's plants has an independent workers committee, but in recent years the committees have tended to work in concert.
While salaries at Teva are not considered especially high, employees at the company are entitled to excellent conditions that certainly affect its expenses line. Among other things, there are tuition subsidies for children of employees, dental insurance, and 13th month salaries. Under new pay agreements signed at several of the company's plants, employees have gained pay rises of up to 10%.
Published by Globes [online], Israel business news - www.globes.co.il - on June 18, 2009
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