After the Ministry of Finance transferred to Israel Military Industries Ltd. (IMI) NIS 60 million last month for products, which was used to pay salaries, the ministry did not make this month's transfer, rending it impossible for the company to pay salaries. The Ministries of Finance and Defense are supposed to each transfer NIS 30 million a month to the company.
"Tomorrow at 9:30 am, there will be a workers' meeting in the courtyard opposite management. Your presence is mandatory. Wear hats," stated a laconic e-mail sent to IMI's 3,400 employees yesterday, after the workers committee learned the Ministry of Finance would not make the monthly transfer.
IMI, a government company, is struggling with a burden of NIS 260 million in annual costs related to pension payments to retirees, the maintenance of strategic production lines, and redundant personnel. The company says that these are ongoing financial problems that have lasted for over a decade, and are unrelated to current operations. Management claims that the problems are the result of converting IMI into a government company in 1990, as well as fundamental problems, including a built-in working capital deficit and pension payments.
IMI strategic production lines include heavy munitions for the IDF. The financial burden affects the company's business operations, and prevents it from recovering. IMI has been trying to carry out a recovery and privatization plan, for which it requires cooperation of the government.
IMI wants to allot 49% of its shares in the first stage of the privatization, together with its subsidiary Ashot Ashkelon Industries Ltd. (TASE: ASHO) and then become a private company. The Ministry of Finance has agreed to the measure. IMI's management believes that it is necessary to retire 800-1,000 of its 3,400-strong workforce as part of the privatization. In order to carry out the two measures simultaneously, IMI and The Ministry of Finance agreed to hold talks over several months to reach a deal on the recovery and privatization, during which time the ministry would transfer money to pay IMI salaries.
Histadrut chairman Ofer Eini and IMI workers committee chairman Yitzhak Yehuda are a party to the Ministry of Finance-IMI negotiations. Yehuda told "Globes", "The Ministry of Finance has begun applying its tyrannical method to employ occupational terrorism and damage our productivity. We're ready to cooperate with the idea of an issue and privatization, even if ideologically I don’t agree with it. But at least we want to preserve the workers' rights."
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2009
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