After 40 years, the Arad Towels factory, which provided a living for many of the residents of Arad, has closed down. Most of its production will shortly be transferred to the US. Some 200 workers have been laid off. In addition, Flextronics, which provides contract production services to electronics companies, intends to lay off 15 employees at its production site in the city. The employees have been summoned for pre-dismissal hearings in the past few days, because of a drop in the volume of activity, senior managers at the company said.
Textiles industry sources said that the Arad Textile Industries Ltd. factory, which produces towels mainly for export, had been struggling for a long time under a burden of high production costs: water prices, electricity prices, and other production inputs. Yaron Harel, chairman of the Israel Textiles and Fashion Association at the Manufacturers Association of Israel, said, "The high cost of inputs has made Israel one of the costliest places in the world to manufacture. CEOs who are based in the US and maintain production lines in Israel ask themselves why it's worthwhile producing here in particular and not somewhere else. In the case of Arad Towels, production is not being transferred to some third world country, but to the US, which has decided to support traditional industry and enable it to exist under good conditions. While in Israel industry pays a lot for water, in many countries factories do not pay at all."
Arad Textile Industries is owned by Gary Heiman, and American Jew who recently closed another textiles factory in Israel.
Flextronics, among whose customers is Elbit Systems, employs 40 people in Arad, of whom 15 will be dismissed. A company manager said, "Flextronics employs about 5,500 people at its sites in Israel, and there will always be ups and downs here or there. In the case of Arad, we did not manage to maintain a volume of production consistent with the number of workers at the site."
Published by Globes [online], Israel business news - www.globes-online.com - on October 20, 2014
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