The Hamat Group today notified the Tel Aviv Stock Exchange that it was considering the closure of its Harsa ceramic sanitary products factory in Beersheva and the transfer of its production overseas. The plant employs 150 workers, and the company says that its wage costs, which are much higher than in Western Europe, combined with the high cost of its production inputs, including gas, electricity, and municipal taxes, do not allow the factory to make a profit. Management said it was considering a number of alternatives around the world, but the company board of directors has not yet discussed them.
The Hamat Group announcement comes two days after the sudden closure of the Arad Towels factory and the laying off of its 170 employees, 15 layoffs in the Flextronics factory in Arad, and 50 layoffs at the IDE Technologies desalination company.
Harsa manufactures sanitary products, and other factories owned by the Hamat Group produce faucets, shower stalls, home pipes, etc. The group, which has 450 employees, is owned by Yoav Golan, and its CEO is Yigal Moran. The group finished 2013 with a NIS 34.8 million net profit on NIS 264.6 million in revenue, and the first half of 2014 with a NIS 16.2 million net profit on revenue of NIS 137.1 million.
This is not the first time that Harsa plant has been in the headlines as a result of threats to lay off its employees. In May 2013, Moran threatened to close the Beersheva plant, following a dispute with the Investment Promotion Center Administration in the Ministry of the Economy. Moran claimed that the Investment Center had demanded that the Harsa plant return the grant it had received 15 years earlier because the plant had not met the commitment it gave to increase the number of its employees when it received the grant. The plant received a NIS 6.5 million grant in 1988 as a benefit under the Law for the Encouragement of Capital Investments.
According to Moran, the competitive conditions in the global sanitary products market, especially imports of these products from Turkey, Spain, and China, had made it difficult for him to increase his staff. "How can I enlarge my workforce when Harsa is suffering and dying under conditions of unreasonable competition? While Spain and Turkey are producing at low cost because they have access to natural gas, our energy expenses are 2.5-3 times those of the competition, and wage costs are four times as much as in China, and double those in Turkey. We have to compete with our hands tied behind our back," he told "Globes" 18 months ago.
The factory complained in the past that following a dispute about the route of the natural gas pipeline, it had been impossible for Harsa to be connected to the gas delivery network, and the factory had been forced to use liquefied petroleum gas in production, which is three times as expensive as natural gas.
The Hamat Group declined today to comment on the crisis in its Beersheva plant, beyond the particulars in its notification to the TASE. p>Published by Globes [online], Israel business news - www.globes-online.com - on October 21, 2014
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