"I cannot remember such a situation in my 15 years in the industry," Kodak Israel co-general manager Avi Waldman told "Globes" about the high-tech industry's fears of a recession and layoffs. Kodak Israel has 900 employees.
High tech accounts for 42% of Israel's exports, a far greater proportion than any other industry.
Waldman said, "We're getting hit from every direction. The slowdown is here. In the coming year, if something doesn’t change in the shekel-dollar exchange rate, we'll see less project development, there will be layoffs, growth will stop, and exports will shrink. I'd say that we're on the brink of a national disaster."
Manpower Information Technologies CEO Erez Banovich says, "Salaries that customers are willing to pay for systems engineers and UNIX programmers, for example, have fallen by 5-10%. Whereas the average salary for a database manager rose by 15% in 2007 to NIS 25,000, the salary is now NIS 20,000. We're back to the level of late 2006."
All the persons interviewed by "Globes", from start-up entrepreneurs to corporate executives, accountants, and venture capitalists agree that Israel will feel the slowdown very soon. The optimists predict that it will hit in early 2009, while the pessimists predict doom descending in the third quarter of this year.
Jerusalem Global Ventures (JGV) managing partner Shlomo Kalish thinks that the macroeconomic data published by the Central Bureau of Statistics bears little resemblance to reality. "The Central Bureau of Statistics figures show sales by the companies. They're selling at the same prices, thereby meeting sales targets, but the companies' profits have been battered. As for start-ups, the impact of the shekel's appreciation against the dollar will become apparent in a year or two. There will be heavy demand for money, and some start-ups won't be able to raise it and will close down. The start-ups that succeed in raising capital will do so at less favorable terms. Regrettably, we'll see start-ups closing down over the next couple of years. We mustn’t live in a fool's paradise."
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008