While the Israeli economy celebrates the deal between the Wertheimer family and Warren Buffett, uncertainty, and even fear, reigns at Iscar Ltd's plant in the Tefen Industrial Zone in the Galilee. "I heard that Buffett promised that as long as he lived, Iscar would continue to operate in Israel. But with all due respect, and I wish him a long life, how much longer does he have?" a production employee told "Globes".
Iscar may have broken profit records in 2012, but the Wertheimer family may have sold its remaining stake at the right time: the same source at the company said that, for at least six months, production has been slumping, and that, as a result, management has slashed employees' overtime and even ended the night and Friday shifts in some departments.
"We're feeling a real slowdown in the market, and the depreciation of the dollar and euro have not helped us either, as most of our business is exports," he said. "If during last Passover, we worked all the time, except for the Seder meal, this year, most departments were closed. For months, there has been only enough work for half a day, and most of the day we drag out the hours."
The source said that Iscar had already closed one department, moving it overseas, and that its workers were transferred to other departments. While this should have raised the employees' fears, this case appears to have had a happy ending. "For a year, workers and managers traveled to China to train the Chinese in the production of a fairly simple product with no special shapes like the ones we know how to make here. But they couldn’t produce them at the quality that we can. They ultimately closed the department there, and shipped all the machinery back here and reopened the department in Israel."
The source added that, despite this bad experience, it cannot be concluded that Iscar will not try to move production overseas in future. "We're not naive, and we can believe that if they really want, it is possible to hire high-quality staff in China for much higher pay, but which is still less than what is paid in Israel."
In 2006, after Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) acquired 80% of Iscar, its employees received a bonus of five monthly salaries. The employees said that there were already rumors that bonuses would be distributed this time too, but that they would differentiate between employees who were at the company before the 2006 deal, and those who were hired afterwards.
In November 2012, "Globes" published an investigative report into work conditions at Iscar. The report presented, for the first time, a someone different angle from the favorable image of the company and its founders. Employees said that the company's gleaming production floor and family image concealed rigid procedures, a bleak atmosphere, and very low pay, especially compared with its profits. The company said in response that its benefits were very good, and that this was a case of a few disgruntled employees seeking to besmirch its good name.
Published by Globes [online], Israel business news - www.globes-online.com - on May 2, 2013
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