Structural problem. Erel
'Israeli high-tech may not survive'
Competition with Far East creates difficult structural problem, which can only be solved by reorganization, Discount Investment Corporation CEO says
The competition with the Far East creates a difficult structural problem for Israel's high-tech industry, for which simple solutions cannot be found offhandedly, Discount Investment Corporation CEO Ami Erel said Wednesday.
Erel, who spoke during a press conference convened by the Manufacturers Association of Israel, added that every year 400,000 engineers complete their studies in China, 400,000 in India and 200,000 in Eastern Europe.
"We are competing with intelligent, diligent, disciplined and hungry people. In my opinion, the reason for the fact that the industrial exports in 2005 grew by 4.5 percent only compared to a 17-percent growth in 2004 is the competition with the Far East," Erel said.
"There are Chinese companies today which sell products like those of Cisco for one-tenth of the price. If we don’t reorganize, we won't survive," he claimed.
"I am also concerned by the fact that Israeli companies are opening centers in India and in Eastern Europe. We should also call on Israeli high-tech companies to prefer hiring Israelis," he added.
'Move high-tech firms to south, north of Israel'
One of the solutions proposed by Erel is lowering to costs of labor by moving high-tech companies from the center of Israel to the north and south of the country, without hurting the engineers' salary.
Elisha Yanay, general manager of Motorola Communications Israel and chairman of the Israel Association of Electronics and Information Industries, said in the press conference that "the cost of employing an engineer in the United States is USD 140,000 a year, in Tel Aviv it is USD 100,000, and in the Far East – USD 40,000."
"However," he said, "the cost in the north and south of Israel is only USD 60,000 due to a cheaper price of land, cheaper property tax, governmental endorsements and a lower cost of living."
