Industrialists: Declining dollar to prompt mass layoffs

Manufacturers Association chairman says Israeli companies may be forced to relocate

Reuters | Published: 11.22.09, 15:06

Further weakening of the dollar is hurting the profits of Israeli exporters and if left unattended will prompt hundreds of thousands of layoffs, Israel's Manufacturers Association warns.

A survey undertaken by the Association shows that 34% of the companies will be forced to layoff more employees should the dollar exchange rate continue to drop, while 15% of companies surveyed will be relocating their operations to other countries.

"The business sector has known one of the most difficult years in its history, Manufacturers Association Chairman Shraga Brosh told Ynet. "The world is starting to recover, but the Israeli economy is facing the dark shadow of the dollar's ongoing decline."

Should the trend continue next year, Israel's industrial sector alone would lose roughly $1.4 billion dollars, including $880 million in exports.

'These are not threats'

Brosh told Ynet that the grim predictions should not be viewed as a baseless threat aimed at prompting government action.

"These are not threats, but rather, a sober assessment of the situation. We are talking about a credible and serious survey we undertake every year," he said. "If you look back at our predictions in previous years, you can see that they fully materialized."

The Association chairman stressed that he does not necessarily expect the Bank of Israel to counter the declining dollar through massive foreign currency purchases.

"I did not say we have to keep on buying dollars," he said. "We must maintain the competitiveness of Israel's industrial sector. If the dollar is too low, we must protect our competitiveness in other ways…factories spend huge sums of money on municipal taxes, electricity, water, and port fees. It's possible to help them to pay less."