Manufacturers Have Bigger Headaches Than Boycott

Despite the specter of an international economic boycott, Israeli manufacturers say it is not at the top of their list of things to worry about in 2014.

Manufacturers Association president Zvika Oren told Globes that the number of Israeli enterprises vulnerable to a boycott are actually insignificant.

“I estimate that it is possible to count the number of Israeli companies operating from Yehudah and Shomron and which are exposed to a significant boycott at fewer than 10. The problem is that the talk developing on the issue is disproportionate to the real situation. Israeli enterprises operating in Yehudah and Shomron export $250 million annually, a third of which goes to Europe. This amounts to two tenths of a percent of Israel’s annual exports, so even if there is a widespread boycott of Israeli goods produced there, the macro effect will be very marginal,” he said.

What does worry Oren?

Lack of competitiveness. “Competitiveness is eroded because of the strong shekel, the extensive regulation, and high production costs. In this situation, we cannot participate in the expansion predicted in the world’s markets.”

The sector’s forecast for the near term is rather bleak, without any boycott. The Association’s quarterly survey among 170 manufacturers predicts that enterprises’ workforces will shrink in the first quarter of 2014. This comes after 22% of manufacturers said that they had to fire employees during the fourth quarter of 2013.

The survey also reports that 55% of small and mid-sized enterprises had difficulty in securing credit in the fourth quarter of 2013. In the same quarter, 45% of large enterprises reported difficulty in securing new credit, and 40% reported difficulty in meeting their credit frameworks.

Oren noted, however, that the threat of a boycott could cause Israeli industry greater damage than the boycott itself.

“Obviously, this is worrying because such a situation is liable to have an adverse effect on the business environment, and entrepreneurs are liable to vote with their feet.

“If an entrepreneur calculates whether to invest in Israel, given the situation of the dollar, regulation, and costs, another factor, such as a boycott, might enter the equation,” said Oren.

This article appeared in print on page 7 of the February 4th, 2014 edition of Hamodia.