A delegation of top Israeli officials failed to persuade Teva Pharmaceuticals to reconsider the plan to close down its plant in Yerushalayim during a meeting on Tuesday.
In a bid to minimize the shock to 1,750 Teva workers threatened with firing, and the knock-on effect on the Israeli economy generally, Prime Minister Binyamin Netanyahu, along with Minister Moshe Kahlon and Economy Minister Eli Cohen, met with the company’s CEO Kare Schultz.
But Schultz would not budge on the restructuring plan, which includes closure of the Yerushalayim facility. The government’s proposal that Teva sacrifice a plant in Ireland instead was rejected out of hand.
“Unfortunately, Teva is unable to consent to the request of the prime minister and ministers and avoid the closure of the plant in Jerusalem and the company will continue in the phased closure of the plant by the end of 2019.”
However, in a gesture of good will, Schultz promised that “Teva will cooperate fully with the team established by the prime minister in order to assist the workers who will leave the company to find alternative employment, training and support.
“In order for Teva to remain an Israeli company and continue to prosper in Israel, and to continue with our significant contribution to the Israeli economy, we must first and foremost save our company. I have taken upon myself to maintain the global headquarters of Teva in Israel, including my own office. I am committed to maintaining a strong presence of R&D, as well as preserving most of our existing manufacturing in Israel in the future,” he added.
In an apparent reference to bitter criticism of the company’s planned firings, which accused it of ingratitude for some 22 billion shekels worth of tax breaks in recent years, the CEO said:
“I am truly appreciative for the substantial support that Teva has received from the Government of the State of Israel over the years and under the leadership of Prime Minister Netanyahu and for the recognition of Teva’s major contribution to the economy of the State of Israel.”
This did not placate Israeli politicians, who launched into a fresh round of condemnations upon hearing news of the disappointing meeting.
MK Amir Peretz (Zionist Camp) said that “Kåre Schultz was supposed to show respect for the efforts of the prime minister and three ministers to get involved in the crisis in Teva, but decided instead to act like a bully. We cannot let this go by. If such behavior will be acceptable in Israeli society — every worker could be harmed by it.”
MK Itzik Shmuli (Zionist Camp) a member of the Knesset Labor Committee, said that Teva’s CEO “has no regard even for the prime minister, and is not prepared to show even the least flexibility on his plan. The time has come for the government to abandon its fawning and submissive approach and adopt a more determined policy, including enforcement of the real tax assessment of the past few years, after Teva spat in the well from which it has drawn such huge sums.”
However, Israel Manufacturers Association chairman Shraga Brosh argued against a punitive reaction, telling a session of the Knesset Finance Committee on Tuesday morning: “Teva should be supported and encouraged. If we do that, there’s a chance that it will close its plant in Ireland and save the plant in Yerushalayim.”
Answering demands for an end to big tax breaks for Teva and others, Brosh said: “Teva is a private company in a desperate crisis, and so it has to reduce its workforce by 50 percent around the world. Unless it does so, it is liable to collapse, with all the tremendous negative consequences of that for the Israeli economy and Israeli society.
“The emphasis must therefore be on how we help Teva extricate itself from the crisis, and not on how we damage it further. The calls from some Knesset members to deny Teva tax benefits have only caused damage, because it is no longer relevant what it received in the past, and in any event it received what it did lawfully under the Law for the Encouragement of Capital Investment, and all major companies active here are entitled to the same benefits under that law. We must keep Teva here, and not chase it away.”