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Strong shekel battering kibbutz exports By Amiram Cohen Tags: kibbutz industries  The weakness of the dollar and the global slowdown is wreaking havoc among kibbutz industries, according to an analysis of first-quarter reports and estimates that the downtrend persisted in the second quarter of the year. Four of the biggest kibbutz export companies admitted that operating income had fallen by 34% to 48% in the first quarter, mainly because of the strength of the shekel against the euro and the dollar. These companies make their income in foreign currency, which they convert into shekels to pay local salaries and costs. Now, they are finding themselves getting less and less shekels for their money. Nissan Barkat, marketing manager at Arad Dalia, a water-meter technology maker and one of the biggest companies in the kibbutz industry sphere, says the companies may have no choice but to move their operations abroad and fire local workers. Or, they can raise prices, which could cost them market share, while abandoning less profitable production lines. Advertisement Yaron Reichman, chief executive of Brit Pikuach, which provides auditing and advisory services mainly to kibbutz and moshav companies, called on the Bank of Israel to intervene immediately, for the sake of the Israeli economy in general and the kibbutz movement companies in particular. Amos Shalev, who runs the Exports Division at the Kibbutz Industries Association, points out that the damage runs far beyond the publicly listed kibbutz companies. Privately-held kibbutz companies have been bruised by the might of the shekel, he says. Sales of many companies improved in the second quarter of 2008, he qualifies, but not by enough to cover the damage to profits. Indeed, Shalev's figures show that kibbutz industry exports increased by 12% during the first five months of the year, compared with the corresponding period of 2007. But that increase is in dollar terms, and it translates into a drop of 4% to 5% in the value of exports in shekel terms, he explains. Since the companies' biggest expenses, such as wages and taxes, are in shekels, the outcome is mass dismissals. "Thousands of people stand to lose their jobs," he predicts. Meanwhile, the Economic Council of Kibbutz Maagan Michael isn't waiting for the government to drag down the shekel. It's taking matters into its own hands. The kibbutz owns Plasson, which specializes in plastic pipe fittings. The council set up a team and gave it 30 days to prepare a report on sources and uses, based on the lower level of profit. For the first quarter of 2008, Plasson admitted to a 34% slide in operating profit and an 11% drop in gross profit even though revenues had soared by 65% year over year. Meanwhile, Plasson's market value has shrunk to NIS 600 million compared with NIS 1.5 billion at the start of 2008. For the year 2007, Plasson achieved profit of NIS 77 million on revenues of NIS 841 million. Bookmark to del.icio.us   Fragile cease-fire Olmert: Gaza cease-fire is fragile, may be short lived. Unbalanced stance Italy FM: EU stance on Israel in past swayed by intolerance.

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