Software house Ness Technologies is hiring hundreds of people for a new center in Be'er Sheva, as other high-tech companies cut back.
The latest tech companies to announce layoffs are Orbotech and Ceregon. On Monday, Orbotech, which makes optical inspection systems for manufacturers of flat screens and printed circuits,warned that about 5% of its workforce will be laid off.
Mobile operator Partner Communications and Freescale Semiconductor recently announced plans to cut back staff; electric car venture Better Place is apparently going to be dismissing 200. Clothing maker Gibor Sabrina also fired several employees recently, including senior staff.
Ness however says it will be hiring 450 people for its new development center in Be'er Sheva.
Ness in the Negev
Ness recently signed an agreement with the municipality to locate the facility in the city's hi-tech industrial park. The Industry, Trade and Labor Ministry has committed to provide the firm with a NIS 65 million grant in support of its development center over a four-year period, which is to be used to pay staff. Ness' Be'er Sheva workforce is to include 150 senior research engineers with at least five years' experience. They are to be paid at least NIS 22,500 per month. The plan is part of Ness' commitment to the state to pay its senior staff at the new center two and a half times the average wage. Another 300 employees will be hired for more junior level positions.
The recruitment is being carried out in conjunction with academic institutions in the city including Ben-Gurion University and the Sami Shamoon College of Engineering. The terms of the state grant include a requirement that the employees who are part of the state-supported plan live in the Negev.
Among the many other high-tech employers in the city is the German telecommunications giant Deutsche Telekom, which employs about 90 people at a communications development center in Be'er Sheva, the company's first of its kind outside of Germany.
In discouraging employment news, Orbotech is expected to dismiss about 5% of its workforce. The company employs 1,700 people around the world including 600 in Israel. Plans call for 95 employees to be let go, including 30 here. Most of the staff cutbacks will be made in the Far East. Orbotech explained that the staff reductions were necessary due to slackening demand in the firm's target markets, primarily involving its flat panel display business.
The drop in Orbotech's sales also forced it to revised its earnings and revenue projections twice this year. In June it cut its revenue outlook for the year by 10% to 14%, to $430 million to $450 million. On the day of the announcement, the company's shares dropped by 25%, the sharpest decline since 1991.
Three weeks ago, Orbotech cut its revenue outlook for 2012 again, to $400 million. The announcement sent the company's stock down further and reduced its market cap to $365 million. At its peak in 2000 the company was worth $3 billion. The company was also hurt this year by allegations of industrial espionage attributed to employees of the firm in South Korea. The company denies the charges, but in its second quarter earnings statements, it disclosed that the case had at that point already cost it $2.3 million.
With regard to Ceregon, its layoffs in Israel are to be limited to 20 people as part of a worldwide dismissal of about 100 employees. In its third quarter financial report, the company explained the need to dismiss staff as part of an effort to reduce operating expenses by 11%. The company, which is dual listed in Tel Aviv and on the NASDAQ exchange, had third-quarter revenues of $118 million, which were 2% higher than in the quarter last year. The company's Latin American business, notably from Brazil, represents 34% of its sales.
Industry sources say Gibor Sabrina has had trouble dealing with stiff competition from imports and a decline in sales. The company acknowledges that it is going through a process of streamlining, but denies any suggestion that it might cease its operations in Israel. "Over the past year, we have moved most of our production activity to Romania," said CEO Simha Keinan, "but development and design work is done in Israel." He also noted that the company, which sells its products through its Lodzia Rotex, Fix and Gibor Sabrina stores, also opened a new branch two month ago at Tzemach on the south shore of the Sea of Galilee. The company's customers include the clothing chain H&O, but it recently announced that its business dealings with H&O had been scaled back considerably.
In other business developments, the Nazareth District Court yesterday approved the sale of the financially troubled glassworks Phoenicia to Fortissimo Capital. A lawyer involved in the case said antitrust approval for the deal is expected today.
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