The Histadrut labor federation has become involved in winding down Kiryat Gat-based Polgat Textile. Union leader Ofer Eini met yesterday with Polgat owner Ofer Gilboa and CEO Yossi Danziger. Apparently they ultimately agreed that Polgat itself, not the National Insurance Institute (NII), would pay the 300 fired workers. When the NII has to pay, it can take months.

Eini also insists that Polgat's owners personally guarantee payment of compensation.

Previous talks between Polgat's management and the umbrella labor union broke down after management balked at agreeing to the company paying the severance pay. Workers yesterday called a wildcat strike and barricaded themselves in the factory yesterday morning, igniting tires. They locked the gates to the plant in protest at Polgat's plans to let the NII pay severance compensation: "We'd have to wait until June at least to get the money we're owned, because the NII won't pay until the company is liquidated," a labor representative explained.

The company already fired 150 workers six months ago, which caused unrest in the ranks: the workers suspected that the axe was closing in. Quality inspector Shula Matri tells how she decided to put off NIS 60,000 worth of dental work because of her floating concerns. Now they are reality: Polgat is closing down because, simply, it isn't profitable any more. But the workers object to the terms of their release.

"All we want is work with dignity," employee Rahel Kadala told Haaretz yesterday. A mother of eight with an unemployed husband, she and women like her have spent decades at Polgat. Others said they were told things would "be okay," but also that they had to accept the severance terms. "What's the problem to pay severance on minimum wage?" one protested.

Polgat Textile produces wool fabrics for suits. First Israel Mezzanine Investors bought parent company Bagir in mid-2007. Bagir clarified earlier this week that closing Polgat won't significantly affect its financial status.

"The dollar, competition from the East, and wool and energy prices combined do not allow for wool fabric production in Israel," Polgat CEO Yossi Danziger said this week. The company exports 90 percent of its product, he said, and the exchange rate undercut revenue. In addition wool prices jumped 40% following a drought in Australia, while oil has driven up fuel prices. These developments forced the company to hike its prices, says Danziger, causing it to lose customers. "The backlog of orders is enough for six weeks," he said, concluding that regretfully there was no avoiding closing down production in the company.

The loss of the Polgat factory is the latest in a chain as the local textile industry adjusts to globalization. Bagir Jeans, also in Kiryat Gat, recently closed down.

Mijal Grinberg contributed to this report.