Business in Brief
The Export Institute reports that Israeli exports of goods (exclusive of diamonds) dropped sharply in September - October compared to the two prior months. After factoring for seasonal adjustments, the institute data indicates that exports to the U.S. dropped 5% during this period. Exports to the U.S., the market for 33% of Israel's exported goods, is expected to show a negative growth of 0.4% in 2009, compared to an estimated increase of 1.4% in 2008 and about 2% in 2007. Imports from the U.S. are also expected to fall by about 14% in 2009, following an increase of an expected 10% in 2008. Exports to the EU, which account for 30% of all goods exported from Israel, fell in September - October by 11% compared to July - August, and exports to Asia fell by 19% in the same period.
El Al has begun the process of firing 30 of its permanent employees, in accordance with an agreement reached with the workers committee. About half of those employees listed for layoffs by the national airline have already agreed to voluntarily retirement. The laid off workers will receive enhanced compensation packages based upon their age, number of years they have been employed with the company or their early retirement plan. For instance, an employee who has been with the firm 25 years and is insured by a provident stipend fund will be entitled to increased compensation of 200%. With the addition of the 100% to which the worker is entitled by law, such an employee will be entitled to compensation of 300%.
The Public Utility Commission - Electricity approved the rate of $0.08 per Kw/Hr for sale of privately generated electricity to the national grid, ensuring a 9.2% yield for private electricity manufacturers. The rate ensures investors will repay their debt capital investment within 15 years and equity investment within 18 years. The model was finally drawn up following sharp criticism leveled at the commission, which had put off approval of the rates twice, in April and September of this year.
The Indian corporate giant Mahindra will buy Tomcar, the Israeli manufacturer of all terrain vehicles for family and military use, for a few million dollars in cash and royalties from sales that will be paid to the company's owners. The deal was made possible after an earlier agreement for sale of Tomcar signed with the Markston fund - based on a company valuation of about $45 million, was not finalized. Mahindra has apparently acquired the company for military use. Mahindra is considered one of the largest groups in India, with sales of some $5 billion in 2007. It's automotive arm is considered the largest vehicle company in India, with annual sales of around $1.8 billion and another $400 million in spare parts trade.
Maariv is cutting down drastically on the number of pages it devotes to stock tables and other financial data, after another bad quarter and further need to cut back on expenses. The newspaper wrote to its readers on the front page of yesterday's business section that it would increase its consumer coverage at the expense of the financial pages. Four years ago Maariv tried a similar move, but quickly returned to the previous format after readers complained. Yesterday's paper contained only one page of financial data.
For the second time this month, work on an upgrade of the Gelilot-West junction has been suspended as the treasury and the project's contractor, Ayalon Highway Corp., squabble over funding. The current disagreement is over the financing of a claim by Malrag Engineering and Construction, a subcontractor for the project, which arose after- you guessed it: work on the project was suspended for some six months in early 2008 when the treasury and the Ayalon Highway Corp. were unable to agree on additional financing for the project. The junction in question, if ever completed, will allow north-bound drivers on the Ayalon Highway to access road number 4 northward or number 5 eastward. (Avi Bar-Eli)
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