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The union at state-owned Israel Military Industries (IMI), lead by Yitzhak Yehuda, yesterday called for the establishment of a commission of inquiry to examine the reasons for the deep financial crisis at the company.

"In 2002, the workers contributed their part to the company's efforts by agreeing to the firing of 720 employees and a cut of 11 percent in salaries for those workers who remained. Nevertheless, the company hasn't extricated itself from its financial difficulties," Yehuda said.

"Salary cuts accounted for NIS 400 million in savings that year alone. Somebody needs to explain where the money from the cuts was invested and what happened in the three years since the company's last recovery plan," Yehuda said.

The union rejected the new recovery plan proposed by the treasury, according to which 500 more IMI workers would be let go, and the salaries of the rest would be cut by a total of NIS 50 million. IMI management accepted the plan on Sunday.

At the same time, the IMI union has launched a publicity campaign designed to "save" the company. Today, letters will be sent to public figures and others under the heading "The crisis at IMI threatens Israel's security."

The letters say that IMI is experiencing a cash-flow crisis to the point that it is unable to purchase raw materials needed to produce weapons and ammunitions for the Israel Defense Forces - weapons and ammunition that cannot be purchased abroad. The letters go on to say that this situation is hurting citizens.

The union says that IMI's recovery plans, which have all failed, are always based on layoffs and early retirement, and that the workers refuse to pay the price for "management failure."

The treasury said yesterday evening that implemention of the plan would permit it to inject NIS 350 million needed to pay suppliers and cover deliveries.

IMI's 1,200 pensioners are due to receive their monthly checks on Friday, but it is doubtful this will happen on time, due to the financial crisis. Regular salary payments due next week are also in doubt.