The Finance Ministry is examining ways to aid distressed factories in the periphery. But though the need for government aid came to the forefront after the possible closure of the Vita Pri Galil plant in Hatzor Haglilit hit the headlines over the last few weeks, the ministry does not intend to help Vita. The treasury thinks that Vita can be saved without state help, as there are potential buyers, and that government intervention would only delay any solution.
Nevertheless, Vita represents the type of factory the treasury wants to help: manufacturers located in the periphery, with a viable business and a recovery plan, that provide a significant amount of employment for their region.
The aid is intended only for areas with limited employment prospects, and most of it would probably come in the form of state loan guarantees for the businesses. The ministry would expect all stakeholders to participate in the recovery plan: owners, employees, suppliers, banks and other creditors.
In the past, the state funneled such aid through a fund for distressed factories. But that fund, which was under the auspices of the Ministry of Industry, Trade and Labor, was closed in 2004 after the government decided the criteria used to allocate the money were not clear enough.
In retrospect, it turns out that most of the fund's investments were wasted: Most of the businesses that received help failed anyway, and the money was used only to pay off the companies' bank debts without any benefits for workers or any jobs being saved.
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