Makhteshim Chemical Works, the firm that was founded to make the Negev bloom, is facing a reform plan that workers fear will lead to hundreds of firings - and a brain drain from the country's south. Leaders of the fight against the plan say it can be stopped - but only if political leaders intervene.
March 14, 2007
The undertaker cometh
Workers in blue overalls lit up Time cigarettes outside the dining room and couldn't believe it. It was a March afternoon. The senior executives sat behind closed doors, by themselves. Instantaneously, everyone grasped that the rules had changed. There wasn't much to be said. And even though they had been expecting it to happen, there was a melee that day. Yaakov Cohen, chairman of the workers' committee of Makhteshim Chemical Works, held the newspaper and seethed inwardly.
"You read the paper and just don't believe it," he said with ill-concealed hatred and bitterness. "The headline talks about millions and on an inside page the CEO explains how he is about to waste you. You feel that your home is about to collapse. Like the undertaker has come to your house."
The paper was passed from hand to hand. That morning, the salaries of the top Makhteshim officials were gleefully published under the headline, "What fun to work for Nochi Dankner." The total cost of the salary of Shlomo Yanai, outgoing CEO of Makhteshim-Agan Industries, was NIS 24 million for the year; for Daniel Porat, vice president and chief strategy officer, it was NIS 8.7 million; followed by NIS 8.5 million for the outgoing chief operating officer, Eli Assraf. The names of the Big Three of Makhteshim seemed to glitter in the newspaper. For the others, though, it was just another unexciting day.
Things are decidedly less upbeat in the backyard of one of Nochi Dankner's golden enterprises. The reason: alongside the millionaires' celebrations at the top of the pyramid, Abraham Biger, chairman of Makhteshim Agan, explained to the paper his reform plan for the enterprise, which is intended to save the company $135 million a year.
"It's not that there is anything wrong with the Negev, but it's hard for some people to get to the Negev," Biger told YNet, the Web site of the daily Yedioth Ahronoth two days earlier. "It doesn't make any difference whether it's in the Negev, Ashdod, Tel Aviv or abroad. Our goal is to streamline." Biger declared that his goal was to reprise the profitability of the golden year of 2004. Cohen, the workers' representative, said this was the opening volley of "Mr. Biger." That's how he calls his boss, in a sarcastic tone, using the English word "Mister Biger." Cohen, 52, married and the father of two, thinks Biger is a small man. "Half a year ago, when Mister Biger took over, things here started to get uncomfortable," he said in the conference room of the workers' committee. "At first it wasn't anything concrete, just rumors from Tel Aviv. But we knew his style of work: he liquidates, that's what he knows how to do. When he was CEO of Super-Sol [a supermarket chain], he fired 500 workers - he fired my friend's wife by fax. The man is a serial dismisser; wherever he enters, 500 others leave. When he entered Paz [a fuel company] years ago, his streamlining plan included the firing of 50 percent of the employees. On his resume he can take pride in having fired thousands of people. I know him. When Dankner wants streamlining he calls Biger. He's Nochi Dankner's terminator."
March 2007 marked the turning point in the struggle of the Makhteshim workers. Articles in the daily press shed light for the first time on the plans of CEO and chairman Biger for Be'er Sheva-based Makhteshim. He wants to launch his reform with two major moves. The first is the operational merger of Makhteshim, in Be'er Sheva, with Agan, which is based in Ashdod. The idea is to unify the research, development and computer systems. Biger's second move will be to move the administrative echelon, which is now based in Be'er Sheva and Ashdod, to Tel Aviv, and transform the Agan and Makhteshim plants into production sites.
The reorganization leaves no place for the CEO of Makhteshim, Ehud Marom, who will leave the company this October. And he is not alone. The two moves imply employee dismissals, though the numbers are in dispute. Biger says there will be limited dismissals, but there is a very different feeling at the plant. The workers there are talking catastrophe.
"Now Biger is here, at Makhteshim," Cohen says in a faint voice, a bitter smile on his lips. He lights up a cigarette, asks the secretary for coffee and makes another call on the mobile phone that rests on the table. "When he took over half a year ago, one of his first moves was to send us the international consultanting firm McKinsey, the same people who recommended that Bank Hapoalim fire 600 people," Cohen says. Dankner wouldn't have brought Biger in to move 10 people. Nochi Dankner appointed Biger for one year to start liquidating Makhteshim. Half the plant will go home - at least 300 workers, I estimate. After half a year the day came when he decided to talk to the press, for some reason. We read it. We got it. The message reached Be'er Sheva."
What do you mean, 'We read it' and 'The message arrived'? Wasn't there a meeting between you, a phone call?
"No. It's all absurd. He talks to 'TheMarker,' you know, and to 'Globes' and to Internet sites. But when it comes to his workers, each of whom produces nearly a million shekels a year, he ignores them. During half a year on the job, he did not come to the plant even once. Have you ever seen anyone who manages a company through Power Point presentations and doesn't step into his enterprise even once? To this day he hasn't come to Be'er Sheva. It's a long way for him, for Mister Biger."
March 18, 2007
Labor dispute declared
The Makhteshim employees' response wasn't long in coming. On March 18, a few days after Abraham Biger's declarations to the financial press, the Negev region of the Histadrut labor federation held a meeting on the second floor of the branch in Be'er Sheva. The heads of the Makhteshim labor council wanted to declare a labor dispute, and updated the regional Histadrut chairman, Meir Babayoff.
"You're not fighting for a wage increment, you're fighting for your survival," Babayoff told them. "You are pitted against an economic tycoon, Nochi Dankner, who is ruining everything good in the country. "He couldn't care less if there are 300 fewer workplaces here in the Negev. He and Biger, a manager who pursues [stock] options - these people are telling us, residents of the Negev, to our faces: You mean nothing to us, you are human dust: produce the dollars for us and keep inhaling the toxins. They are spitting in our faces. There's going to be a war here," Babayoff intoned, and authorized the labor dispute. The Makhteshim employees left his office ready for a fight.
This is the new war of the south - not the first, nor the second - but this time the struggle is not being waged by textile workers, or by a single mother in the person of Viki Knafo. This time the battle is emerging from one of the most successful enterprises in Israel, which sends dozens of emissaries from Be'er Sheva to strike deals worth millions and ends the year with profits of millions of dollars. Makhteshim is considered the symbol of Negev industry, and its workers belong to a very elite group.
Yossi Almog, 59, is one of the company's veteran employees. His wife is a school principal in Be'er Sheva, and he is chief technician in the R&D division. He has worked at Makhteshim since 1969. "For years, Makhteshim was known as 'the flagship of the Koor concern,'" he says. "It's a huge plant, one of the biggest in the country, a symbol of southern prestige. My feeling is that I am about to be thrown out of my house, the house we built. In the 1970s I was present when the cornerstone was laid at Ramat Hovav. I built this plant with my own hands.
"There is uncertainty," he continues. "It's a very disturbing feeling. There is no feeling of stability. The declaration of a labor dispute is essential; there was no choice. We need the support of everyone who can help, because this is not a private matter of the Makhteshim workers. We also have to take into account the circle of people who earn a living from Makhteshim - I am talking about suppliers and contractors and other service providers. The plant provides a living for thousands of families in Be'er Sheva. Thousands of families. Hurting Makhteshim will cause a social disaster."
The heart of the plant, which manufactures agricultural pesticides, is located in Be'er Sheva. The company develops generic pesticides and is considered one of the world leaders in its field. Its sales volume is almost NIS 2 billion a year, and it has 36 subsidiaries across the world. Under the shade of large trees, all the enterprise's departments are concentrated in Be'er Sheva - more than 600 employees, including researchers, agronomists, lawyers, patent registrars, marketers and laborers. The latter are employed primarily in the production section, in the Ramat Hovav industrial zone south of Be'er Sheva. Of the employees, 150 are academics, 35 percent are above the age of 50, and 480 are part of a collective work agreement. From the outset, the company, which was founded in 1951 by a group of chemistry students from the Hebrew University of Jerusalem, carried an ideological message. Makhteshim is one of the first industrial plants built in Be'er Sheva after Israel's creation.
"We established Makhteshim in Be'er Sheva for purely pioneer reasons," relates the company's first chief, Zvi Zur, now 88, who still lives in Be'er Sheva. "It was clear to us that we had to make the Negev bloom economically, that Israel would not be able to exist without the development of the Negev. Profit-making was not at the top of our agenda. We felt we had a role, that the activity of a chemical plant in the Negev, one that was knowledge- and labor-intensive, is part of the realization of Ben-Gurion's vision."
Zur, who was a consultant to the company until recently, was fired a few weeks ago along with the other members of the old guard: Yisrael Tamir, 86, and Michael Pikarsky, 79, the founders of Agan.
In the 1980s, when Koor Industries, formerly a Histadrut corporation, was privatized, Makhteshim also passed into private hands for the first time. In 1998, Makhteshim was merged with Agan and began to be traded on the stock exchange. The company is now part of the Koor Industries group, which Nochi Dankner bought less than a year ago.
April 17, 2007
A sad press conference
Preparing for the next stage of their struggle, the Makhteshim workers met again in Babayoff's office. The Histadrut's weakness is apparent. No other workers are present to show solidarity. The strategy: to hone the messages against Abraham Biger and to recruit David Ben-Gurion for the campaign. A red poster prepared by the Histadrut declares, "Ben-Gurion is turning over in his grave when he hears this. Biger wants to eliminate Makhteshim in the Negev. The workers of Makhteshim are staying in the Negev." The next day - it is Holocaust Memorial Day - a first press conference is held.
These days, the only viable alternative for the workers of the south is to invoke the vision of a dead leader. They are unable to make contact with the living minister for the development of the Negev, Shimon Peres. "I understood that Nochi Dankner is apparently one of the donors to the Peres Center for Peace," Cohen says. The response from Peres' office: "Agan Makhteshim is one of the biggest and most significant employers in the Negev, and for years was a central factor in the development and advancement of the region. As such, we expect it to continue to be a central element in Israel's national effort to develop and strengthen the Negev and the Galilee. The ministry's director general, Efrat Duvdevani, is working with the chairman of the board of Makhteshim, Abraham Biger, and with representatives of the Knesset Finance Committee, to examine legitimate ways to change the decision."
"The whole history of this plant is Be'er Sheva," Cohen says. "You have to understand: for years, one of the conditions for working at Makhteshim was living in the Negev. Now they want to dismantle it all [and transfer it] to Tel Aviv, and they're calling that streamlining. It's hard for me to understand how renting dozens of offices in Tel Aviv will be cheaper than the offices that exist here. It is part of the plant's vision, of its culture, for everyone to be here together. The whose essence of the struggle is not to change Makhteshim in Be'er Sheva into a factory that is managed from Tel Aviv. The move of management to Tel Aviv will be a loss of human capital for the Negev. What do they want - to leave the hewers of wood and the drawers of water here? To remove the quality population from Be'er Sheva, the academics and the economically established families, and leave the workers in the chemical stench of Ramat Hovav?"
Well, yes. It's hard to see Be'er Sheva from the 27th floor of Azrieli Towers in Tel Aviv. What is visible from the office of chairman and CEO Biger is mainly the 2006 fourth quarter (Q4) results for Makhteshim-Agan Industries, which, like the previous quarters, show a continued erosion of profits. Makhteshim's 2006 revenues did grow by about 2 percent, to NIS 7.95 billion, but net profit plunged. In Q4 2005, profits stood at NIS 47 million, but in Q4 2006 the company lost NIS 38.5 million, the first quarterly loss for five years. According to company data, as published on the Web site of the First International Bank, annual net profits dropped by 59 percent, from $204.8 million in 2005, to $83.9 million in 2006.
Biger undoubtedly wants to add to his credit another positive line in his resume. In the 1970s, he worked in the budgets department of the Finance Ministry. From 1984 to 1986 he was the accountant of Bank Clali, and for the next seven years was its CEO. He then served as CEO of Paz, and in 1995 was appointed to the board of directors of Bank Leumi. From December 1996 until the end of 1997, he was CEO of Menorah, an insurance company. In economic circles in recent years, Biger has gained the reputation of being "Dankner's healer of companies." He is now concluding his tenure as chairman of Super-Sol, after putting the chain back on its feet and receiving handsome bonuses from Dankner. He continues to act as chairman and CEO of Makhteshim-Agan Industries and chairman of the Caesarea Edmond de Rothschild Foundation.
Confronting this rich resume is Yaakov Cohen, who began his career as second goalkeeper for the Maccabi Be'er Sheva soccer team. "Don't mention that I was a goalkeeper, it's not important," he requests. Cohen began working for Makhteshim 31 years ago as a production operator. He is now safety supervisor, and since 1993 has been chairman of the workers' committee, apart from a two-year period.
"I feel it's too big for me, definitely," Cohen admits as the photographers and journalists leave the room. "This is a public struggle over the image of this country, it is a national struggle, not only a battle between Biger and Cohen. If no one cares about the Negev, what can Yaakov Cohen do?" He has more plans to step up the struggle, he says, but doesn't hold out much hope for them. "I am ready to risk walking on the edge, but this is a countrywide thing, and it can only be stopped at the top. The members of the Knesset and the senior officials of the treasury have to stop the fracas here. But they will not do anything. The treasury officials walk down the corridor that connects their present post with mega-corporations, and the politicians need the millionaires' money. The connection between capital and government is so strong in this country. There is nothing to be done. When will something happen? When banks are burned and factories blown up."
April 29, 2007
'Let them buy Coke'
The air is heavy with a smell of chemicals. Monstrous iron facilities, scorched by white smoke, rise from the desert soil in the Ramat Hovav industrial zone. Outside the Makhteshim plant stands a truck from Mekorot, the national water company, laden with empty chlorine containers. As part of the intensification of the struggle, and in a desperate attempt to project the workers' distress onto the public consciousness, Cohen has decided on an unusual step: he has stopped the supply of chlorine Makhteshim produces for Mekorot.
Cohen's move means that Mekorot, which is responsible for the purity of the country's drinking water, is liable to encounter a problem in the weeks ahead. "I produce chlorine to purify the drinking water in the whole country," Cohen says. "In the past week we cut back the production of chlorine and supplied less and less chlorine to Mekorot. Today we are not taking out any more chlorine. At this moment a Mekorot truck is waiting outside the plant and I am not letting it enter. Within a week people will start boiling their drinking water. We have no choice - we have to emphasize the disconnect between the center and the periphery. Conscience? I have no conscience for the people who don't give a hoot about me. That's the situation, If there is no mutual surety, then I say to the people in the center to go and look for water to drink. Let them buy Coke."
The next day, Mekorot fires off an urgent fax to the Makhteshim management. "Recently the supply of chlorine to Mekorot was stopped completely, after a few days when the supply was partial. The supply of chlorine is vital; without it, Mekorot will not be able to supply drinking water. We request that you take all necessary means to ensure the supply of chlorine, including court orders to the workers .... Tremendous damage is liable to be caused to Mekorot and other elements, and the absence of action on your part will compel us to impose the responsibility on you, if the public suffers damage."
The message was signed by Avi Gefen, the senior financial officer at Mekorot. Ronen Wolfman, the company's CEO, adds, "If the supply of chlorine to Mekorot is not resumed toward the middle of the week, we will have to call on the public in large areas of the country to boil drinking water."
May 1, 2007
Biger wants to meet
May 1, a symbolic day for a labor struggle - though Cohen in fact associates himself and the workers he represents with the middle class. As Cohen talks, his mobile phone rings incessantly. The pressure he is exerting is beginning to bear fruit. It's a month and a half since the start of the struggle, and suddenly everyone wants to talk to him. He glances at the phone display to see who's calling and emits a curse: "It's Shalom Granit, an expert on wage agreements. He was appointed a few years ago as a conciliator by Biger," he says.
A minute later there is another call. This time it's the CEO of Makhteshim, Ehud Marom. Cohen doesn't answer and his look turns serious. He happens to like Marom. The game is getting hard for him. "I have nothing to say to them. They probably got a call from Mekorot," he says. What can I tell them? They won't get chlorine. This time we won't let it happen. It's not just the problem of the workers in Makhteshim, it's a message to all the workers here."
This time, he also feels the need to elaborate. "The move by management sends a message to the other owners of plants and CEOs that the Negev is the place for simple industrial production, that the place for the elites of the enterprises is Tel Aviv. That you can manage everything like that. Years ago, Israel Chemicals did the same thing, and it passed quietly. The leaders of the Negev and of the state lent their hand to the move, either by saying nothing or by making empty declarations.
"There is an abnormal situation here," he continues. "A few months ago, the Delta [textiles] factory in Carmiel was shut down. Six hundred workers were fired. The owner transferred the production line to Egypt. Did anyone hear about that? No one heard about it because the workers were Arabs, or maybe because the owner, Dov Lautman, was just awarded the Israel Prize. It's the same thing with us. The plant will be transferred and everyone will be mute. Maybe Dankner will get the Israel Prize next year."
It's May Day, and in the evening there is a first television report on the Makhteshim workers. Channel 1 news warns that the supply of pure drinking water may be disrupted. In the meantime, Cohen decides to answer the phone, and Shalom Granit sets up a meeting with him in the company's Be'er Sheva offices. "Monday at 2, write it down," he says with no satisfaction.
He understands the complications, that this is a game with insane rules and false smiles. "We can't do it alone," he repeats at the end of the day in his house. "We need more support. We are weaker. There is no labor solidarity. There is identification, but it's not real; everyone looks after himself and people don't join the struggle of other workers. That's the culture.
"Each plant has its own agreements, and if the workers have it good they forget the weak. We won't see a common struggle of workers, I'm sure of that. When the workers have it good they behave like they are the owners. We didn't even manage to connect with the workers in Agan, who are having an even harder time than we are, because they don't have a collective agreement."
But you were indifferent to the struggle of Viki Knafo, of Yisrael Tuito from 'Bread Square,' of the Haifa Chemicals workers near Dimona. The strong workers' committees in the south did not support people them.
"We were shits. Absolutely. It's a disgrace. I am ashamed now. We are all criminals. It's the truth. We didn't support them. The Makhteshim workers live well, and we didn't connect with the struggles of Knafo and Tuito. We didn't behave like human beings. But we did identify with the struggle of the Haifa Chemicals workers and we demonstrated with them at the gates of the plant."
What insights have you gained?
"We have become insensitive. No one cares about others anymore. These days, when you hear about 200 people being fired, it doesn't make any impression. It's just not interesting. Dismissals have become a symbol of managerial power, of success, there is no shame to it. It makes me sick that after every wave of dismissals in a company, the next morning its shares shoot up. The only thing people want is money. I think they haven't suppressed the middle class enough yet. We are getting battered all the time, but it's not enough. The day will come when the middle class will be brought so low that it will connect with those who are already on the ground."
And what will happen then?
"Then there will be a huge explosion here. The day when people shoot owners of industries is very close. And they will shoot them. People don't understand that. There will be no state here if people don't have anywhere to work. It is the state's responsibility to make sure these plants, which employ hundreds of people, continue to exist. The state is investing in the development of China - that is a subject the state comptroller must examine. Millions are invested in industries, and then they hand them to private investors who transfer them to China. The absurd thing is that we are a profitable enterprise. You can go nuts - how much more do they want? So there was one slightly weak year compared to other years, but there was no loss. Last year the Makhteshim group had profits of nearly $90 million."
That's apparently not enough.
"You can't go on chasing money without end. You can't fire a hundred workers in order to get $5 million to balance the books. Don't fire workers; manufacture new products, sell more, that's how you will increase your profit as CEO, not by sending whole families down the tubes."
But the plant doesn't belong to you, and the owner wants to streamline - it's his money.
"This plant was established and continues to operate thanks to state grants. The chief scientist is involved in many of our projects here. A sewage purification system was built here, and the state helped with taxpayers' money. Dankner doesn't own the whole enterprise. I'd like to see him establish an industry like this without assistance from the state. He bought a ready-made industry, which came with workers, too. When he bought this plant, people told him, 'You have facilities and you have materials, and you also have workers.' It was all one package. If he wants to send people here to soup kitchens, we will see to it that he won't have a plant. I sold my shares in Makhteshim."
Does your struggle stand a chance? It often looks like a struggle between unequal forces.
"He terrorized us, because he has money. We don't have money. For 30 years we have been working with scary materials, inhaling toxins and walking around in protective suits. Now, after 30 years, you can't come and say to us, 'Idiots, you did your thing, now go home.' And even if that is the approach here, that they are rich and have top lawyers and PR people, and half the country is theirs, we will not bow down. We will not bow down."
May 7, 2007
The tension reached a new peak as Abraham Biger's car passed through the white gate and cruised into the heart of the plant in Be'er Sheva. The two protagonists arrived at their meeting point unwillingly. Biger and Cohen met in the office of CEO Marom. They sat for two hours and talked a lot, but got nowhere. There wasn't much to say to the workers who waited outside to hear the good word.
"He opened by saying that he is a person who means what he says, that he does not lie, that what he says is what he does, that he plays openly," Cohen told his colleagues. "It was a businesslike conversation that ended in a crisis of confidence. He told me there will be no dismissals. When he asked me if I believed him, I told him no. His record speaks differently. He just wants quiet until then."
Abraham Biger says he doesn't understand what all the fuss is about. "There are duplicated positions in Makhteshim and Agan," he says, "so it may very well be that there will be dismissals relating to duplications. But that has nothing to do with the production workers. I am talking about accounting and managerial functions."
How many workers will be fired?
"I have no idea how many workers. At the moment I am not about to fire anyone. There is no offensive against the workers in any form. Certainly no one is out to liquidate Makhteshim. I don't know what the source of the disinformation is. I explained all this to Yaakov Cohen. I held a frank conversation with him."
Still, he didn't believe you.
"What can I do if he doesn't believe me? I have no idea who lit this fire."
Maybe it has something to do with the total break between you in the past six months?
"I don't know."
Will the management staff now located in Be'er Sheva move to Tel Aviv?
"No one is moving the management to Tel Aviv. At the same time, we want to concentrate people who come from different disciplines in one place. This involves only a few dozen people, whom we will centralize in Tel Aviv. It's not a process with a hostile intent."
The day before, the mayor of Be'er Sheva, Yaakov Terner, met with Nochi Dankner in Tel Aviv. Biger and Cohen talked about that, too. Cohen made no secret of his disgust at Dankner's move. The Terner-Dankner meeting could have brought good news for the Makhteshim employees, but instead, Terner received generous support for the city's soccer team. Dankner agreed to pump NIS 4 million into Hapoel Be'er Sheva in order to save the team from collapse - half this year and the other half next year.
"It's scary," Cohen says. "Not a thing was agreed about the workers of Makhteshim, but there is NIS 4 million for the soccer team. You don't know what's happening, it's like someone is trying to make fun of you. I told Biger that the whole story of Dankner's support for the soccer team has a bad smell. It was really grating. It looks as though Dankner gave Terner two million for soccer and that if Terner behaves nicely he will get another two million. But we were forgotten amid all this good-heartedness."
And Terner is behaving nicely, in Cohen's view. That same evening there was a meeting of the Be'er Sheva Municipal Council. Cohen and 70 other workers showed up for the event, and the corridors of City Hall rang with their outcry. "It just killed me," Cohen said after the meeting. "This is not a private struggle. How can the mayor not look after the residents of his city and just leave us by ourselves? Regrettably, a decision was made to send letters to all kinds of people. Letters. The whole business stinks. It's a done deal. Done. We go to the council to set things in motion but nothing operative gets done. You feel that there is a reason for this. Everyone makes firebrand speeches and that's it. To decide to shut down the city's schools - something that would generate public discussion about the developments - or to raise the property taxes on Dankner's assets, to do something - no way. Pity people who have leaders like this."
On Monday of this week, the Q1 2007 results for Makhteshim-Agan were published. The company returned to double-digit growth in sales and profits, headlines in "TheMarker" stated. Biger was undoubtedly pleased, but he didn't forget to note that the quarter results had been influenced only in a minor way by the reform plan, which is yet to come. W