Factory Closure Is Big Blow to Small Southern Town, Dying Industry

Last 200 workers at Arad Towels receive dismissal notices as policy makers focus on helping high-tech, not textile manufacturing.

Eliyahu Hershkovitz

The 200 employees of Arad Textile Industries — the last ones remaining from a work force of 700 just four years ago — were fired this week, in a huge blow to the remains of Israel’s dying textile industry and to the small, isolated Negev town where the factory is located.

“Closing Arad Textile Industries is a critical blow to Arad,” said Tali Ploskov, mayor of the town of 28,000 people, which has an unemployment rate about 1 percentage point higher than the national average of 6.4%. “Those who were dismissed have nowhere else to go because the existing factories in the areas can’t take on extra workers.”

Just 300 meters from the Arad plant, 23 employees of a Flextronics factory producing parts for defense electronics makers Elbit Systems were receiving notice for a pre-dismissal hearing.

Four years ago, Arad Textile, popularly known as Arad Towels for its principal product, churned out 1,200 tons of towels a month. But output has since declined by a whopping 95%, to just 70 tons.

The company moved production from Arad to Jordan and as far afield as China and the United States. Losses over the past four years reached some $13.5 million.

Employees were put on a forced vacation on October 1, with management saying they didn’t want to fire anyone during the holiday season. The last 200 Arad Towels workers — 60% of them Negev Bedouin — got their dismissal notices Sunday.

Like the biggest companies in Israel’s textile industry, Arad Towels couldn’t keep production at home while simultaneously competing with rivals manufacturing in low-cost countries like Pakistan, China and Jordan, even if it put an emphasis on design and quality.

The high cost of everything from municipal taxes to water and energy, not to mention relatively high salaries averaging 7,000 shekels ($1,870) a month, made it impossible for Arad Towels to compete.

“We asked for a discount on municipal taxes — we’re paying 3 million shekels a year — but they told us there was nothing that could be done,” said one manager at the company, who spoke on condition of anonymity. “The feeling is no one did enough to try and strengthen the business.”

Executives at Arad Towels also met with government officials. But with policy makers focused on high-tech, textile makers like Arad and Negev Textiles, which was shuttered last year, didn’t get much attention.

“When they closed Negev Textiles in Sderot, the economy minister, Naftali Bennett, told us he doesn’t believe in the industry and that he would offer professional retraining to those who were fired,” the manager said. “How are you going to retrain people who are 60 years old?”

The loss of Negev Textiles hurt Arad Towels, which had been sending it 30 tons of towels every month for dyeing. In turn, Arad Towel’s closure will reverberate on other business that supplied goods and services to the plant — at a cost of another 100 jobs, one source estimated.