The Knesset Finance Committee on Wednesday approved a NIS 100 million state to the government-owned armaments maker, Israel Military Industries.
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The company needs the money to pay salaries (NIS 70 million) and for raw materials (NIS 30 million). The loan is just the latest tranche in the state's supports for the company, which has already reached NIS 2.28 billion - around $640 million.
Nor will that be all, it seems: IMI CEO and president Avi Felder said the company may well be back to ask for yet another loan within a month. IMI is running an annual structural deficit of NIS 300 million, Felder said - because it has 950 redundant employees on the payroll in addition to pension liabilities and other previously incurred liabilities. Felder noted that the company has a very large backlog of orders, 90% of them from abroad.
IMI is in the final stages before privatization, Felder said, which will allow it to move pension obligations and the wage costs of its 950 noncritical employees off its books. The privatization plan also calls for moving IMI's manufacturing facilities from central Israel to the Negev by 2020.
The chairman of the Knesset Finance Committee, MK Nissan Slomiansky, said that while the committee had approved the loan it would have to weigh seriously any further loan requests in the event the privatization process were not finalized.
The union steward of IMI, Itzik Yehuda, blamed the government for the company’s economic woes. He said the union local and the Histadrut labor federation was willing to authorize the privatization but the Defense Ministry threw up obstacles. In the meantime, Yehuda said, salaries had to be paid and the factories kept running.
“The state will sell IMI for a pittance and a lot of people will get rich,” he said. “The state doesn't know how to privatize.”