Fighting in Gaza Has Cost Israeli Industry $101 Million So Far

Manufacturers Association says south has borne most of losses, but 60% have come from other parts of the country. Uptick in Internet shopping in south.

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The rocket that landed in Ashkelon, July 13, 2014.
The rocket that landed in Ashkelon, July 13, 2014.Credit: Police spokesman

Rocket attacks over the first eight days of Operation Protective Edge have cost Israeli industry some 345 million shekels ($101 million), more than 40% to plants in the south of the country, the Manufacturers Association reported Thursday.

The figures, based on a survey of 90 plants around the country over the past two days, include the costs of lost production, wages paid to employees who did not report to work or were unable to work, as well as the loss of raw materials, said the association, which groups Israel’s industrialists.

These figures are the latest to be added to the ledger as the fighting with Hamas ended its ninth day. Treasury officials estimate that actual combat costs amount to 110 million shekels a day, although that could rise if Israel mounts a ground incursion. The economy has also suffered blows from cancellation by incoming tourists and double-digit drops in retail sales.

Nevertheless, citing the experience of Israel’s previous rounds of fighting, most economists say the economy will likely recover much of the losses when the fighting stops.

The Manufacturers Association said biggest losses were for factories that manufacture food products or engage in round-the-clock production. In this category, it said, losses were estimated at 20% to 40% in the south, and about 7% in the rest of the country.

Many plants that operate 24 hours a day reported that raw materials were spoiling or could otherwise not be used, but this cost them only some 2% of their revenues.

The estimates do not include direct damage caused by a plant being hit by a rocket or fires caused by the attacks, the association said. Nor do the losses include the cost of cancelled orders or reputational losses from not being able to meet deliveries on time to overseas customers, which the association said are extremely difficult to quantify.

Meanwhile, food retailers reported that Israelis were shunning big shopping centers on city outskirts in favor of online shopping and neighborhood stores.

Mega, Israel’s second-largest supermarket chain, said its online sales had jumped 40% in shekel terms since the fighting broke out, with the increase reaching 70% in the southern city of Be’er Sheva. The retailer began offering free delivery to some 62 communities in the area around Gaza, which has been hardest hit by rockets, for purchases above 180 shekels, through this Friday.

No. 1 chain Supersol said sales were down at its discount stores, which are further from city centers, and had risen in neighborhood and downtown outlets.

Rami Levy Shivuk Hashikma, the discount food retailer, said sales were actually up 1% since the start of Protective Edge, although down in the south – including a 50% drop in the port city of Ashdod. In Be’er Sheva, the decline was just 7%, while Internet purchases had risen between 15% and 20%, Rami Levy said.

In a related development, Finance Minister Yair Lapid told the Knesset Foreign Affairs and Defense Committee on Thursday that the Tax Authority would start compensating workers who suffered financial losses during Protective Edge. He said the aid would be allocated on a framework similar to that after Operation Pillar of Defense in 2012.

Histadrut labor federation chairman Avi Nisenkorn and representatives of private employers had asked Lapid to sign an agreement that would guarantee the economic rights of residents of the south during the hostilities.

On Sunday, representatives of the Finance Ministry, the Histadrut and the Manufacturers Association will start negotiations over formulating regulations for compensation, in order to have the Knesset approve them quickly.

The compensation will be given to all workers within 40 kilometers of the border with the Gaza Strip, and will be for workers who missed work under orders from the Home Front Command or because they had to remain at home with children after schools, day care and camps were closed by order of the defense authorities.

Employers will recognize the missed days as regular work days at full salary, including all benefits, with the employers compensated by the state.

For the first time the compensation mechanism will relate specifically to workers with disabilities who were unable to reach their workplaces .

In addition, Lapid instructed ministry officials to also start talking Sunday on compensation for indirect damages, because of a loss of business during the fighting.

A gas station in Ashdod following a rocket strike. July 11, 2014.Credit: Ilan Assayag

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