Iscar, the Israeli maker of machine tools owned by U.S. billionaire investor Warren Buffett, wanted to build an additional plant at its headquarters in the Galilee town of Tefen. Eli Cohen, the minister of economy and industry, was there to help with an offer of a 50-dunam (12.5-acre) site at no cost.
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Cohen wanted to ensure that as Iscar grows, it grows in Israel, rather than just overseas. But it doesn’t look like the plant will be built after all, and that’s because there aren’t enough skilled workers to hire, sources close to the company told TheMarker.
Cohen visited Iscar’s facility at the Tefen Industrial Park this week, together with officials from the Economy Ministry, and met with company management and Sigal Shaltiel, the head of the Migdal Tefen Local Council.
“Opening and expanding factories together with advancing industry in all parts of the country – in the outskirts and the north in particular – is at the top of our priorities at the Economy and Industry Ministry,” Cohen said, adding that the ministry was investing more than 900 million shekels ($263 million) this year in boosting productivity and creating jobs in the manufacturing sector.
Still, sources close to Iscar said the manufacturing sector lacked qualified workers.
Iscar, which has been the recipient of major government aid over the years under the Law for the Encouragement of Investment, is trying to hire 100 people for an expanded plant, which was slated for land north of its existing facility.
“Without a trained workforce we won’t be expanding, not at Iscar and not at other companies,” said a source who asked not to be named. “The problem isn’t land but labor. The government needs to find a solution. We’ve heard government officials talk about it, but in practice we haven’t seen any change.”
Stef Wertheimer, the legendary industrialist who founded Iscar, developed his own worker-training program, but the source said the company couldn’t do it all alone.
Israel is facing an increasingly tight labor market, as unemployment falls to its lowest point in 30 years even as more and more Israelis join the labor force. But many of the new entrants to the labor market, such as ultra-Orthodox men, don’t have adequate job skills, and Israeli schools do a poor job of providing them, even outside the ultra-Orthodox community.
Earlier this month, Finance Minister Moshe Kahlon unveiled his Industry Net program to help manufacturers. Its 1.1-billion-shekel budget includes 365 million for technology training for industrial workers, including 200 million for reforming technical training at schools. The budget for the program appears in the 2019 Economic Arrangements Law.
A maker of metal-cutting tools, Iscar was formed in 1952 and bought by Buffett’s Berkshire Hathaway in two stages, the final one in 2013, in a deal that valued the Israeli company at $10 billion. Some 1,900 of its 2,600 employees are engaged in manufacturing.
The company’s main plant is in Tefen, but it has manufacturing facilities in Europe, the Americas and Asia.