Israel Gives Green Light to Six Foreign Construction Companies

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A construction site in Tel Aviv.
A construction site in Tel Aviv. Credit: Nir Keidar

The Housing and Construction Ministry gave the go-ahead on Wednesday for six foreign construction companies to build homes in Israel in the hope they can solve a serious manpower shortage and bring advanced building technology to the country.

The five Chinese and one Portuguese company were selected from some 50 applicants from Greece, Turkey, Russia, Vietnam and Ukraine, who responded to a government tender published last March and will have the right to act as contractors or co-developers with Israeli partners in the residential construction for five years, with an option for three more.

“These companies are on a scale that we don’t have here in Israel. At a minimum they have to have turnover of $300 million and among those that won the competition there are some with turnover of a billion dollars,” said Eshel Armoni, the Housing Ministry director general.

The government has been struggling to speed up the pace of construction and get more homes on the market to help stem soaring home prices. One of the obstacles is a severe shortage of trained workers for so-called “wet” construction, such as plastering and concrete work. Almost no Israelis have these skills. Another obstacle is backward building technology.

“The companies will be bringing with them trained teams of people who have worked together for many years and do the work quickly,” said Armoni. “By bringing together technology and experience, these workers will shorten construction times, which is a main goal of this undertaking.”

He added: “These are companies that know how to work 24 hours a day, seven days a week without strikes and holidays. In Israel, of course, this doesn’t happen because of our labor laws, but even so we’ll be seeing a faster pace of work in a lot of places.”

Armoni also said he hoped that the presence of foreign builders would enable Israeli companies to upgrade their own building technology. “The idea is there will be interaction between foreign and local companies in sharing information, which is in the interest of the industry,” Armoni said.

Israel had sought to solve the skills shortage by importing 20,000 Chinese construction workers directly, but negotiations with Beijing over terms reached an impasse. Instead, Israel is importing whole companies that will be authorized to each bring up to 1,000 workers of their own.

The biggest of the six companies is Beijing Construction Engineering, which was formed in 1953 and has an annual turnover of $2 billion and works in China, the United States, Australia and Africa.

No. 2 is Jiangsu First Construction Corporation, which does about $1.5 billion in building work every year in China and Singapore. Others are: Everbright International Construction Engineering Corporation, JiangSu NanTong No. 2 Construction Engineering Company and China Haushi Enterprise Company.

The one non-Chinese company is Portugal’s Mota-Engil Engenharia e Construcao, SA, which does about $400 million a year in business. The six will join the Turkish-owned construction firm Yilmazlar, which has been operating in Israel for the last 20 years.

Israeli builders are unhappy with the decision to introduce foreign competition, arguing that it would have been better to import more foreign construction workers.

“The decision to allow six foreign building companies to work in Israel will endanger small and medium-sized companies building homes,” said Roni Brik, the president of the National Builders Association. The decision is no solution to the serious shortage of professional workers in the building sector.”

Armonis aid he hoped the first of the companies begin operations in the next few months. Under the rules of their license, they have to show officials they have each begun work on at least 100,000 square meters of construction by the second year they are in Israel, 150,000 the third year and 250,000 in the fourth.

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