From the 35th floor of the site of two office towers on Tel Aviv’s Yigal Allon Street, two men survey the city. It’s part of a new business center taking shape along the Ayalon Highway, Menachem Begin Road and Hamasger Street. Around a dozen high-rise commercial and luxury apartment buildings are already under construction.
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“We’re building here,” says one of the men, pointing to Azrieli Sarona, with its trademark diagonal lines. “And here,” he adds, his hand moving slightly southward, to Gindi TLV, on the site of the former wholesale produce market, “and here too,” indicating Project Midtown, to the north.
The speaker is Ahmet Arik, the CEO of the Turkish-owned construction firm Yilmazlar. He’s talking to Nisim Gayus, the company’s representative in Israel and the person who was responsible for bringing Yilmazlar to Israel exactly 20 years ago. From the 35th floor of the Allon Towers, which is slated to rise to 40 floors within a few weeks, they point out a few more of their company’s projects, and it’s apparent that Yilmazlar is involved in building about half of the high-rises under construction in Tel Aviv’s new business center.
That’s a rather impressive accomplishment for a company with just 1,200 employees, all of whom are Turkish. It also may be why, in a call for proposals issued by the finance and housing ministries in an effort to recruit six more foreign construction companies to operate in Israel, Yilmazlar was cited as a model.
The company works mainly as a subcontractor for other companies in Israel, the largest of which are Electra, Danya Cebus and Ashtrom. Yilmazalar specializes in building the frames of high-rise buildings using highly industrialized techniques. Using prefab sections made in Germany and installed with advanced equipment, Yilmazlar has cut building times — sometimes shearing six months from the typical construction schedule in Israel — and that’s worth a bundle to developers.
“Sure, we see our being viewed as a model as a compliment,” says Arik, when asked about it.
Housing prices will drop when taxes do
“The problem is that foreign companies who look into the feasibility of coming here will find that there are considerable difficulties, first and foremost taxation. There is currently a tax of about $1,000 per month in levies and employers’ taxes imposed on every foreign worker employed in Israel. That means that even before he picks up a hammer, every one of the workers costs $1,000 per month. Add complex bureaucracy, and you get a picture that is liable to dissuade a large portion of the companies from coming here,” says Arik.
“The government imposed the tax a few years ago to make it more expensive to import workers at a time when they were trying to encourage employment of Israelis in the sector,” Gayus adds.
“The problem is that there are no Israelis who do wet works,” meaning molding, structural ironworker, plastering and flooring.
“The moment the plan was reversed, with the government trying to bring in as many construction workers as possible, I see no need for this tax,” Gayus says, adding, “As soon as the government lowers the cost of labor, including eliminating or reducing the high tax on foreign workers, it will immediately be reflected in the price of the apartment,” said Gayus.
“I know there is goodwill on the part of various people in the government to try to ease the bureaucracy, so we need to wait and see if changes are made.”
It wouldn’t bother you if other foreign construction companies come here?
“On the contrary,” says Arik. “Everyone thinks we’re a cartel. We are an exceptional factor in the Israeli market and a lot of Israeli companies envy us. From my standpoint, they should bring in several other companies so they stop looking just at us all the time.”
“There is enough work for everyone,” says Gayus. “We are working at 15 construction sites, and according to the Central Bureau of Statistics, there are 5,000 active construction sites. And not everything involves office and residential. There is also a lot of work on infrastructure that needs to accompany the increase in the supply of residential construction, so there is no lack of work.”
After his many years in Israel, Arik has picked up relatively good Hebrew, which he peppers with English when necessary.
When Arik talks about envy of Yilmazlar by Israeli contractors, it includes three High Court of Justice petitions during the company’s 20-year history in Israel. They were filed against the state by agencies that bring in foreign construction workers and that viewed the company’s operations as a detour around the agencies’ services. The court rejected all three petitions.
That’s not to deny that Yilmazlar is an anomaly on the Israeli construction scene. The company operating in Israel is actually an Israeli firm under foreign ownership, a subsidiary of the longstanding Turkish firm Yilmazlar Insaat, which is jointly owned by brothers Ahmet and Adnan Yilmaz.
The story of their arrival in Israel begins in the 1990s. The current government seeks to increase the supply of housing in order to drive down prices, but in the 1990s the goal was to house the enormous number of new immigrants from the former Soviet Union. Gayus, an Israeli who was born in Turkey, was a recruiter for the Turkish construction industry. He matched Turkish workers with Israeli construction companies.
Everything changed for Gayus, however, when he met one of the owners of Yilmazlar Insaat, Ahmet Yilmaz. The two set out to enter the Israeli market by founding a company that could take on building projects. A few dozen workers came to Israel on a trial basis in 1996, and their numbers simply grew over time.
The development that solidified the company’s standing began in 2003, when Israel agreed to purchase Turkish goods and services as part of a massive contract, worth hundreds of millions of dollars, landed by Israel Military Industries to upgrade tanks for the Turkish army. The Turkish government recognized Yilmazlar's Israeli operations as part of the procurement arrangement, and Israel allowed the company to bring in 800 Turkish workers in Israel. By 2012, that number reached 1,200.
A lot has changed in Israeli-Turkish relations since 2003, and not for the better. Amid the current sour relations between the two countries, it is hard to believe that in 2003, Israel Military Industries had a contract to upgrade the Turkish armored corps. Since then, Recep Tayyip Erdogan’s pro-Islamic government was elected in a country that was Muslim but nominally secular. The low point in relations came in 2010, when a Turkish flotilla of ships that included the Mavi Marmara sought to break the Israeli naval blockade of the Hamas-controlled Gaza Strip.
Israeli naval commandos who stormed the Mavi Marmara met violent resistance from passengers. The commandos killed nine passengers and injured several more; a 10th died of his injuries much later. Jerusalem and Ankara are still negotiating to restore normal relations.
But Arik says the Mavi Marmara incident and the tense relations that followed didn’t really affected Yilmazlar’s work. “Israeli bureaucracy worked more slowly,” he surmised, “but even on a routine basis, the regulations are complicated and difficult, so it’s possible that wasn’t the reason. Nevertheless, clearly we want Israeli-Turkish relations to return to what they were before and for Turkey to again appoint an ambassador in Israel.”
Asked how the tensions have affected the laborers and whether it made them less likely to work in Israel, Gayus said there has been no decline in their motivation. In an effort to show how committed they are, he noted their response in the summer of 2014 when Israel and Hamas and its allies fought a war in the Gaza Strip that saw rockets fired from Gaza at most of Israel’s population centers. The south was particularly hard hit. The company, Gayus said, had workers on projects in Ashdod, south of Tel Aviv and in Ashkelon, which is adjacent to the Strip. “Not a single worker left Israel or even the building site. The laborers would see the missiles flying overhead and they would continue to work,” he said, other than the five or six times a day when air-raid sirens went off.
Yilzmazlar’s focus in Israel is on residential and commercial construction, with very few public infrastructure projects. Its past work includes the square tower in Tel Aviv’s Azrieli center, as well as Israel’s three Ikea stores and annexes to Tel Aviv’s Ichilov Hospital and to Jerusalem’s Hadassah University Hospital, Ein Karem. Yilzmazlar also built the structural skeletons of seven of the 10 towers in Tel Aviv’s upscale Park Tzameret.
The company’s construction workers earn $2,000 a month net, while salaries for more highly-skilled employees with experience can reach and even exceed $3,000. Arik says that’s double what their counterparts in Turkey could expect, and in Israel the company pays for nearly all of the workers’ other expenses, including housing, food and travel to and from Turkey.
Most of the company’s workers live on a seven-building campus owned by Yilmazlar in the Arab town of Kafr Qasem, northeast of Tel Aviv, where they eat in a big dining hall that is served by a central kitchen. “It’s more comfortable for them in a Muslim environment,” Gayus says by way of explaining the choice of location.