IMI Stuck; No Staff Agreement in Sight

A promise of NIS 270 million from the state's coffers has not saved the beleaguered Israel Military Industries from its financial straits, and opposition by IMI workers to further cutbacks could jeopardize the state payment.

Some 1,200 retired IMI workers have yet to receive their pensions for July, which should have been paid yesterday, and the 2,900 workers are - for the third consecutive month - fearful they may not get their monthly paychecks on time, on August 9.

Two weeks ago, after a meeting between IMI chairman Ovadia Eli, company CEO Avi Felder and Accountant General Yaron Zelekha, the government agreed to give a further NIS 270 million to the cash-strapped state-owned defense company, less than the NIS 350 million that IMI initially insisted was the minimum necessary to keep the company going.

In order to receive the cash injection, the company agreed to downsize some 500 workers (through dismissal or early retirement) as well as to cut NIS 50 million off salaries of those remaining workers. The parties also agreed to cancel the high compensation terms for those leaving the company as of the beginning of next year. The government has transferred NIS 40 million of the agreed NIS 270 million, and the remainder will be paid as talks with the IMI workers progress, and the workers agree to the conditions.

However, talks between the heads of the company and chairman of the IMI workers' committee, Yitzhak Yehuda, have yet to bear any fruit. Yehuda said that the workers are opposed to any further wave of dismissals or pay cuts at the company. Ofer Eini, head of the professional trade union department at the Histadrut labor federation, said Histadrut was also against the government-dictated recovery plan for IMI and would give its "full backing" to the IMI staff.

"In 2002 we agreed to a draconian recovery plan," Yehuda said yesterday, "which included layoffs and voluntary retirement of 720 workers and a pay cut of 11 percent for the rest. We agreed with the management that this would be the company plan until the end of 2006, and we understood then that there would be no further cutbacks. So, as far as we are concerned, there is no new recovery plan and we will only discuss steps that will come into force from January 1, 2007.

"IMI has accrued an impressive order book of $1.4 billion. If the company is mired in difficulties despite its faithful customers in Israel and overseas, and despite the proceeds from the sale of its plants, then the problem is with company management, and not with the workers who, again, are paying the price."

IMI management said it was in concerted talks with the treasury and the workers to adapt its expenditure to its capabilities, but that, so far, no progress had been made on an agreement to the planned personnel and wage cuts.