manufacturing has grown 800% since 2000
meeting with delegations from China and Germany, Udi Orenstein the CEO of the
Kibbutz Industries Association (KIA), reported that since the year 2000
manufacturing by KIA companies at sites abroad has increased from one billion
shekels to 9 billion shekels. He said the main reason for producing abroad is
proximity to target markets, which enables a quick response to orders and also
reduces transportation costs and without having to return stocks.
of the meeting with industry managers was to explore possibilities for
establishing manufacturing facilities in industrial parks overseas. The meeting
was organized by A.B. Planning, which is a company involved in establishing
production facilities abroad.
The visiting delegations presented the
managers of industrial companies with details of the opportunities at industrial
parks in Tientsin China, which has an industrial
capacity equivalent to that of Hong Kong and at industrial parks in Saxony,
Germany which is strategically situated in Europe close to millions of
consumers. The presenters indicated that the costs of establishing
manufacturing operations overseas are not necessarily cheaper than in Israel,
but the companies who have established such operations have benefitted.
Regev , director of business development at AB Planning stated that
globalization requires industrial plants engaged in international
activities to examine the possibilities for establishing manufacturing sites
around the world as part of their development and expansion activities .She
said that establishing a plant overseas
has many implications in terms of production costs , proximity to target
markets , proximity to raw materials and complementary industries , partnerships between enterprises , exchange
rates , incentives and allowances , the spreading of risks and more. The meeting was designed to equip managers with information that will
help them in decision making and allow them to become familiar with Israeli
companies that have set up overseas production sites.
included three senior managers who told of their experiences in setting up factories
abroad: Avi Salzman, CEO of Kafrit, Moti Dinstag , CEO of Palram Germany .Peleg
Zamir, the Chief Operating Officer of Huliot gave the reasons for the establishment
of a factory in India, the planning process and adjusting plant conditions to the
be noted that most of the growth of kibbutz factories today is achieved by
increasing sales from factories and production sites abroad. That means that
the economy in Israel does not enjoy increased employment and purchases by
Israelis' which could be the case if growth in production occurred in Israel.
This phenomenon is
a combination of the companies' internal considerations, diminishing
production in Israel and global macro trends. KIA officials
stated that "this is a red light for all of us and requires a thorough
investigation mainly by economic policy makers."