Koor: Makhteshim potential sale won’t endanger local jobs

Koor Industries Ltd., the controlling owner of Makhteshim Agan Industries, said Monday the possible sale of the producer of crop-protection chemicals will not put the operations of local factories at risk.

“There is no danger that the factories of Makhteshim Agan in Ashdod and Beersheba will be closed,” Koor chairman Ami Erel told the Knesset Finance Committee. “We intend to continue the operations at these factories and protect the company and its workers. The factories will not be closed, regardless of whether there will be a deal. There is no sale of Israel’s natural treasures involved in this deal.”
 
Makhteshim Agan employs 1,800 workers, and the majority would continue to work here, he said.

Koor, which owns 44.1 percent of Makhteshim Agan, announced earlier this month that it has been approached by China National Chemical Corporation (ChemChina) to turn Makhteshim Agan into a private company. A preliminary understanding was reached for the Chinese agrochemicals company to buy all public shares in Makhteshim Agan and 17% from its parent company, Koor. If the deal goes through, ChemChina will own 70% of Makhteshim Agan, and the remainder 30% will be owned by Koor, a subsidiary of IDB Holding Corp.

Following fierce opposition and threats of a strike from Makhteshim Agan workers, IDB last week announced that the negotiations over the sale to ChemChina would be frozen for one week for negotiations with the workers’ committee.

“The globalization process has in recent years led to fierce price competition in the market in which Makhteshim Agan operates, especially through the entry of China and India into the crop-protection market,” Erel said.

“Makhteshim Agan is coping with difficult market conditions. It is very hard to compete in a market in which the average salary of a worker at Makhteshim Agan is 15 times higher than the average salary of an employee in China or India,” he said.

In light of expectations that Makhteshim Agan will report losses for the third quarter of the year because of fierce competition in the market, the company would need to implement streamlining and efficiency measures in all of its operations, Erel said.

“We started the efficiency process and early retirement measures before ChemChina’s process in order to bring the company back to profitability and growth,” he said. “The retirement of some employees will take place over years, and the employees will receive much greater severance packages than mandated by law.”

Israel Manufacturers Association president Shraga Brosh told the Knesset Finance Committee the government should take responsibility to enable the continuation of the development of the industry and competition in world markets.

“Makhteshim Agan is only a symptom, not the real problem,” he said.

“The real problem is the continued damage of the competitiveness of Israeli industry against global competitors.

In a period in which the continued weakness of the dollar is hurting exports, the government is continuing to levy new taxes and indirect costs on manufacturers who are struggling in a competitive market.”

Separately, the Histadrut Labor Federation on Monday declared a work dispute at Taro Pharmaceuticals Industries, which was taken over by India’s Sun Pharmaceuticals this past month. The declaration came after Taro announced it would lay off workers at its Haifa factory, which has 700 employees, and management refused to enter into negotiations over a collective agreement.