More than half of Israeli companies surveyed say they have maintained their previous levels of exports during the conflict.Despite news of suicide bombings and other acts of terrorism in Israel and the distressed economy, more than half of Israeli exporters have had no change in their exports levels and a little more 7 percent have seen their sales to the United States and other countries rise, according to a survey from the Israel Export Institute.
Only 36 percent of the respondents said the foreign customers expressed concern about delivery timetables for Israeli products, according to the survey, which polled 100 Israeli export companies.
Total Israeli exports to the United States – which were about $11 billion in 2001 – have been flat so far this year. But observers are more inclined to blame the depressed state of world trade and a weak U.S. economy rather than fallout from Palestinian unrest.
Weaker U.S. demand has been offset somewhat by increased sales of Israeli polished diamonds and by a weaker shekel, which has made Israeli products more price-competitive in the United States and other overseas markets. Diamond exports to the United States grew by 16 percent in the first four months of this year, compared with the same period in 2001.
In any event, many Israeli executives say they haven’t encountered significant problems with customers abroad – and they’re ready to cope with them if they occur.
“We have not felt any difference in our business,” said Jacob Evan-Ezra, chief executive officer of Magal Security Systems, Ltd., in Yahud, Israel.
There’s lot of U.S. interest in Magal’s bomb detection devices and computer-monitored security fences, used to protect airports and other key facilities, following the attacks on the World Trade Center and Pentagon. But Even-Ezra said that’s not the real reason for the company’s strong performance. In fact, he says he doesn’t expect a wave of post-Sept. 11 contracts to arrive before the end of the year because of the long lead time required for facilities to plan and purchase such systems.
Far from watching sales to the United States drop during this period of political uncertainty, Makhteshim-Agan Industries, an agricultural chemical company, now expects them to top $100 million this year, up 25 percent from 2001, in part, the company says, because it changed its marketing strategy.
“Nobody is worried about our ability to supply,” said Chief Operating Officer Daniel Porat. “The company has existed for 50 years and we have gone through many a crisis. The start of the Gulf War in January 1991 was a record export month for us and we made it that to show that no matter what there would be business as usual.”
Despite the general optimism, the export institute survey reported a few problems. The poll found that 10 percent of Israeli exporters have had orders cancelled as a result of the security situation, 8 percent have had negotiations cut off, 7 percent were told their name would be taken off their product because of associations with the conflict, 5 percent had contracts revoked, 3 percent were asked to provide additional bank guarantees, and 1 percent had merchandise returned.
In addition, about 25 percent of the companies surveyed said customers had asked them to set up operations out of the country because of the security situation.
Tefron Ltd., a maker of intimate apparel for brand names like Victoria’s Secret, The Gap, Target and Banana Republic, used by millions of customers in the United States, is already prepared for the kind of disruption in manufacturing that has some customers worried.
The company has a manufacturing subsidiary in North Carolina and recently calmed clients by saying all production could be re-routed there in the event that production in Israel was halted, according to the company.
A large part of the reason the conflict has had as little impact on exports as it has is that Israeli companies are old hands at coping with crises, said Moti Ish-Shalom, director general for economics and planning at the Israeli Ministry of Industry and Trade.
“In the past 24 years we have gone through five wars and two intifadas, and Israel has always kept its shipment schedule and supplied the products to its clients oversees,” Ish-Shalom said. “Even during the most difficult situations, during the Yom Kippur War when the entire country was mobilized, every Israeli company fulfilled its contract. This intifada is no problem compared to that.”