Globes [online] - www.globes.co.il
6 December 2004
Tefron’s Yosef Shiran: Free trade agreement a death blow to local textile industry
Delta Galil’s Dov Lautman disagrees: The agreement with Egypt is a major political and economic achievement.
By Sapir Peretz
Delta Galil Industries (Nasdaq:DELT; TASE:DELT) chairman Dov Lautman, currently in London, told "Globes" this morning that the free trade agreement with Egypt was not only an economic achievement, but also a major political one. "The agreement will contribute to Israel’s economy, and to political reality in the Middle East."
Lautman does not believe that the Israeli-Egyptian peace is cold. "Some people think that the peace with Egypt is cold and strained. I’ve always said that anyone who knows how to do business in Egypt, and how to exploit Egypt’s relative advantages, can definitely do good business there. It’s not easy, but it’s possible."
Delta Galil’s factory in Egypt, which is marking its tenth anniversary, has 4,500 employees. The factory’s products are exported to Europe, and will be exported to the US, too, following the free trade agreement.
Lautman was a party to the writing of the agreement with Egypt. He says the export of goods from Egypt to the US will not affect Delta Galil’s exports from Jordan to Egypt. He believes that the agreement will boost Israeli exports to Egypt, and thence to the US. "In order to benefit from the advantages of the free trade agreement, Egypt will have to buy 11% of materials, manufacturing parts, etc. for each $1 million in exports to the US."
Tefron (NYSE: TFR) CEO Yosef Shiran completely disagrees. He says the agreement is a death blow to Israel’s textile industry.
Shiran says that Egypt is blessed with a developed textile industry, and therefore does not need Israel for manufacturing and exports under a free trade area agreement. "Although Egypt undertakes to buy from Israel under the agreement, market forces are stronger. In the end, Egyptian workers will replace Israeli workers, which will be the coup de grace for Israel’s textile industry," he says.
In contrast to Lautman, who was a party in writing the free trade agreement with Egypt, Shiran admits that Tefron was not involved in the agreement. "We did not speak out against the agreement so long as Azzam Azzam, a Tefron employee, was sitting in an Egyptian prison. Now that Azzam is back with us, we can discuss this matter on a purely economic basis."