When the missile warning siren sounded in the huge production hall, the workers only had a few seconds to reach the shelter. In this factory in southern Israel, within shooting distance of the Gaza Strip, it’s almost routine.
Like the entire national economy, the Rav Bariach group is trying to adapt to a war situation that is different from previous Israeli-Palestinian conflicts.
“In the first weeks of the war, the alarms were much more numerous,” assures Ravid Brosh, head of international development of the group, in one of the factory’s safe rooms, where the alarm is canceled after a few minutes.
The opaque shelter is equipped with locally developed products: Rav-Bariach is the leading Israeli manufacturer of armored, fireproof protective doors and locks, which it supplies to private homes as well as ministries or embassies across the country.
The headquarters and flagship factory in Ashkelon, a coastal city with around 150,000 inhabitants, is not insignificant. The group’s location is less than ten kilometers from the Gaza Strip.
Rockets are regularly fired at the south of Israel by the Palestinian Islamist movement Hamas or its allies and intercepted by the “Iron Dome” missile defense shield. Their debris often causes damage and sometimes injuries.
Called and moved
One of them landed on the sidewalk overlooking the production halls on October 10th after breaking through the ceiling. “It’s part of our reality,” says Idan Zu-Aretz, the company’s CEO.
On a daily basis, it is the lack of labor that has most affected the company’s operations since the start of the war, which was sparked by a deadly Hamas attack on Israeli territory on October 7.
“We lack weapons. “Some personnel were recruited from the army, others were transferred to other regions for security reasons,” notes Idan Zu-Aretz, who estimates that he operates at this location with 60 to 65% of his usual staff. In normal times there are around 600 employees.
In addition to the more than 360,000 reservists mobilized according to official figures, at least 125,000 Israelis were forced to leave their homes in the south of Israel or in the north on the border with Lebanon, an area hit by daily exchanges of fire between Israel and the Israeli army and Hezbollah, a Hamas ally.
Although Israeli society and the economy are accustomed to crises, “all Israeli-Arab conflicts in recent years have been relatively minor compared to today,” Bental notes.
Environmental anxiety
Some sectors are suffering more than others: “The construction sector is at a standstill,” he assures. It employed many Palestinian workers whose work permits were revoked due to the conflict, and Israeli Arabs “are no longer welcome on construction sites in Israel.”
The hotel and catering industry is suffering from low consumer sentiment. In a sign of general concern, the volume of credit card transactions in the country fell by 10% shortly after the Hamas attack and by up to 20% after the start of the military operation in Gaza on October 27.
Key will be the resilience of Israel’s powerful tech sector, which accounts for 18% of GDP. In a survey of 500 companies in the industry conducted at the end of October, 70% said that important orders and projects had been canceled or postponed since the start of the war.
While many economic institutes have lowered their growth forecasts for 2023 and 2024, the National Bank of Israel is relatively optimistic and expects GDP growth of 2.8% for next year.
“There are many conditions in the scenarios. An expansion of the conflict in northern Israel would completely change the situation,” warns Benjamin Bental.
And while the war will result in billions of dollars in additional spending for the state budget, 300 renowned Israeli economists challenged Prime Minister Benjamin Netanyahu’s government in an open letter at the end of October.
They demanded urgent action from him and accused him of “not understanding the extent of the economic crisis facing the Israeli economy.”