The Israeli economy has long withstood acts of terrorism and war, and clothing companies are keen to reassure customers that the current conflict is no different. The intensifying battle in the Middle East has so far failed to dent their production and export shipments are on schedule, as some of the country's business leaders tell Leonie Barrie.

Israeli business leaders say the latest conflict to hit the troubled region has had little impact on the country's clothing industry and that companies are continuing to fulfil all their order commitments to customers.

"The number of factories that has been affected is very small," confirms Mr Dan Catarivas, director of the International Department at the Manufacturers Association of Israel. "Most plants are working at full capacity."

Likewise, Mr Dov Lautman, founder and chairman of Delta Galil Industries told just-style: "In general, we are working as normal in Israel."

The company, one of the world's leading underwear manufacturers with customers including Calvin Klein, Hugo Boss, Nike, Marks & Spencer and Ralph Lauren, is also working to full capacity with three shifts a day at its factories in neighbouring Jordan and Egypt.

"We are showing everyone that it is business as usual and that supply will be on time," Mr Lautman adds.

A similarly positive message comes from Mr Ofer Gilboa, CEO of suit maker Bagir Ltd, who says: "Our production facilities and manufacturing process have not been affected at all."

He told just-style: "Business and orders for our products continue to stream in from clients all over the world, regardless of the current situation."

Exports are a cornerstone of the Israeli apparel industry because of the small domestic market, so maintaining deliveries is a prime objective.

Last year Israel's clothing exports were valued at over US$1bn, and in the first six months of 2006 the country's textile, clothing and leather exports were worth US$545.9m. The US is one of the country's main export destinations, with shipments between January and May 2006 amounting to US$218.3m.

Localised damage
Hostilities between Israel and Lebanon erupted unexpectedly on 12 July, and fighting has since been predominantly concentrated in southern Lebanon and the north of Israel.

According to Mr Catarivas, around 20-30% of Israel's textile and clothing companies are located in the north of the country.

Missiles fired from Lebanon have hit the Israeli port of Haifa and its surrounding areas hardest, but other targets have so far included Nazareth, Tiberius and Afula.

Destruction at the port of Haifa - which has now partly reopened to handle a few container ships - has been minimised by re-routing cargo shipments to Ashdod, the country's smaller southern port that is now working around-the-clock to absorb traffic.

"We are able to divert the outgoing shipments to other ports in Israel," explains Mr Gilboa. "Even in these difficult times we are investing in whatever additional logistical needs to see that our clients get their products as ordered."

Elsewhere Israel's infrastructure seems relatively unscathed. Flights to and from Israel are running without disruption and as Mr Catarivas points out, services like banking are fully operational.

Even business information company Dun & Bradstreet says its 'slight risk' credit rating for trade with Israeli companies remains unchanged, and recommends continuing to do business with Israeli companies using documentary credit (commercial letters of credit).

And as far as Israel's economy is concerned, the country is able to withstand this kind of conflict better than many of its neighbouring countries. It is well practised in dealing with such emergencies, "unfortunately," as Mr Catarivas explains "because we're used to it."

Contingencies in place
Some of the contingencies in place at Delta Galil include the provision of day-care facilities for children in the bomb shelters so that their mothers can go to work at the company's four factories, and allowing other parents to work from home using their laptops.

"From day one we have been working with no problems," Mr Lautman confirms. "The days are not normal days, but as far as supply, production, deliveries, communication with customers are concerned, we maintain business as usual."

In common with many of Israel's larger textile and clothing firms, Delta Galil has moved some of its labour-intensive activities to neighbouring countries such as Jordan and Egypt, where wages are substantially lower. 

This strategy also means production can be switched to other company locations as and when the need arises.

As well as its design and development centres in Israel, Delta Galil employs 1600 people making socks, fabrics, knitting and dyeing. Sewing is carried out at the company's plants in Jordan, which employ 2,500 people and Egypt, where there are 5,000 workers.

Likewise, Bagir has been able to minimise its risk by shifting production to other facilities in several countries around the globe, including Jordan and Egypt.

The company also has manufacturing bases in Romania, Ukraine, Italy, China and Vietnam where it makes men's and women's suits for customers including Marks & Spencer and JC Penney.

"Hence we are in a position to secure production for our clients' orders one way or the other," Mr Gilboa notes.
The only note of caution comes from Mr Catarivas at the Manufacturers Association who points out that an escalation, or expansion of the conflict beyond Haifa and the northern region could undermine current business confidence.

"What will happen all depends on the length of the crisis. If it is longer in length then it will have a greater impact on the economy, but at the moment it is still localised in the north," he says.

In the meantime, though, it seems overseas customers are continuing to believe in the strength of the Israeli industry, economy and exporters - and that apparel companies are responding by delivering orders on time.