By  on February 12, 2002

NEW YORK -- While the shock of the New York terrorist attacks left U.S. apparel executives shaken and wondering if their lives had changed forever, the threat of violence is not a new one in Israel, where the conflict with Palestinians has simmered for years.

While some Americans think of Israel as a place of ever-present danger, officials at major Israeli apparel companies said it does not have a disruptive effect on their business. They contend attacks tend to target major cities and religious sites, not the industrial parks where their factories are.

Executives at several top Israeli manufacturers, including Tefron Ltd., Delta Galil and Nilit Ltd., said they are very aware of U.S. customers' concerns that the region's violence could disrupt their shipments, and argued that makes them all the more focused on delivering on time.

These companies, as well as seamless apparel maker Gibor, have become a major resource of American and European retailers including Victoria's Secret, Gap, Banana Republic, Federated Merchandising and Target, as well as apparel giants Sara Lee, VF and Warnaco.

Zohar Peri, Israel's economic minister to North America, said that the textile and apparel industries represent 2 percent of that nation's $100 billion gross national product. More than 40 percent of Israel's exports are textiles and apparel.

"We keep getting calls from clients asking 'Are you gonna ship, are you not shipping?' We proved during the Gulf War that we ship better during wartime," said Chuck Klinger, microfibers business manager at Nilit, a fiber maker.

He added that the company employs over 700 workers in Israel from diverse cultural backgrounds including Israeli Christians, Israeli Arabs, Russian immigrants and members of a Druze Muslim sect. The firm also operates a U.S. division, Nilit America Corp., in Greensboro, N.C.

"No matter what their political background is, once they pass the gates of Nilit, everybody becomes part of Nilit," he said. "What happens outside of the gate doesn't affect the way we do business" Oded Breier, Nilit's fibers division marketing manager, said, "People have been looking more carefully at doing business to see if there have been any changes. But we have had no delays for 18 months. The minute we fail, we pay a huge price, and we can't afford that. It won't happen."Executives said that Israeli businesses, particularly manufacturers, tend not to be prime terrorist targets. They said the bigger threat is in populated areas such as Jerusalem, Tel Aviv and Haifa, where terrorists can claim the most collateral damage in crowded marketplaces and buses.

Sigi Rabinowicz, chief executive officer at Tefron, said, "These terrorists don't go looking for a factory, a small place to bomb. We are located in a high tech park in northern Israel far away from big cities. We employ Israeli Arabs and have never had any problems. We have production in Jordan and haven't experienced any problems going in and out, thanks to the King of Jordan who keeps everything open. It's like part of Israel at this stage and everything is fine."

Tefron's U.S. operation, Valdese, N.C.-based Alba-Waldensian, has specialized in seamless apparel for several decades. The company also manufactures in Madagascar and Honduras.

Security checkpoints have been a way of life in Israel for decades, and executives said the pace of business in Israel, and in neighboring Jordan, Egypt and Turkey, has not slowed down since Sept. 11. Executives also pointed out that the larger companies have U.S. subsidiaries and have a network of sourcing facilities in Asia, Eastern Europe, Central America and the Caribbean, which gives them backups.

Michael Fitzgerald, ceo of Delta USA, the American unit of Delta Galil, observed, "Manufacturing has not been impacted....The Palestinian problem has not affected the pace of our businesses. We operate our plants in a multicultural environment at our Israel facility where everybody has a common economic interest."

While he contended the recent U.S. focus on terrorism has not affected his business, he acknowledged that the global economic slowdown has taken a toll.

"The sour economy has motivated us to consolidate our in-house production in our larger, more efficient facilities that exist in stable environments with good management in Honduras, Egypt, Jordan and Romania," he said. Arnon Tiberg, ceo of Delta Galil in Israel, added, "We are having no problems as to what's going on in Israel."

Executives said the biggest change to their business since Sept. 11 has been that U.S. and European companies, motivated by safety and budgetary concerns, have been less willing to visit Israeli suppliers. In response, Israeli vendors have:Stepped up their travel abroad to see customers.

Turned to videoconferencing and other electronic communication.

Started to rely more on New York offices.

Increased their presence at international trade shows, such as the Salon International de la Lingerie and the Interfiliere fabrics fair in Paris. A greater turnout of Israeli companies is expected at the Lyon, Mode City show scheduled for Aug. 31-Sept 2.

"The only thing we feel restrictions from are the U.S. firms which have limited their employees' visits to Israel. We used to have daily visits, but not anymore. We need that interaction -- that is really missing," said Rabinowicz of Tefron. "We travel much more now and are scheduling more meetings with clients during [New York] market weeks."

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