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Israel, Google eye greater productivity at low-tech manufacturing plants

NIS 3 million program aims to help close the productivity gap with other developed nations

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Logos of US multinational technology company Google, on December 28, 2016, in Vertou, western France. (AFP PHOTO / LOIC VENANCE)
Logos of US multinational technology company Google, on December 28, 2016, in Vertou, western France. (AFP PHOTO / LOIC VENANCE)

Israel’s small and medium-sized manufacturers are due to get a productivity boost through a NIS 3 million ($860,000)  program run jointly by the Finance Ministry, the Manufacturers Association of Israel and Google

Businesses that have a sales turnover of up to NIS 100 million and/or employ up to 100 workers will be granted a workshop for senior management on how to improve productivity and a data analytics course for workers. In addition, each company that takes part in the program will get a government grant of NIS 10,000 ($2,900).

Google will help the companies implement necessary changes and grant them an additional NIS 10,000, the Finance Ministry said in a statement last week.

The program is a first step by the ministry to promote innovation among small and medium-sized low-tech enterprises, as part of its goal to bridge a gap in productivity between traditional and high-tech industries, Shai Babad, the ministry’s director, said in the statement.

Data is one of the most important resources in the world today, said a report by consultant company Deloitte commissioned by Google. But while data is highly accessible, it is not “sufficiently exploited,” and those who know how to make use of data will have an advantage over others.

“Technology and innovation are the major causes of increased productivity,” the report said.

Israel ranks a low 23rd out of 35 countries listed on the OECD’s productivity scale, just below New Zealand and one above the Slovak Republic. The scale measures how efficient the labor input is, as part of a production process.

Productivity per work hour in Israel is lower than that of other industrialized nations, and Israel has not managed to close this gap for forty years, according to data provided by the Bank of Israel. This is due in part to the low educational achievements of Israeli children and also the educational gaps between secular Jewish children and those of the Arabs and the oltra-Orthodox populations, Karnit Flug, the governor of the central bank, said in a speech last week.

A significant improvement in data-driven innovation has the ability to generate a 6.4 percent growth in sales in traditionally run businesses, and could contribute some NIS 54 billion to Israel’s economy, the Google-Deloitte showed.

“We believe that the path to real growth and success of any business requires a deep understanding of its weaknesses and strengths. To succeed in this task, businesses need to use all the tools at their disposal,” said Google Israel’s country director Barak Regev in the statement.

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