Israel-based Avgol, a global producer of fabrics, announced it will expand its North American operations by building a new production line at its Mocksville, North Carolina plant, creating dozens of new jobs.
The expansion is part of a recent trend in Israeli business, in which the “home office” in Israel, seeking to expand sales in the United States, opens production facilities there, creating jobs and bringing production closer to markets.
Earlier this week, Bram Plastics Industries, a major producer of food storage and kitchen products, said it would open a new plant in Savannah, Georgia. The Sderot-based firm will invest $3 million in the facility, where it will produce food packaging products, tableware, plastic housewares, plastic storage tools and more for its American customers, which include large chain stores like Walmart. The factory will generate at least 60 new jobs, the Savannah Economic Development Authority said.
And venerable kitchen counter maker Caesarstone, based in Kibbutz Sdot Yam in Israel, this week officially opened its first American manufacturing facility in Richmond Hill, Georgia. In a gala event, Caesarstone CEO Yos Shiran said, according to the Savannah Morning News, that the company “examined many places in the states. We have found Georgia, Bryan County and specifically Richmond Hill as the best place for us, combining proximity to interstates and the port, warm people and the support of everybody around us.”
The factory – which local officials called a “magnificent, state of the art facility” – currently employs 107 people, with an additional 80 to be hired when the factory expands later this year, reversing decades of job loss, local officials said.
The trend is not limited to manufacturing, either. Israeli tech firms are also dotting the US with job-producing research and development, manufacturing and sales operations.
A 2013 study released by the New England-Israel Business Council (NEIBC) showed that 211 Israeli-founded businesses that have set up shop in the Massachusetts – mostly start-ups – accounted for 2.9% of the state’s GDP. Some 6,700 people – the vast majority Massachusetts residents – worked for these companies, with an additional 17,000 people employed in businesses supporting these companies (technical support, janitorial services, banking, etc.). Thanks to this “multiplier effect,” the $6.2 billion business that these Israeli companies did in 2012 had an overall economic impact of nearly $12 billion.
Overall, job growth at the Israeli companies grew five times faster than the state’s overall employment growth rate between 2010-2012. Over that period, revenue at Israeli-founded companies in the state grew three times faster than in the Massachusetts economy overall, with revenue growth double the state’s most important IT and professional services sectors, including life sciences, the study showed. The study was the first in-depth analysis on the impact of Israeli tech on any US city or state.
For the Israeli firms, access to local expertise, especially in sales, as well as saving money on transporting and shipping goods and being able to ship products to customers quickly is an important part of why they build facilities in the US. But there’s another reason – the incentives offered by local and state governments to open in specific locations.
While some criticize such incentives – either in the form of grants or tax breaks to companies that choose to open facilities in specific locations – the consensus on the deals is generally positive, because of the jobs they create. In Mocksville, for example, Avgol received a county and municipal incentive package worth $2 million to build its expanded facility, which will cost about $40 million to build and outfit with manufacturing equipment. But local officials are satisfied. The Winston-Salem Journal, for example, said that Davie County and Mocksville had “made a decent deal,” and was getting its money’s worth.
“As we’ve often said before, nobody likes incentives,” said the newspaper. “But in today’s business climate, they’re often unavoidable.” The expansion will bring in 50 new jobs paying an average of $35,000 a year in salary and benefits “in addition to the plant’s current 220 jobs that pay an average salary of $30,000 with benefits, and increase the county’s tax base by at least $36 million,” the newspaper said. “Cheers to Davie County for making a decent deal on an incentives package for Avgol to expand its Mocksville facility.”
Avgol’s non-woven fabric is used in a large number of industries, including in the manufacture of disposable diapers and feminine hygiene products. Among Tel Aviv-based Avgol’s customers are some of the largest makers of these products, including Kimberly-Clark and Proctor and Gamble. Besides Mocksville, Avgol has manufacturing plants in Israel, Russia and China.
In Georgia, too, local officials were satisfied, despite incentives given to Caesarstone for its facility. Jimmy Burnsed, chairman of the Bryan County Board of Commissioners, told the Savannah Morning News that “you are not going to be getting any taxes out of it for probably 10 years. It is what it brings with it — the jobs. Of course when you get the jobs, you are going to have the retail and other things with it. It is just a great thing for the city and south Bryan County.”
According to local officials, the Caesarstone factory is the first new manufacturing plant to locate in the city in decades. Indeed, for many American communities devastated by the globalization of manufacturing, incentives are seen as a small price to pay for what they really need – jobs, which are one of the most important things people in the local community are looking to political leaders for.
The Caesarstone plant “is going to be a great thing for the city of Richmond Hill,” Mayor Harold Fowler told the Savannah Morning News. “This is the first new industry we have had in 35 years. It will be nice to have students graduating from high school have a good-paying job close to home, rather than having to leave to go to work.”