Elisha Yanay: High-tech crisis is behind us 

The Motorola Israel general manager said Israeli electronics and 
information technology exports would grow a further 10% in 2005. 

Globes 
January 3, 2005
 
"The crisis in the high-tech industry is behind us. High-tech exports 
grew 19% in 2004 in comparison with 2003, to $12.9 billion, a level 
similar to the record exports in 2003, before the global crisis," said 
Motorola Israel general manager and Israel Association of Electronics 
and Information Industries chairman Elisha Yanay. Yanay was 
speaking at the association's annual general meeting. Yanay believes 
that the global high-tech industry will continue to recover, and that, 
as a result, Israeli electronics and information technology exports 
will grow a further 10% in 2005, to $14.2 billion, and that the industry 
will take on another 2,800 employees. 

Detailing the industry's performance in 2004, Yanay said that the 
highest rate of growth, of over 50%, was in exports of industrial 
electronic equipment, which totaled $2.22 billion. Telecommunications 
equipment exports grew 20% in 2004, to $2.88 billion; electronic 
components exports grew 10%, to $2.11 billion; medical equipment 
exports grew 10%, to $1 billion; software exports grew more than 
10%, to $3 billion; and security equipment exports grew 5% in 2004, 
to $1.77 billion. 

Yanay added that total sales by Israel's high-tech industry grew by 
16% in 2004 compared with 2003, to $1.3 billion. 

According to Yanay, 3,700 people joined the high-tech workforce 
in 2004, representing 7% growth over 2003. Some 57,200 people 
are currently employed in the industry. This is about 9,000 less than 
in 2000, before the crisis broke, despite the fact that output in 2004 
was the same. 

In Yanay's view, the reasons why there are so many fewer employees 
in the high-tech industry than there were in 2000 are that the industry 
became more efficient in order to maintain its competitiveness, and 
that work was outsourced to sub-contractors in the Far East, where 
costs are far lower. Yanay warned that "the migration of jobs to 
East Asia is a global phenomenon, one which is extremely dangerous 
for the Israeli industry, and everything should be done to make 
development and production in Israel more worthwhile, so that only 
work that cannot be carried out in Israel will be sent overseas." 

Yanay called on the government to help maintain this growth 
momentum by raising the incentives offered by the Chief Scientist 
to the levels at which they were before the recent cut. The 2005 
budget cuts aid for research and development by 30% in comparison 
with 2004 levels, and by 50% in comparison with 2001. He said 
the government should also examine further ways of bringing down 
labor costs in Israel's high-tech industry, such as tax cuts, and 
should improve the education system, including technological 
education. Another suggestion was to offer incentives and 
encouragement for Israelis who have gained experience overseas 
to return to Israel, and for Jewish experts to immigrate.