Arad hit hard by factories closure

More than 150 residents in the southern city of Arad will be joining the ranks of “Arad Towels” American-owned factory. The company has closed the manufacturing facilities at the site and moved to Jordan; and will only be maintaining a logistics and administrative center employing only a few dozen workers.

 The "Arad Towels" American-owned factory (Photo: Al Ittihad)

The “Arad Towels” American-owned factory (Photo: Al Ittihad)

It is an especially hard blow to the local economy, as the factory had been an economic mainstay for over 40 years. Also, the Elbit Systems factory in Arad is expected to send 23 people their pink slips.

The Arad Towels company’s founder, Gary Heiman, is the co-owner (along with his brother) of an all-embracing American textile empire Standard Textile, which has a yearly turnover of $600 million. Arad Towels is Standard Textile’s main subsidiary and is responsible for 20% of its sales. The factory was founded in Arad in 1976. The first years were tough, but an investment by Delta, which bought about 40% of Arad Towel’s shares, helped the company. At the time, Standard Textile dealt with marketing and distributing products to the American market only. Arad Towels was its first manufacturing factory. “Today our products can be found in nearly every hotel 4-star or higher rated hotel, in the army and in hospitals,” Heiman said to journalists. Later Delta sold its shares in the company. In 2002, after operating as a public company for 10 years, Heiman removed the company from stock listings. In 1998, Heiman was appointed president of Standard Textile. Today the company has 24 factories in 14 countries and it is considered the Number 1 textile company in the United States and in Europe, with a market share of more than 60% in hospitals. It is the third biggest manufacturer of textile products to US hotels. The holding company employs 3,600 workers, 800 of them in China and 1,000 in Israel. The Arad factory manufactures 85% of the company’s towels and the rest are produced in the factory built in China, where it was the first foreign company to enter the market without a local partner. The company’s products are sold in 57 countries, and its customers include the Accor, Ritz, Hyatt, Intercontinental and Le Meridien hotel chains.

In 1992, Heiman established a factory for work clothes named Standard Textile Israel in Migdal Ha’emek, which was later merged with Arad Towels. The factory supplies work clothes mainly to operating rooms and hospitals. The factory in Migdal Ha’emek was closed last July. Arad Towels owns two additional factories in Irbid, Jordan. The annual sales of the Migdal Ha’emek factory amount to approximately $70 million. Until today the cloths are designed and cut at the factory and then sent to Irbid, where the clothes are sewn and sent back to Israel. The Jordan factories were established following the QIZ agreement, which gives companies manufacturing in Jordan and Israel tax reductions in the United States.

Because it is a private company, Arad Towels does not report its earnings, but Heiman indicates that “our profit in Israel is something we are very proud of. Before the company was traded in the market, the profit before taxes stood at 13%-16% of the income (the company pays 31%-32% tax), and I can tell you that the profit today is not lower than that.” According to these figures, the company’s profits total approximately $11-12 million a year. The company sells towels for $830,000 per workers. According to Heiman, “When I mention these figures, people think that we’re a high-tech company.”