Israeli manufacturers face a growing risk that their next production line, investment or group of jobs will be built abroad rather than at home, the head of the country’s industrial association warns. Avraham (Novo) Novogrocki says overseas resistance to Israeli suppliers is combining with worker shortages, high interest rates and a stronger shekel to squeeze companies that are still selling and investing despite the pressure.
His warning is about more than factories closing. It is also about industrial knowledge and manufacturing capacity gradually moving elsewhere if businesses cannot earn enough to justify expanding in Israel. In an interview published Sunday, he called for the next government to adopt a long-term industrial policy rather than manage the sector from one crisis to the next.
Novogrocki, identified as president on the Manufacturers Association of Israel’s official profile, said the trade problem now includes both open restrictions and less visible commercial barriers. Customers and distributors are delaying decisions, freezing deals or imposing conditions that did not previously exist, he said. In some cases, he said, a “Made in Israel” label has itself become a business obstacle.
He argued that the damage extends beyond individual businesses to Israel’s reputation as a supplier, making export promotion and access to new markets a national economic concern.
He said the government recognizes the problem and is trying to help, but that the response needs to be much broader. His proposals include active support for exporters affected by boycotts, opening additional markets and strengthening the international image of Israeli industry. He also urged consumers and government ministries to put more Israeli-made products on their shopping and purchasing lists.
Currency movements are another pressure point in his account. Novogrocki said industrial goods exports had increased about 17% in dollar terms, but that the shekel’s appreciation had erased a substantial part of the benefit. A company can sell more abroad while seeing less of the proceeds reach its bottom line, he argued.
He also pointed to disrupted supply chains and exports when airspace closed during confrontations with Iran. During Operation Roaring Lion, he said, 83% of industrial exporters reported that they expected the war to hurt exports.
Despite those strains, he said factories continue to invest. He cited machinery and equipment investment of NIS13.8 billion in 2025, up from NIS12.5 billion in 2024, while arguing that some of that spending reflects confidence in Israel rather than a clear competitive advantage. The policy challenge, he said, is to ensure the next investment by an Israeli company is made locally.
Novogrocki made that case with figures he cited for industry’s contribution in 2025: about NIS240 billion to business-sector output, close to 400,000 employees and roughly NIS183 billion in exports. He said average industrial pay was about 45% above the economy-wide average. These are the figures presented in his interview.
The association is seeking a national program costing about NIS2.2 billion a year. Novogrocki said its own cost-benefit calculations project that the investment would pay for itself from the first year and produce a net economic benefit of about NIS9.7 billion within five years.
He argued that cutting spending aimed at productivity, exports and investment could weaken future tax revenue rather than provide a lasting answer to the budget deficit. His demand is for a policy covering labor, investment, energy, innovation, exports and regulation, with a clear direction for the next decade.
The association is also taking steps of its own, he said. Its recently launched artificial-intelligence center helps factories adopt AI in production and across their operations. It is supporting robotics, automation, connections between technology companies and traditional manufacturers, and training for managers and workers.
Novogrocki said the association would work professionally with any government that is formed. His central call was for certainty: a sustained industrial strategy that gives companies a reason to build their next stage of growth in Israel rather than overseas.
JBizNews Desk | Tel Aviv, Israel
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