Israeli defense powerhouse IAI to stunningly lay off 900 workers

CEO resigned, workers union promised to battle the decision

Golan Hazani 16:2001.07.20

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Israel Aerospace Industries (IAI) is preparing to lay off 900 employees, primarily in its aviation division, a person familiar with the move told Calcalist on condition of anonymity. This would be one of the largest ever rounds of firings in a state-owned company as a result of the coronavirus (Covid-19) pandemic. The person said that the decisions regarding the layoffs were reached at a board of directors meeting in recent days.

Earlier on Wednesday, Nimrod Sheffer, the company’s CEO announced his resignation after only two years at the helm of the company. He is expected to be replaced by deputy CEO Eyal Younian.

The entrance to IAI headquarters. Photo: Avi Mualem

Sheffer joined IAI in March 2018, following 36 years of service in the Israel Defense Forces. He was meant to lead the company to an upcoming IPO together with the company’s dominant chairman Harel Locker. The Covid-19 crisis, which hurt IAI’s civilian activity and endangered future military projects, added to the pressure on the company’s leadership and led to Sheffer’s early retirement.

Nimrod Sheffer (left) and Harel Locker. Photo: Orel Cohen and Kfir Ziv

“Sheffer and Locker did not see eye-to-eye on many issues,” a person familiar with the move told Calcalist. “Locker is a very dominant chairman, who functions as a sort of uber-CEO. Disagreements between the two, particularly over the rush to go public, as Sheffer saw it, and the constant striving for commercial results even at the expense of the national security objectives of IAI, left him no choice but to quit.”

IAI is Israel’s largest aerospace and defense company specializing in developing and manufacturing advanced weapons and defense systems for air, space, sea, land, cyber and homeland security. It employs around 15,000 people in its offices around the country.

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The report on the planned layoffs faced a strong backlash from the strong IAI workers union. “Management wants to shut down production lines that are neither profitable nor unprofitable in order to meet profitability goals. The entire world is tightening its belt and IAI has sufficient resources to wait out the coronavirus crisis without sending its workers out to starve in a job market that offers them no alternatives. The union agreed to have employees put on unpaid leave at the height of the outbreak, but we will not permit layoffs,” said union chairman Yair Katz. “The company entered the crisis financially sound and these layoffs are unjustified. We will employ unparalleled measures to prevent them.”