*NEWS*HP’S $60M INVESTEMENT IN ISRAEL ?

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Date: Thursday December 1, 2005 10:18:00 am
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    Hewlett-Packard mulls $50-60m investment in Israel
    HP will only invest if it obtains benefits under the strategic track in the new Investment Law.
    Hewlett-Packard 
    is considering investing $50-60 million in Israel, Singapore, or China,
    said HP-Indigo general manager Alon Bar-Shani, during a tour of the
    company’s ink plant in Kiryat Gat.
    If Hewlett-Packard picks Israel,
    it will add 200 employees to its current workforce of 2,250
    manufacturing, marketing and R&D staff.
    Hewlett-Packard will
    invest only if the government agrees to include the investment in the
    strategic track in the Law for the Encouragement of Capital
    Investments, which exempts foreign investment in preferential outlying
    areas from taxes on dividends. To Hewlett-Packard’s displeasure, under
    the new Capital Investments Law, Kiryat Gat is not eligible for
    benefits. There is another, more significant, obstacle: the strategic
    track applies only to investments of $150 million and up.
    Bar-Shani
    said, “In contrast to Intel, which demanded a huge grant from the
    government, we’re not asking for contributions in tens of millions of
    dollars in investments. However, we want to be sure that we’ll receive
    at least as much support in Israel as for a new plant in Singapore or
    the Scitex Vision plant in China. I’m sure we’ll reach an overall
    investment of $150 million, but it will be gradual.”
    Until now,
    Hewlett-Packard has obtained approval for investment under the regular
    tax break track, but it wants to be eligible for the strategic track,
    which is designed to attract foreign investment.
    Bar-Shani said
    Hewlett-Packard had discussed the matter with former Minister of
    Finance Benjamin Netanyahu, and later with Minister of Finance and
    Minister of Industry, Trade and Labor Ehud Olmert, and that talks with
    the Investment Promotion Center were continuing. However, the
    Investment Center has taken no decision, and under the current
    political uncertainty, it was not clear when a decision would be made.
    Investment
    Promotion Center director Hezi Zaieg CPA told “Globes” that HP-Indigo’s
    investment would not be approved because it did not meet the mandated
    $150 million threshold for a strategic investment. In order to meet the
    threshold, Hewlett-Packard asked that its acquisition of Scitex Vision
    for $220 million be taken into account. However, Zaieg said, “We won’t
    begin considering acquisitions of Israeli companies as investments
    eligible for benefits.”
    Hewlett-Packard (Israel) managing director
    Gil Rosenfeld said Hewlett-Packard was positioning Israel as the
    capital of digital printing. The company’s activities in Israel total
    $835 million, half of which is exported. 65% of domestic sales are to
    business customers.
    Hewlett-Packard invests $3.5 billion a year in
    R&D, and developed 650 new products in 2004. $1 billion was
    invested in digital printing, one tenth of which was invested in
    Israel. Hewlett-Packard invested $100 million in HP-Indigo’s ink plant
    in Kiryat Gat. The current investment is intended to expand this plant
    to produce new products. Hewlett-Packard is also considering setting up
    new plants to meet demand for digital printers.
    Rosenfeld said
    Hewlett-Packard Israel had signed a new kind of contract with Osem
    Investments Ltd. , under which Hewlett-Packard provides infrastructure
    and support for Osem’s Petah Tikva center, with payment on the basis of
    actual use. He said contracts of this kind cut computer costs for large
    customers by 20-25% under.

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