Teva Workers Barricade Themselves Inside Jerusalem Plant

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Teva workers barricade themselves inside plant in Jerusalem
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It’s going down in Israel. Generics pharmaceutical giant Teva announced last week it was laying off 14,000 employees or 25% of its workforce.CEO Kare Schultz wants to cut $3 billion in expenses amid generic competition and a loss of pricing power. In the Shock Exchange’s opinion, Schultz is choosing to sacrifice employees to the benefit of shareholders. Employees are not standing for it either. A few hundred barricaded themselves inside a plant in Jerusalem:

Some had expected up to 10,000 headcount reductions, but 14,000 totally blew investors away. The stock rose 10% on the prospects of saving $3 billion in expenses:

Some 200 employees of the generic drugs giant Teva Pharmaceutical Industries barricaded themselves in the Jerusalem factory in protest of planned job cuts of one-quarter of the company’s workforce.

The protesting workers prevented managers from leaving the building, while other people — including relatives of the employees — burned tires outside, according to Hebrew reports. Teva plans to lay off some 1,750 workers across the country and shut down the two plants in the capital. Rallies against the move were held in Jerusalem, the coastal cities of Ashdod and Netanya, and the central Israel city of Petah Tikva on Sunday.

Demonstrators briefly blocked the entrance to the capital before police removed them from the highway. In Ashdod, the employees were torching tires outside the local Teva offices. Demonstrators also disrupted traffic in Petah Tikva.

Avi Nissenkorn and union power Histadstrut led a solidarity strike with Teva workers that attempted to paralyze the public sector. Now all of Israel has to take notice of the disrespect Teva has shown to employees. Workers decided not to show up for work from 8am to 12 noon at Ben Gurion airport in Tel Aviv. Several flights were either delayed or cancelled. The striking workers shut down highways, banks, post offices, phone companies, universities, stock exchanges, universities and the Israel Electric Corporation.

We understand there will be an open-ended strike on Teva. That could entail shutting down plants or maybe even boycotting Teva’s products. The company is in dire straits. Its revenue and EBITDA is a falling, while its $35 billion debt load is at junk levels. The company was recently downgraded to junk status by Fitch due to operational stress, declining cash flow and a potential need for outside sources of capital:

Teva is facing significant operational stress at a time when it needs to reduce debt,” said Patrick Finnegan, an analyst with Fitch. “Pricing pressure in Teva’s North American generics segment and erosion of sales of Copaxone will continue to weigh on free cash flow in the near term, requiring the company to continue to sell assets or find external capital resources to meet debt obligations.”

The company can ill-afford to have its operations suspended. Teva needs to churn out product and generate cash flows to service its debt. The company also needs to reassure financial markets its turnaround plan is intact. Any backtrack on cost cutting by Kare Schultz could cause the stock to plummet.

Caught Between A Rock And A Hard Place?

Workers want their jobs saved. Appealing to the Israeli government to step in and provide grants or other forms of relief to Teva could be problematic. Teva has already received $6 billion in tax breaks from Israel and it still planned to cut 1,750 local employees. The company has $5 billion in principal payments due next year and $19 billion over the next three years. It needs help restructuring its debt and an disruption in operating activities could jeopardize that.

So far Fitch has sacked Teva, but Moody’s and S&P lay in wait. Another ratings downgrade could increase Teva’s borrowing costs, crimp cash flow and jeopardize any debt restructuring efforts.

Trump And The Global Economy

Wuyi, Coconut Rob, Shock Exchange, Professor Brogman stunt for the ‘gram

The second installment of Trump And The Global Economy Town Hall took place October 24th in Fort Greene. It Featured Professor Lance Brofman, Coconut Rob (Coconut Rob Smoothies), Wuyi Jacobs (AfroBeats Radio) and Ralph Baker, author of Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead.

The event was well-received by the community. We parsed through President Trump’s proposed tax plan and [i] how it was pure economic folly and [ii] high net worth individuals could potentially game the system by shifting income around. Apparently, Kansas Coach Bill Self did this when the state of Kansas cut taxes in the past. We discussed the pros and cons of technology on workers and the economy. How will the economy and country prosper under Trump’s leadership vis-a-vis Obama? What’s behind the verbal sparring with black athletes, ESPN’s Jemele Hill and North Korea’s Kim Jong Un?

 

 

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