Israel: Consolidation Continues

Aggressive expansion has been the main characteristic of the cable industry in most parts of the MENA region in recent years, but this is not true for Israel, where further consolidation of the industry has taken place. Though Israel has trading relationships with some countries in the MENA region, it is economically isolated from many of the strongly growing markets of its Arab neighbours, so the main export markets served by Israel are in Western Europe and North America. As a result, Israel’s cable producers have not benefited very much from the booming demand for cable in the region. The previous phase of consolidation of the cable industry in Israel happened in the late 1990s when Superior Cables was formed from the merger of three pre-existing companies. More recently, Superior Cables has changed its name to Synergy Cables, and in 2008 the company went through a split: the energy cable business remains with Synergy Cables but its communication cable business has been sold to Teldor Cables & Systems. Thus the Israeli wire and cable industry is now aligned into three segments with one major player in each segment: energy cables (Synergy), communication cables (Teldor) and magnet wire (Shelhav).


Iran Remains Isolated

Though there has been a lot of cable industry activity in other parts of the region, Iran remains isolated from these developments. While it is understandable that western companies – those based in North America or Europe – would be cautious about doing business in Iran, either because of legal inhibitions or a perception of a high level of political risk, it is interesting that there has apparently been little enthusiasm amongst cable companies from countries in the Middle East to enter the Iranian market in a major way. There have been no announcements of outside companies making acquisitions or forming joint ventures in Iran. Despite some restrictions by the EU, such as withholding export trade credits, the largest source countries for cable exports to Iran in 2007 were European ones (Italy and Germany). It is also likely that there is further indirect trade taking place with Iran via the UAE.


Largely Self-Sufficient

One problem is that the Iranian economy in general, and the cable industry in particular, have survived in isolation for a number of years, so they can operate on a largely self-sufficient basis. Iran has a substantial cable industry: there are a large number of energy cable producers but a more limited number of companies producing communication cables, the leading ones (Shahid Ghandi and Rafsanjan Industrial Complex) being state-controlled. There may be little urgent need to change, unless new technology is needed from foreign suppliers. Considering the way in which Algeria has opened up to foreign investors in the last two years, it would not be surprising if a similar trend is eventually seen in Iran, but a major thaw in the political climate would be required for this to become possible.