By Andrew Friedman
Like many Olim Hadashim (new immigrants), Miriam Lottner had one over-arching goal when she made Aliya from Los Angeles in 1994: To become Israeli, in the broadest sense. In many ways, she suceeded: She got married, bought a house, had children and established a successful semi-professional photography business.
Two decades later, her immersion into her adopted country served her well when she set out to build Reveal Cards, small education games company with several lines of family card games that she says are designed both to encourage non-computer based family time as well as to teach about a variety of topics: Israel, outer space, the animal kingdom and more.
Her efforts have paid off: Since founding Reveal in 2014, she has sold thousands of boxes of cards around the English-speaking world, and has translated some of the series into Hebrew for local sales. But the strength of the local currency – the shekel has gained more than 13 percent against the US dollar over the past 13 months – has pushed Lottner into a corner she’d never really considered being in.
“The Shekel is overvalued right now- it’s that simple,” Lottner told Tazpit Press Service (TPS). “I do all my work here – graphics, design, administration. I don’t employ salaried workers, but I’ve got five freelancers who I work with regularly. With shekel so strong, it’s raised my business costs and slashed into the local value of the sales we’ve made. I had a terrific year sales-wise in 2017, but with the drop in the dollar value I didn’t make any money. I’m working on the business far too hard for that.”
Lottner says she isn’t planning to abandon the business of selling educational card games. But she did say that for the first time, she is strongly considering moving everything but her management of the company overseas.
“I’ll be honest – I can’t afford to keep the business here under the current conditions. That’s very frustrating – it’s important to me, ideologically and practically, to keep as much of my business in Israel as possible. But I produce my products in China, which means I pay in dollars, and most of my sales are in the US, which means I get paid in dollars. If the dollar doesn’t gain some of its strrength back against the shekel, I’m going to have no choice but to move the graphics and design part of the business overseas,” Lottner added.
Predictably, politicians say the strength of the shekel is a point of national pride: Finance Minister Moshe Kahlon has praised the value as an indication of international confidence in the local economy, which is closing in on a 10-year high against the US currency.
But the positive outlook is not limited to the political arena: Economists, too, say the rising strength of the shekel is a reflection of the strength of the economy. They note that while traditional industries have indeed suffered due to the currency upheaval, it is also true that “new economy” sectors have remained strong.
“Yes, goods exports have taken a tough hit, but service exports are very strong,” said Dr. Michael Sarel, the head of economics at the conservative Kohelet Policy Forum and a former head of research at the Ministry of Finance. “You’ve got incoming tourism (which is considered an ‘export’ because it brings foreign currency into the economy), software, technology, cyber products, information technology all exporting and doing very well.”
Given his view that the strength of the shekel is a reflection of a strong economy, Sarel agreed with the suggestion that the current state of the shekel-dollar relationship could in fact be a view of a new “normal” that local businesses will have no choice but to adjust to. He acknowledged that currency movement is a notoriously difficult thing to predict, but he said that the overall macro-economic state of the economy would suggest that the government not intervene to adjust the local currency.
All of which presents ongoing challenges for small Israeli businesses, as well as individuals living in Israel but who maintain their month-to-month finances in dollars.
“There’s no question about it: I’ve watched my functional Israeli income shrink from month-to-month over the past year, said B., a 10-year-resident of Efrat who continues to work as a sales executive for a Boston based software company.
“Now, I have to say: For me, it isn’t so bad relative to small business owners I’m a salesman. I make my plans based on a 12-month outlook, so if I get to a point in the year where I can see I’m coming in short, I can always work a bit harder in order to make up the short fall. But there’s no question, the current situation is tough,” B. said.
“I sent a proposal to a potential client in the US two months ago, but due to various reasons the project has been delayed. As a result of the dollar’s recent dive, my profit on the project is shrinking before my eyes,” added Naomi Elbinger, CEO of YesPotential, an Israel-based website development company with clients worldwide.
“But I can’t raise the price on them now, because we already agreed on a dollar-based fee. US clients are the backbone of my business. Most of my clients pay me in dollars, but I pay my team in shekels – so I’m losing both ways. I don’t want to raise my rates to US clients, so I am trying to find creative ways to compensate – including changing my payment processor to one that offers a better deal.”