Golan Industries: How Much of the Value Chain Really Depends on Kibbutz Shaar HaGolan

What This Follow-up Is Isolating

The main article focused on the cash cost of expansion. This follow-up isolates a different layer: how much of Golan's ability to produce, staff, and operate its Israeli core really depends on Kibbutz Shaar HaGolan, which is also the controlling shareholder.

The short answer: less than it may seem on labor, more than it may seem on the site itself.

At the end of 2025, only 24 of the company's 307 employees were kibbutz members. That is not a picture of a factory still run mostly through the kibbutz. But the plant, the offices, the accelerator building, part of the site-services layer, and part of the employment structure still sit inside a long-running relationship with the controller. The real dependency is therefore not the whole labor chain. It is the land, the manufacturing floor, and the surrounding contractual shell that keeps it working.

That is also why a quick read can miss the story in both directions. If you look only at the related-party agreements, it is easy to think the whole chain still sits inside the kibbutz. If you look only at headcount, it is easy to think the dependency has mostly faded. Neither read is quite right. The group reports 45 production lines in total and manufacturing sites in Denmark, Argentina, Mexico, and the United States, but the Israeli industrial core, including the main site and the accelerator building, still remains rooted in Shaar HaGolan.

Where the Dependence Is Real: Land, Buildings, and the Accelerator

This is where the kibbutz still has the strongest grip. The company's main plant and offices sit on land leased from the kibbutz, with a total area of 81,064 square meters, including 20,664 square meters of built area and 60,400 square meters of yard and plot area. On top of that, there is a separate lease for a 1,489 square meter building used to operate the electron accelerator.

This is not passive real estate. The fixed-asset section makes clear that this site houses a meaningful production layer: 24 PEX production lines in Israel, 19 coating lines, an armored PEX line, multilayer lines, a corrugated line, a domestic wastewater pipe line, and the electron accelerator building. In other words, what sits on kibbutz land is not just the registered address. It is a major part of the local operating base.

On the one hand, the short-term read actually improved. The lease signed in 2017 was due to expire on 31 December 2026, and after the reporting date, on 22 February 2026, the company signed an amendment extending the lease for 8 more years, from 1 January 2027 through 31 December 2034, with an option for another 5 years. That removes the near-term cliff.

On the other hand, that arrangement does not eliminate the dependency. It extends it. Rent is linked to CPI, there is an appraisal mechanism every three years to test whether rent deviates by more than 10% from market rent, and such a deviation would send the agreement back through the approval path for a controller transaction. The company also has a right of first refusal over adjacent land and an option to lease up to 5,000 additional square meters, but that too remains inside the same relationship.

That is the core point: Golan does not face an immediate risk of losing the site, but it does remain structurally dependent on keeping the controller relationship orderly, approved, and supportable as market terms.

Labor: Less Dramatic Than the Land, Still Not Irrelevant

Here the picture is more moderate. At year-end 2025, the company reported 24 kibbutz members versus 284 salaried employees, or about 7.8% of the workforce. A year earlier, the figure was 23 out of 292. Total headcount rose by 15, while the number of kibbutz members rose by only one. That does not look like a dependency that is deepening through labor.

The employee breakdown also shows where these employees sit. Of the 24 kibbutz members, 13 were in operations, logistics, and engineering, 7 in marketing, and 4 in general and administrative roles. So this is not a layer concentrated only on the shop floor, but it is also far from control over most of the operating base.

But the headcount itself misses the more important distinction. Kibbutz members are not employed in a standard employer-employee structure. The company receives labor and officer services through agreements with the kibbutz, does not accrue pension and severance obligations for those members, and is indemnified by the kibbutz if it is nevertheless required to bear a payment based on an employment claim.

Economically, that creates a more convenient structure for the company, but it also keeps part of the labor layer inside a controller transaction. The agreement for kibbutz members who are not officers was renewed in August 2025 for a 5-year term running from 1 October 2025 through 30 September 2030, with annual CPI updates. The officer-placement agreement allows up to 10 kibbutz-member officers, excluding directors. So direct labor dependence is clearly milder than land dependence, but it still sits inside the control perimeter.

The company also states that it has no material dependence on any specific employee. That matters. It suggests the risk here is not "one person leaves." It is an institutional arrangement that has been built into the company for years.

The Quiet Layer: Services, Administration, and Ongoing Related-Party Flow

This layer is smaller in shekels, but more constant in daily operations. Beyond land and labor, the kibbutz provides catering and general services. Those services include water, sewage, parking, perimeter security, mail, a driver, and also on-demand services such as forklift training, meeting-room use, fueling, waste services, laundry, guest hospitality, and purchases from the local grocery. These agreements were extended through 1 October 2026.

This does not define the thesis on its own, but it shows that the operating base is not separated from the kibbutz only at the land-ownership level. Part of the day-to-day services surrounding the site still comes from the same related party.

There are also a few smaller but still telling links. The company updated its unified tax reporting agreement with the kibbutz in 2025, and under a separate equipment-purchase agreement with the kibbutz it had paid about NIS 2.7 million in total by the report date. These are not necessarily the main risk, but they sharpen the point that the link to the kibbutz is not limited to the plot of land and labor placements.

What Matters for Shareholders: The Machines Are Pledged, the Land Is Not Theirs

This is where the asymmetry becomes economically interesting. The company does not own the land underneath its main operating base, but it does invest in fixed assets and equipment that sit on that land. At the same time, the note on liens shows that the company created fixed and/or floating charges over equipment and assets in favor of the banks, securing credit that amounted net to about NIS 94.3 million at the balance-sheet date. In addition, there is a first-ranking floating charge over all of the company's property and assets, and a fixed charge over unissued share capital and goodwill. Separately, in favor of the state, there is also a floating charge under the investment program covering movables, including machines, equipment, facilities, and cash.

That is the point that really changes the read. Shareholders fund the machines, the lines, and the investment layer. The land underneath the Israeli operating base remains with the controller. Part of the movable asset base that supports the operation is already pledged to banks and the state. In a normal operating environment, that model can still work well. But in a financing squeeze, a negotiation, or a restructuring scenario, the company's bargaining position is different from that of a company that owns both the land and the operating equipment.

That is also why the lease extension is only half a solution. It removes a near-term timing risk, but it does not turn the site into a company-owned asset. It simply buys more time inside the same dependency structure.

At the same time, perspective matters. Golan is not wholly captive to Shaar HaGolan. It does have international manufacturing, foreign sites, and 45 production lines at the group level. So the correct read is not "the whole value chain depends on the kibbutz." It is "the Israeli manufacturing core, and the ability to keep piling investment onto it, depends on the kibbutz more than the headcount figure alone would suggest."

Governance Is a Buffer, Not a Substitute

The report also shows a relevant governance move at the end of 2025. After the term of independent director Shaul Ashkenazi ended, the board approved the appointment of Michal Tzuran as an independent director. In her signed eligibility statement, she declares that she has no ties to the company, the controller, or affiliated entities in the two years prior to the appointment, that she does not receive and will not receive any compensation beyond standard director fees and expense reimbursement, and that she has the professional qualification required to serve in the role.

That does not remove the dependency. But it does matter, because a company whose main site, part of its labor structure, and part of its routine services still run through controller agreements needs a genuinely independent oversight layer around every approval, renewal, and pricing update tied to those agreements.

Conclusion

The right read on Shaar HaGolan at Golan Industries is not "the entire value chain still sits inside the kibbutz," but it is also not "this is just legacy history that no longer matters." The deepest dependency sits in the land, the accelerator building, and the services and agreements that allow the Israeli operating base to function. Direct labor dependence, by contrast, is much lower than the related-party disclosures alone might initially suggest.

Current thesis: Shaar HaGolan is less Golan's labor supplier and more the landlord and operating shell of its Israeli manufacturing floor.

The implication for shareholders is straightforward. As long as the relationship with the kibbutz stays routine, approved, and workable, the model can remain stable and even flexible. But if the company keeps investing in equipment, development, and additional Israeli activity, the key question is not how many workers come from the kibbutz. It is who owns the land, who supplies the site shell around the plant, and which assets are already pledged.