Confusion surrounds the future of the Motorola manufacturing plant in Arad. For the past week media reports have been warning of closure of the town's second largest employer, but on Wednesday the company said it would not be closing the factory and rather will be introducing new production lines to the plant.

While the Arad plant, which manufactures mobile phones, car phones and radios, has been gradually downsizing its labor force for the last two years, a report last Friday stated that the company was considering shutting down the production facility and moving operations to China. A report in Friday's The Marker stated that the company's president, Elisha Yanai, had approached the government, requesting that they provide tax relief for the parent company Motorola International in exchange for keeping the Arad plant open.

Since then there have been multiple reports in the media speculating that the plant would either be closed or sold to a foreign company and that the 500 employees would either be fired or forced to become external contract workers.

The rumors became so pervasive that politicians decided to take action to prevent the plant's closure.

On Monday, Likud MK Carmel Shama and Israel Beiteinu's Alex Miller called for an immediate debate on the matter in the Knesset's Finance Committee. A press release presented by Shama read: "It is in the clear economic interest of the State of Israel to keep the Motorola plant in existence; therefore, if it is necessary to provide the factory with extra ordinary benefits, we should all enlist and do everything possible to prevent its closure. Together with the members of the Knesset I plan to use all the parliamentary tools available to save the factory from closing."

Arad Mayor Gideon Bar Lev said the plant's closure was not just Arad's problem, but a national problem. "The state should do everything possible in order to make sure that Motorola doesn't leave," said the mayor in a phone interview.

Bar Lev explained that the problem was a drop in the number of orders the company was receiving and the crisis accompanying the fall of U.S. currency rates. "All the hi-tech companies are in the same boat in this," he said.

Bar Lev said that he had approached the minister of finance and the Prime Minister's Office, but that ultimately the solution would have to come from the Ministry of Industry, Trade and Labor. "I approached them too and told them they had to come up with an offer to convince the company to stay. Motorola employs 400 people, 65 percent of them Arad residents.

"It also provides for nearly 1,000 families who are employed by second-layer contractors and helps us out with aid to the community. Losing it would be very bad for the city," said Bar Lev.

The ministry told The Jerusalem Post that a request for response had come from the mayor, but offered no solution, saying that the ministry was "studying the matter."

Motorola Israel is now downplaying the issue. On Wednesday the company's spokeswoman released the following statement: "Contrary to wrongful reports in the media regarding the closure of the factory in Arad, Motorola is clarifying that there is no basis to the reports. On the contrary, the company is looking into several options for increasing the activities of the plant, which is without a doubt one of the best of its kind in the world, which employs skilled personnel and is based on the most advanced technologies. Among other things, Motorola is considering introducing new producers that will increase the product basket and production capacity in the Arad factory, as well as in the labor force."