Think for a moment what comes to mind when you hear the term "task force". A Japanese animated cartoon series? A military operation? The answer is both simpler and more complex to the same degree. "Task force" is the phrase Gary Heiman, founder and chairman of international textile corporation Standard Textile, to describe his next plan. And no, it is not about adding production capacity, boosting exports, or expanding production floors, but rather, opening hearts. Heiman, whose company set up local textile company Arad Textile Industries Ltd., (originally called Arad Towels) is calling on Jewish businesspeople worldwide not to be content with making donations, but to invest in local businesses as well. Why? Because it's worth it.
Globes: What's wrong with donations?
Heiman: "We need to reassess the relationship between Diaspora Jewry and Israel. Until today, a good many Jewish businesspeople overseas tended to think that they had done their share if they gave money. But donations are not enough to generate economic change. Jewish businesspeople need to understand that donations and annual vacations don't bring about long-term change.
What are you proposing?
"We need to invest in businesses and factories in Israel, not out of philanthropy, but profitability. Israel presents a lot of business opportunities."
This, perhaps, is what sets Heiman's vision apart from others. He is convinced that Israel is a businessman's paradise. And don't talk to him about businesses moving elsewhere, income tax, or bureaucracy. China is a partial and lackluster alternative to the polished original: in this case, Israel.
Securing Israel as a business hub
One could be have been forgiven for believing that the timing of our meeting at Heiman's office in Textile House in Tel Aviv on a bright day at the end of December, with the warm sun highlighting the calm sea outside has made him ecstatic. But Heiman is a man of action. He is chairman of Arad Textiles, the producer of the Arad Towels product range. The company has two plants in Israel, one in Arad, which exports towels to leading hotel chains worldwide, and the other in Migdal Ha'Emek, which produces work apparel for various industries as well as a special range of textiles for hospitals and operating theaters made from special fabric to minimize seepage, which the parent company Standard Textile jointly developed with international science and technology company EI DuPont de Nemours & Co. (NYSE: DD).
Standard Textile's plants in Israel produce the more sophisticated textile products, while its four plants in neighboring Jordan weave the fabric under the terms of the Qualified Industrial Zones (QIZ) treaty (under which ventures between Israeli, Jordanian, or Egyptian firms receive tax breaks in exchange for sharing production for export to markets in the US). The plant in China produces simple items, but the core textile business activity is in Israel. This goes against the grain of the general trend in the local textiles industry, which has seen companies close plants and relocate production to Egypt and China, leaving only their management and design departments in Israel. Heiman, on the other hand, is investing a further $8 million to add 3,000 extra square meters of space on the production floor at Arad, and hiring extra staff.
What would you say to Israeli businesspeople who move their operations to China?
"Moving factories to China will not solve the main problem, which is globalization. The classic mistake is to look solely for cheap labor. This is a task that is never-ending and has no value, so moving factories to China, or to anywhere else in Asia won't solve the problem. The only things that differentiate one company from another are better products and solutions, which are better suited to customers' preferences than the others. This is the only answer which is also long-term, and the best place to develop superior products is Israel."
This is what people usually say about the high-tech sectors, yet you represent a traditional industry.
"It is exceptionally important because of the very fact that we are dealing with a traditional industry. There are new fibers being developed for textiles, and various needs that must met. For example, we produce pre-laundered ready-to-use white towels for hotels. This saves hotels a lot of money. We've also produced a cloth that is blood and liquid resistant, which provides a solution for operating theater staff. We have patented 50 ideas so far. Israel has a tremendous advantage in terms of ingenuity, innovation, curiosity, and a desire for perfection, which produce fantastic ideas for our R&D department.
"We've been profitable ever year for the last 25 years, and I would say, cautiously, that we end most years with growth in sales and profit. Why? Because we add solutions and value that no one else gives our customers anywhere. And that is exactly the message I want to give through the 'Task Force': Israel is a good business choice."
Do you intend to meet businesspeople on the verge of relocating their production overseas?
"No. The moment companies find themselves in difficulty and need to stem the losses, it's very difficult to try and convince them to make an about-turn and rebuild everything from scratch. In order for a factory to stay in Israel, it needs a good, creative team, so I will focus on successful businesspeople and factories overseas. I won't suggest they move all their activity to Israel, but I will urge them to make use of the wonderful capabilities here, and set up a turbo for a factory or company."
One could say that Heiman (54) was born into the business world. Standard Textile was founded by his grandfather, a refugee from Nazi Germany, and it initially engaged in the marketing and distribution of textile products. Heiman studied engineering and history at Washington University, St. Louis, Missouri, and completed post-graduate work at the Georgia Institute of Technology, and, parallel to the founding of Arad Textiles, the Saurer Institute in Arbon, Switzerland. At the age of 22, Heiman came to Israel under the auspices of a program for youth. He was based in Neve Antib, and Kiryat Shmona, and volunteered for the IDF when the Yom Kippur War broke out.
Three years later, when he was still in his 20s, he decided to set up the Arad Towels manufacturing plant in the Negev. "They looked at me as if I was bit weird. 'What's this kid talking about?'" he recalls. The plant, in which Delta Galil Industries (Nasdaq: DELT; TASE: DELT) initially owned 40%, later become a public company, and is now privately held by Heiman and his brothers. He returned to the US to run the family business (but continued to come back to Israel from time to time to do reserve duty in the IDF), and in 1993 he took over the reigns at Standard Textile, which ended 2007 with sales of $650 million. Today Heiman travels non-stop between the US, China, and Israel, as well as being active chairman of Arad Textiles.
How does the task force principle operate in your factory?
"We'll start with the basics. We have brought 700 jobs to Arad, supporting 700 families. We do not employ people through agencies and all our employees receive full social benefits; all our employees pay taxes to the state, we export more than 90% of our production, and in addition, we are extensively involved in the city."
Arad Textiles has set up a fund called the "Heiman Fund" which allocates $150,000 a year for city projects, such as the Ometz Project, which runs activities to help young people who have dropped out of school to return to education, and funds one third of the city's youth drop-in centers. Other schemes assisted by the fund include the Tafnit project, which provides professional help for children and youth with learning difficulties, and the Arad girls' volleyball team.
The Heiman is also partnering with other organizations in providing vocational training to discharged Beduin soldiers, one third of whom stay on at Arad Textiles. A similar program exists in Migdal Ha'Emek, where discharged soldiers attend business and industrial management programs.
Launched only recently, Heiman outlined the Task Force project in a meeting a month ago with the cabinet minister responsible for relations with Diaspora Jewry, Isaac Herzog, who congratulated him on the initiative. Heiman first presented the scheme last summer in a meeting with President Shimon Peres, and claims that both men promised him their help in securing support of prominent Jewish businesspeople for the scheme. Heiman gives himself six months to get the project up and running.
Published by Globes [online], Israel business news - www.globes.co.il - on January 30, 2008
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