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'My business card doesn't say CEO'
By Ora Coren
Tags: Israel News

When Aunt Berta moved from Germany to Israel some 50 years ago, she did not forget her special jam recipes. Together with other members of the Beth El group, she settled in the thick woods of Har Horshan, near Zichron Yaakov. Aunt Berta is nearly 100 now, and her eponymous fruit jams and preserves are sold in supermarket chains in Israel, the United States, Germany and Britain.

It happened after the group adapted her recipes for their factory in the north, Beth-El Food. It is one of seven enterprises founded by the group. GTI-Gilboa supplies metalwork for the aviation and space industry. Beth-El Zikhron Yaaqov Industries manufactures nuclear, biological and chemical (NBC) protection systems. One subsidiary, Filt Air, manufactures industrial filters, while others manufacture plastics injection molds and factory production lines. Carmel Natural Products, meanwhile, produces organic baked goods. Together, these enterprises employ more than 700 people, some of them Beth El members, and the rest locals from outside the community.

The general manager of Beth-El Industries, Albrecht Fuchs, refuses to disclose sales figures but says the companies do turn a profit and that these funds are reinvested in research and development, in expanding production and in establishing new plants.
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"Beth El are Christian Zionists who believe we must thank the people of Israel for everything we do," Fuchs said during a September visit by Industry, Trade and Labor Minister Benjamin Ben-Eliezer. "We believe that all our salvation came from you, as the chosen people. What the Beth El community does here is designed to help build the country, not line our pockets. We have come from rich countries. We lack nothing," Fuchs said.

Ben-Eliezer's visit was an exceptional event for this community, which shuns exposure and focuses on what it sees as its calling. Its arrival in Israel caused a stir, with fears (which turned out to be groundless) that its members intended to engage in missionary work under the guise of love for Israel. The community operates as a cooperative. Most of its 450 or so members live in Zichron Yaakov or Binyamina. They call themselves Kibbutz Beth El, and their lifestyle resembles that of a pre-privatization kibbutz. Members work in the community's businesses, eat lunch in a communal dining hall and receive food for preparing the remainder of their meals. In lieu of salary, they receive an allowance.

According to the head of the Zichron Yaakov Local Council, Eli Abutbul, as company director, Fuchs is paid less than NIS 1,000 a month. The group's lifestyle also resembles that of ultra-Orthodox Jews, or the Amish in the United States. They do not own televisions, do not go to bars or clubs and derive their inspiration from the Bible.

The children of the community attend its own kindergartens and elementary school, and then move on to vocational school, for an education that is equivalent to that of a practical engineer. After graduating they work in the community industries.

Fear and acceptance

The issue of the members' legal status in Israel has not been fully resolved, and only a few of them have permanent resident status. The five community members serving in the army are a source of pride for everyone. When members of the group settled in Zichron Yaakov, just east of the Mediterranean coast south of Haifa, in the 1960s, locals feared they would try to proselytize among their children, and organized demonstrations against them. The tension was particularly high on a street in the town that had Haredi families living on one side and Beth El families on the other. The community is now accepted warmly, in part because it is the second largest employer in Zichron Yaakov, after the local council. The community's training center, for its high school students, has not changed its methods in the 30 years since it was established. Businessmen from outside the community commend the workers' high professional standards.

"Our training is more extensive than what is customary in Israel," Fuchs says. "We brought an expert from Mercedes-Benz who introduced the German curriculum. The studies, which last three and a half years, combine theoretical and practical tracks, and the examinations are difficult. The teens begin with filing metal, and achieve very high-precision results. They get everything they need to earn a degree in practical engineering," Fuchs says.

It was due to the group's sense of mission in Israel that the first factory it founded was for ventilation and filtering systems intended to provide protection against nonconventional weapons. The equipment forces clean air into bomb shelters, eliminating the need to use gas masks in the event of a nuclear, biological or chemical weapons attack.

That firm, established in 1972 in Zichron Yaakov, employs some 450 people. Customers include the Defense Ministry, NATO forces and civilian organizations in dozens of countries, including municipalities, hospitals and schools. Companies that maintain clean-room production facilities, such as Intel and Tower Semiconductor, also buy from Beth El.

"In 1977 I was in Haga [the Civil Defense Corps, the precursor of the Home Front Command] for the first time," Fuchs relates. "I asked to see the standards for protective equipment but it barely existed here at the time. We obtained standards from overseas, translated them and today about 1 million Israelis have access to protected shelters," Fuchs says.

Fresh air and the Messiah

The decision to manufacture NBC protection equipment was made more than a decade before the 1991 Gulf War. To Fuchs the decision was natural. "We know the Messiah will arrive soon and that he will be preceded by tough times in Israel," Fuchs explains. There are many shelters here with no air [circulation and filtering systems], and an airless shelter is a death trap. So Beth El's contribution to the Jewish people was the provision of shelters with air. That's how it began in 1977, and now we are among the leading companies in the world in this field. This tells you that you cannot bless Israel without getting, in return, a blessing from God."

One of Beth El Industries' divisions manufactures production lines for dairies. Customers include Harduf, in Israel, as well as foreign dairies. The community also operates an aircraft parts factory owned by a Canadian sister company. Members here persuaded the parent company to open the plant here rather than in Canada, as originally planned.

"We have a sister community in Canada," Fuchs explains. "We told a consultant we hired that we wanted to expand the plant that manufactures parts for the aviation and space industries, and he suggested building it in Israel. I flew to Canada, got an okay from the community and the plant was built in 2002 in Moshav Magen Shaul, near Mount Gilboa. Fifteen percent of the moshav's residents work at the plant. Before we came, the young people were leaving, and it was said that the grass was taller than the houses. But now the members' children are returning home. We are about to build a second plant, for precision parts for Airbus aircraft."

In 2008 the community's Carmel Bakery, located in Zichron Yaakov, signed an exclusive partnership agreement with Dodot cookies to market the former's products abroad. Dodot, owned by Danny Hecht (80 percent) and Herzl Yifrah (20 percent), employs 50 people.

The partnership, which was created about 18 months ago, is Beth El's first joint venture with an outside investor. It was forged in order to provide added value to the community's businesses, although the measure changes their character slightly. Hecht is former deputy CEO of Willi-Food International and a major force in building brand names such as Halutza Olive Oil, Abadi cookies and Kikkoman soy sauce. Yifrah is CEO of Shamir Salads. The agreement provides for Dodot to market Carmel Bakery products, in particular abroad. "We export to eight countries and are in advanced negotiations with major grocery chains in Australia, Britain and the United States," Hecht says. In Australia Dodot is in negotiations with Woolworths, which has 2,200 stores. Like Aunt Berta's jams, the bakery uses home recipes that it adapted for commercial production. The recipes, which Hecht got from his aunts, include sweet and savory cookies as well as whole-wheat crackers. "These are unique items that are not available anywhere else," Hecht says. He adds that Dodot has spent a lot on research and development, and is particularly proud of the company's reduced-sugar honey, developed in cooperation with the Weizmann Institute and approved by the Israel Diabetes Association.

"We studied what consumers like to eat and the trends in foods, and went for healthful products," Hecht says. "Even if my aunt makes fantastic cream puffs, we won't make them because they're fattening and don't suit our company." The meeting between Carmel Bakery and Dodot is fascinating from a business point of view, bringing together two very different ways of doing business. "Unlike other enterprises, profit is not our most important consideration, people are," Fuchs explains. "Profit or turnover are of secondary importance, and this creates a different atmosphere in the factories."

Sweet honesty

For Hecht, however, profit comes first. Nonetheless, he and Fuchs are in agreement on the importance of increasing the company's workforce and of not competing with - and definitely not supplanting - Israeli companies. "I love their honesty and accuracy," Hecht says about his partners in Beth El. "When we give them a recipe calling for brown sugar, which costs five times more than white, I am confident that the cookies will contain brown sugar. Other places would halve the amount, since in any event it's difficult to measure [the amount] in the finished product. We also use extra-virgin olive oil, and I have no doubt that that is what the cookies contain, even though it costs at least twice as much as other oils," Hecht says.

Hecht says that Beth El's food divisions were the only community enterprises that were affected by the global economic crisis, but "even that was only for a brief period," he notes. "All of them have bounced back."

Fuchs says the group's food sales are more or less evenly divided between the domestic and foreign markets, emphasizing the importance to the community of not taking work away from Israelis.

"That's why our main goal is to export goods, for Zionist reasons," Fuchs explains. "The products we sell in Israel are quite expensive, so in effect they mainly compete with imports. All our profits are plowed back into new projects in Israel to build more factories. We also have environment-friendly projects. At the moment, for example, we are working on recycling inside our plant and are talking with the local council about expanding this project."

Pyramid scheme

"We believe in an inverted pyramid, with the boss at the bottom," Fuchs says about his role in the company. "This means that people are not here for me; rather, that I, as manager, am here for them. That is how it is in all departments: The managers are the servants, not the bosses.

"My calling card does not say CEO [but rather 'management']. It eliminates a lot of jealousy, and I don't see anyone who wants my job. It's no great pleasure to be a manager here, but it brings people together."

What do you consider a business failure?

"The biggest failure is when you quarrel, whether in court, with customers or within the company. Losing money is another failure. It must not happen."

What is your strategic business plan?

"We don't have a strategic plan. We lift our eyes to God and if he opens a new door then we open another business." Industry and Trade Minister Ben-Eliezer was simply beside himself after Fuchs explained his business philosophy and enumerated the community's thriving endeavors. "Mr. Fuchs, you gave me much pleasure," Ben-Eliezer declared. "What I saw here was a world that is all good. When we talk about the good land, this is it."

The community's enterprises have received government aid, in accordance with the law. This includes a grant equal to 24 percent of the company's investment value in National Priority Area A, as well as assistance from the Fund for Promoting Overseas Marketing. Earlier this month Eli Abutbul asked Ben-Eliezer's ministry to help Beth El with another enterprise it seeks to build in the Zichron Yaakov area, even though it will not be eligible for government grants. Ben-Eliezer, typically, was forthcoming. "I can assure you that we shall continue to support, help and assist," he told Fuchs. "I will support each one of Abutbul's requests, whether you build the plant here or anywhere else. We'll make every possible effort to help you. I'd like to see the community continue to carry out its mission. Your presence is terrific, great and important and I wish you all the best."
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