May 23, 2013
Industry is best bet for peace, Israeli billionaire says
On a new industrial park in Israel's largest Arab town, a software plant belonging to a multibillion-dollar U.S.-listed firm sits cheek-by-jowl with two small Arab-owned businesses: a metal factory and one producing tools for brain surgery.
About 300 Jews and Arabs work in the park in Nazareth, and within five years it should be 1,000.
This is what peace between Israelis and Arabs will one day look like, says the park's founder, Israeli industrialist Stef Wertheimer: manufacturing- and skills-driven wealth creation that makes ethnic differences seem less and less important.
Wertheimer, who fled Nazi Germany with his family when he was 10, has testified before the U.S. Congress about forging peace through the teaching of skills and developing export-oriented industries.
Aged 86, the billionaire has just completed his seventh industrial park with a personal investment of $25 million, and his zeal for peace through prosperity is undimmed.
"At the moment both sides are afraid of each other and don't see their future clearly," Wertheimer said.
"The solution is to switch the focus from fear to success. Achievements in successful export industries, which need highly skilled people, can create an area as flourishing as South Korea and Singapore."
Israel has forged a reputation for high-tech innovation, but Wertheimer's vision is of a broader base of industrial production for export, not only in Israel but also across the region.
In the process, he fully expects to improve the lot of Israel's Arab citizens, who make up 21 percent of the population and complain of underfunding for their community. Research by Tel Aviv University last year said the Arab unemployment rate stood at 30 percent against a national average of 6.5 percent.
"Israel and our vicinity is an area that traditionally has little industry. The area is known for history, it's known for religious stories, it's known a bit for agriculture but ... neither was the Jewish population thinking about export industry, nor the Arab or Palestinian population," he said.
"Germany and South Korea were able to lower unemployment through success in export industries. If our region will be successful in building export industries and skills, this will help promote peace."
Wertheimer moved his home and office to Tel Aviv a year ago to be near the sea after spending most of his life in the Galilee in Israel's north. There, 61 years ago, on a lush green hill, he founded the toolmaker Iscar, which today employs 12,000 people around the world - many of them in Germany and South Korea.
This month, the Wertheimer family sold its remaining 20 percent stake in Iscar to Warren Buffett's Berkshire Hathaway Inc for $2.05 billion in cash.
Berkshire had bought 80 percent of Iscar, a maker of metal cutting tools formally known as IMC International Metalworking Cos, for $4 billion seven years ago.
ISCAR THE FOUNDATION
At the time, that purchase was one of the largest acquisitions involving an Israeli company, and Buffett's biggest bet outside the United States. The latest purchase suggested that Iscar's value has more than doubled since then.
Around Iscar, Wertheimer built his first industrial park, Tefen, which today accounts for 10 percent of Israel's exports.
Six more centers followed, mostly in Israel's northern and southern peripheries and one in Turkey, which was established eight years ago and is home to 1,200 workers.
All were built entirely with Wertheimer's own money, except for the one outside Istanbul, which includes a Turkish partner. Most include a university or trade school to teach the industrial skills lacking in Israel.
The park in Nazareth is anchored by a plant belonging to Amdocs, a provider of software for communications companies that had revenue of $3.2 billion in fiscal 2012.
The Arab-owned companies that sit beside it have been carefully chosen.
"It's not a real estate story. It is a story of picking companies that can make exports and create interesting jobs for the local people," Wertheimer said.
Wertheimer, who recently founded five new companies making products ranging from drums for printing machines to spindles for the semiconductor industry, said he had agreed to sell the rest of Iscar after Buffett guaranteed that the jobs in Israel - a third of the company's employees - would remain.
"We made an agreement from the beginning ... that Iscar would continue to grow, which was my biggest worry," he said. "I got a promise from Mr Buffett that he will make all efforts for us to continue because my job is to make jobs and make peace."
Editing by Steven Scheer and Kevin Liffey