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Israeli exporters target US customers
Journal of Commerce / May 11, 2000

By Larry Luxner

RISHON L'TZION, Israel -- Tourists visiting the Carmel winery south of Tel Aviv are often surprised to see bearded, religious men checking cooling tanks, tasting samples from wine vats and operating forklifts on the loading docks.

That's not all. Honoring a Jewish tradition known as terumot vema'aserot, Carmel Wines Ltd. intentionally spills on the ground or gives to charity 10% of its annual production.

Other Talmudic laws prohibit Carmel from using fruit produced during the first three years of a grape harvest, while requiring all wine to be flash-pasteurized before bottling and allowing the land to rest every seventh year.

None of this, however, comes as any surprise to Leslie H. Berman, export and import manager at Carmel Wines Ltd.

"From the vineyard right through the actual bottling line, everything must be done by religious, observant Jews," he says. "Some people go as far as to say that if a non-religious Jew even looks at the grapes, it's considered unkosher."

Maintaining kosher standards is a priority for Berman, whose $57 million company last year exported 50,000 nine-liter cases of wine worth $1.6 million to the United States -- a 35% rise over 1998 figures.

"The United States is our largest single market, based on its large Jewish population," said Berman.

While Carmel's sweet wines and varietals may be among Israel's most familiar products in the States, they're certainly not the biggest in either volume or dollar terms.

Last year, according to the Tel Aviv-based Israel Export Institute, Israel's leading exports to the United States were diamonds, jewelry and precious stones ($4.43 billion); computer software and machinery ($1.84 billion); chemicals ($589.7 million); textiles ($565.4 million); measuring devices ($470.8 million); plastics and rubber ($294 million), and basic metals ($257.9 million).

Interestingly, 50% of all Israeli garment exports go to the United States, which also buys 35% of Israel's swimwear production.

This year, Israel's total exports to the United States will hit $10 billion, up from $9 billion in 1999, says Daniel Bloch, director of the institute's international media division.

"We have free-trade agreements with many countries, so the problem of market access is not so big any more," said Bloch. "The main problem is our ability to compete. We can't compete with cheap-labor countries. Our textile and steel industries are going down, so our future is in more sophisticated products."

In line with the shift in Israel's export focus -- from traditional products like kosher wine, Jaffa oranges, textiles and Dead Sea minerals to computer software, telecom equipment, electronics and biotechnology -- American and Israeli high-tech companies have launched a partnership aimed at boosting trans-Atlantic cooperation and promoting bilateral trade.

The U.S.-Israel Business Exchange will facilitate new business alliances, primarily via the Internet. It's now in the process of creating a Web site -- to be ready next month -- where interested investors will be able to share information and learn about new products.

The effort initially is geared toward high-tech companies in the mid-Atlantic region, home to such giants as America Online, Lockheed Martin and PSINet.

Ohad Marani, minister of economic affairs at the Israeli Embassy in Washington, said a recent speech by former Prime Minister Shimon Peres to the new organization attracted 300 potential investors.

"In light of the new importance of the mid-Atlantic region for the information technology in dustry, and because of the growing Israeli interest in investing in this region, we decided to set up a business club that will allow Israeli and U.S. companies to share information and increase their total joint business endeavors," he said.

Marani listed the top three U.S. exporters to Israel as Boeing Co., General Motors and Microsoft Corp., while the top manufacturing investors are Intel Corp. and Motorola Inc.

Intel has invested over $2.5 billion in semiconductor factories in Jerusalem and Qiryat Gat, and, according to Marani, is exploring the possibility of building another site in Israel that would represent hundreds of millions of dollars in additional investment.

U.S. retail investment also has soared in recent years. The typical fast-food giants -- McDonald's, Burger King and Pizza Hut -- all have a presence, as do retail franchises like Office Depot and Toys R Us.

In addition, American-made cars, once a rarity here, are increasingly seen on the congested streets of Tel Aviv and other major Israeli cities. Prosperity has boosted the once-poor country's per-capita income to $17,000 -- well ahead of any of its Arab neighbors.

"We are now ranked No. 20 in the world in terms of U.S. exports," Marani said. "Considering the size of the economy, this is quite impressive, putting us ahead of bigger countries like Argentina, Sweden or Spain." In 1999, imports from the United States totaled $6.3 billion, a 17% rise over the year before.

Just as imports have flooded Israel, the country's exports to the rest of the world are also booming.

According to Dun & Bradstreet's annual company rating report of Israel's top 150 industrial enterprises, released last month, Israel Aircraft Industries (IAI), which had 1999 revenue of $2 billion, is the largest single exporter, with overseas sales amounting to $1.5 billion.

IAI was followed by Teva Pharmaceuticals, ECI Telecom and Makhteshim Agam Industries. The most significant export increase belonged to Intel, whose Israeli subsidiary exported $583 million worth of goods in 1999, up127.7% from 1998 figures.

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