Buffett backs winning culture by aqq19286

VIEWS: 0 PAGES: 1

warren buffet pdf

More Info
									                                                                                                                            TOOLING




Buffett backs winning culture
Iscar Metalworking Companies (IMC) president Jacob Harpaz spoke to Andrew Allcock at MACH 2006
about the majority sale of IMC to global investor Warren Buffett’s Berkshire Hathaway company




I MC (Iscar Metalworking Companies),
  which includes cutting tool
manufacturers Iscar, TaeguTec, Ingersoll
                                                                                              IMC way is, suggests Mr Harpaz, to do
                                                                                              with the Israeli culture which is not
                                                                                              American and not European, but
Cutting Tool, Outiltec, Metaldur and,                                                         something different.
recently, Unitac of Japan, has sold 80 per                                                         “Our culture allows us to work easily
cent of its stock to global investor                                                          with other cultures around the world.
Warren Buffet’s Berkshire Hathaway                                                            For example, IMC is the first [non-
investment vehicle for $4 billion.                                                            Japanese] cutting tool company to
(Berkshire Hathaway has Microsoft                                                             acquire a cutting tool manufacturer in
founder Bill Gates on its board.) IMC,                                                        Japan [Unitac]; the [acquired] company
established in 1952, is the largest                                                           is very comfortable with that. Japanese
privately owned company in Israel.                                                            companies usually sell to other Japanese
    “IMC is a family owned business in its                                                    companies.”
third generation [third 20-year period].       “A financial backer will provide long-term          IMC acquired deep hole drilling
A financial backer will provide long-term      stability for the company, as it is managed    system manufacturer Unitac about a
stability for the company, as it is            today,” says IMC president Jacob Harpaz        year ago. With headquarters in Osaka,
managed today – family orientated, with                                                       and plants both there and in Kyushu, it is
a special culture, ” explained company         achieve that goal? Well, IMC must “more        the third largest manufacturer of such
president Jacob Harpaz. It would have          or less double its turnover”, but reaching     drilling systems in the world and the
been possible to raise more money with         that goal in the current generation will       market leader in Japan and the Far East.
a traditional IPO (initial public offering),   not be possible through organic growth              On the topic of high tungsten prices
he added, but, “Warren Buffett is the          alone. So although its record of growth        and IMC’s response, Mr Harpaz says that
right partner because he will let us run       through new product introduction is            IMC has built a “huge” cutting tool
the company in the same way; not only          impressive, the company must also grow         factory in China as a counter-measure,
this, he insisted that the Wertheimer          through acquisition.                           but if the price goes higher still, then it
family kept 20 per cent of the company –                                                      will be economic to open new or old
normally he takes 100 per cent of his          INTERNAL COMPETITION                           mines, including the IMC group’s own
target companies.” IMC will continue to        Like the number one cutting tool               mine in South Korea – indeed, eight
be managed in the same way by                  manufacturer in the market, Sandvik            years ago, that country was responsible
chairman Eitan Wertheimer, son of              Coromant, IMC maintains separate               for more than 70 per cent of world’s
founder Stef Wertheimer.                       brands with separate R&D activities. This      tungsten ore output, he says.
    Indeed, it was IMC that selected           internal brand competition is seen as a             But the company is recycling at
Warren Buffett, approaching him via a          good thing by Mr Harpaz, and obviously         various places around the world via third
“simple letter, maybe one and a half           delivers results with over half of IMC’s       parties, while another reaction to high
pages”, says Mr Harpaz. Warren Buffet          sales coming from products developed           prices is to use less material,
sent an email the very next day.               within the last five years. No alteration to   concentrating its use only at the cutting
    And the backing of Berkshire               this set-up is anticipated, says IMC’s         edge. TaeguTec’s steel shank, carbide
Hathaway will help it realise its dream.       president.                                     tipped Super F-Ball is an alternative to a
The “dream” for IMC is to be “number               For any acquired company, the IMC          solid carbide cutter, for example, while
one in the market”. Currently the              operating culture and infrastructure will      more cutting edges per insert is another
company is number two.                         be installed, just as it is in all of its      approach. “The customer will not suffer
    And how much work is there to do to        current companies. The success of the          from the increased price of tungsten.”I



www.machinery.co.uk G June 2006


                                                                                                                                            17

								
To top