BUSINESS

An Ounce Of Prevention
Is Worth A Pound Of Cure

Israel's Economic Ills
Go To American Problem Solver

JOEL BAINERMAN

Special to The Jewish News

D

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56

FRIDAY, NOVEMBER 1, 1991

espite having estab-
lished one of America's
leading distributors of
forest products on the shores
of the East River in Manhat-
tan more than 60 years ago,
Julius Stulman doesn't con-
sider himself first and
foremost a businessman.
Although a self-made
millionaire by age 25, he is
first and foremost a "problem
solver."
Problem solving isn't new to
Mr. Stulman. As far back as
1951, he was an adviser to In-
dia's first Five Year Planning
Commission shortly after
that country became an in-
dependent state. Since then
he has advised many coun-
tries in the Third World on
how to solve their economic
problems by making better
use of these nations' natural
resources.
Now officially retired, Mr.
Stulman has the time to
spend to solve Israel's major
socio-economic problems.
In March 1961 Mr. Stulman
published an article in Ar-
chitectural Forum on his ver-
sion of the ultimate design in
a city's handling of raw
materials. Called "Cargo Ci-
ty," it sought to revolutionize
how goods are transported
and distributed in major
cities to enable small and
medium-sized industries to
reduce their overhead, in-
crease their productivity and
free them from the need for
costly warehouses, inventory
control and unnecessary
bookkeeping.
The idea is based on a con-
cept that all goods to be
manufactured within a city
are imported and exported
through one central "Cargo
City." When a group of pro-
ducers in any given city agree
to share a common warehouse
and transport facilities, it
creates the equivalent of a
mass production system. All
of the contributors have a
common goal: to lower pro-
duction costs.
"Israel's cities are ideal for
the integration of warehous-
ing, distribution and produc-
tion facilities," says Mr.
Stulman. "It would lower the
costs of nearly every product
to Israeli consumers, as well
as making the larger com-
panies which buy smaller
firms' products more com-
petitive in world markets."
Mr. Stulman claims
answers to Israel's other

economic problems, par-
ticularly in light of the need
to create hundreds of
thousands of new jobs for
Soviet and Ethiopian im-
Migrants. He says that the
key to Israel's industrial suc-
cess isn't in high technology
products, although they are
an attractive component of
Israel's economy. The problem
is that high-tech manufactur-
ing will never be able to serve
more than a small segment of
any market and thus never be
a major producer of manufac-
turing jobs. Israel, he con-
tends, needs to think also in
terms of "mass production of
more goods at lower prices
available to an ever-
increasing number of con-
sumers."
He says Israelis have the
creative technological
abilities to create revolu-
tionary new products, such as
a new type of refrigerator
which would sell for under -
$150. This would make it af-
fordable to millions of con-
sumers in Third World coun-
tries who today couldn't af-
ford to pay $700 for the same
item. Or, a car which sells for
under $1,000 and can reach a
maximum speed of 50 kilo-
meters per hour. The key is to
re-design existing products so
they use fewer parts and are
thus cheaper to manufacture.

Mr. Stulman adds that in-
stead of always emphasizing
the lack of natural resources,
Israel should be investing
more energy in methods to
use sand, the only major
source of raw material it has,
to come up with new parts for
consumer products manufac-
tured out of silicon products.
"Israelis are usually too
busy running after profits to
understand people's needs,"
he points out. "They need to
start thinking like Henry
Ford did, to build products
which service human needs.
This will allow them to mass
produce?'
Contrary to traditional
Israeli industrial thinking,
Mr. Stulman says that Israeli
companies need to adopt
mass production techniques,
such as working three shifts
a day, to be able to produce
products at the lowest possi-
ble price.
"This was Japan's secret
weapon," he avers. "She put
her factories on capacity pro-
duction, produced as many-
automobiles as she could and,
in turn, could sell them for
less than other manufac-
turers because cost per unit

was cheaper. The same tech-
nique would work for Israel."
Mr. Stulman says that only
by going to capacity produc-
tion will an industrialist ever
'know the least number
of workers required for the op-
timum output. At capacity
production workers • can be
withdrawn from the manufac-
turing process until it
"hurts."
"A plant will know the
maximum production
because it won't be able to
produce anymore," he says.
"The manager keeps taking
orders until the production
line has reached the max-
imum."
To achieve capacity produc-
tion, a large order is needed.
The key is to make a deal
with a country like the Soviet
Union to produce, say, the
parts for a television set, then
give those parts to the other

Mr. Stulman says
that Israeli
companies need to
adopt mass
production
techniques to
produce products
at the lowest
possible price.

country for assembly there.
People there, who never had
anything to spend their wor-
thless currency on, will sud-
denly be awash with locally
assembled consumer pro-
ducts. Israeli companies
would be repaid with some
type of barter arrangement.
Another market the capaci-
ty production technique
would work in, according to
Mr. Stulman, is the Do It
Yourself (DIY) products which
can be assembled by the con-
sumer for 60-70 percent less
cost, thus making them affor-
dable to larger segments of
the world's markets.
Mr. Stulman believes Israel
has the power to change
societies by helping them
create consumer products.
The secret is to develop a
more responsive socio-
economic attitude by think-
ing in terms of creating to
share rather than creating to
take: "More goods at lower
prices available to an ever-
increasing number of con-
sumers and creating more
real dollars." ❑