usiness
General Motors wants Israeli
firms to make more of its parts.
ALAN HITSKY ASSOCIATE EDITOR
Above: Livonia's GM
parts plant.
Right: Jerusalem's
Dome of the Rock.
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eneral Motors wants to be a good corporate cit-
izen. And equalize its balance of payments. And
find cheaper sources for some of its components.
Israel wants part of the action.
That combination — General Motors and Is-
rael — is starting to be a serious venture. The
giant automaker sold 16,000 vehicles in Israel
last year.
At the same time, Israeli companies did $10
million worth of business with GM and the com-
pany is working hard to boost the number. It ex-
pects this year to purchase up to $16 million in
parts and supplies from Israel, and the target in
1996 is $19 million.
"Global sourcing is 2 112 years old," said GM's
Les Schoonover. "It helps our core business."
As executive director for international trade
at GM subsidiary Motors Trading Corporation,
Mr. Schoonover is GM's point man for increas-
ing supplier business with Israel and India. Since
1990, he has visited Israel 14 times.
And he has created his own trade network
to drag Israel into the automotive supplier mar-
ket.
Israel's Industrial Cooperation
Authority (ICA) would like to see
far more exports. Both GM and Is-
° rael have trade agreements that re-
quire more exports in exchange for
sales in Israel and Israel's defense
imports from the United States.
But many sources believe Israel
does not have the manufacturing
base to satisfy the ICA's expecta-
tions, nor do Israel's manufactur-
ers have the desire ... yet.
Between 1990 and 1994, Gener-
al Motors representatives met with
116 Israeli manufacturers. Accord-
ing to GM assessments, 54 of the
116 had mid to high potential to be
suppliers. Many are "sourcing-
ready."
Yet unless they learn the auto-
motive "culture"— how to play the
game — the Israelis will win few contracts.
"They must have appropriate representation
here," Mr. Schoonover said. "It takes years to
know which doors to open."
Nan Israeli company hires an Israeli living in
Detroit who doesn't know the industry, "it will
have a very difficult time."
Appropriate representation for the Israeli com-
panies in the United States means good sales
and engineering support, warehousing and dis-
tribution to get automotive contracts.
To that end, Mr. Schoonover worked with GM
purchasing agents to develop a list of indepen-
dent manufacturers representatives preferred
by the company. He narrowed the list to 10 and
took a group of the representatives to Israel in
1993. He also has gone to Israel with GM sup-
plier development experts.
The reps are not cheap. The minimum rethiner
fee is $7,500 a month, but those on Mr.
Schoonover's list generally have agreed to work
with the Israelis for one-third that price.
"The reps make their money on sales com-
missions, not the retainer," i\lr. Schoonover said.
GM's efforts led to 18 Israeli manufacturers
retaining representatives here or opening U.S.
sales offices. Another six are negotiating repre-
sentation and 20 more are on GM's market test
list, which is being distributed around the Gen-
eral Motors world.
Meanwhile, the Israeli companies have begun
bidding for General Motors work. They have sub-
mitted 359 bid packages. Four have been ac-
cepted out of 209 considered, but 150 are still
being processed.
The $19 million projection for 1996 could go
even higher, and GM is already looking to the
future. A job awarded to an Israeli firm today
would not be delivered to GM until 1998 or be-
yond.
"Once that individual manufacturer gets that
first order," Mr. Schoonover said, "the second or-
der is a helluva lot easier to get. Opportunity
begets opportunity and that new business means
expansion."
Roadblocks that have stood in the way include
the automobile industry's preference for a sin-
gle supplier for any part or component and a dis-
like for going "off-shore."
As for the Israelis, Mr. Schoonover has seen
many of their manufacturing operations.
"Can they convert to making automotive com-
ponents? Yes," he says. "Are they interested? Not
yet. I have to get their attention."
He says he is getting some cooperation, but
the Israeli government has not been able to open
up the country's larger industries. The govern-
ment and the American-Israel Chamber of Com-
merce of Michigan hope a June visit to Detroit
by Israeli manufacturers will help. The Israelis
want to meet one-on-one with automotive parts
purchasers in the metropolitan area.
Meanwhile, Mr. Schoonover has some pro-
grams of his own, which he declined to reveal.
But he is working to alter the mindset both in
Israel and the United States.
"We're talking millions," he said, "and
they're talking thousands. But it is starting to
change." D