EARN HIGHER YIELDS! - 4.75 0 0 MONEY. MARKET* VISIT ONE OF OUR LOCATIONS NEAR YOU! Sterling BERKLEY • '(810) 546-2590 BIRMINGHAM • (810) 646-8787 CLAWSON • (810) 435-2840 ROCHESTER • (810) 656-5760 bank &trust SOUTHFIELD • (810) 948-8799 W. BLOOMFIELD • (810) 855-6644 "We create solutions."e 1.41 ANNUAL PERCENTAGE YIELD EFFECTIVE AS OF 1 1 /15196. RATES SUBJECT TO CHANGE WITHOUT NOTICE. 'MONEY MARKET: $2,500 MINIMUM BALANCE REQUIRED. STATEMENT FEES MAY REDUCE EARNNGS IF MINIMUM BALANCE Ti NOT MAINTAINED. S Makes Your Life Easy. Our Exclusive Service Offers: • Home Space Planning • Packing • • Unpacking • Deluxe Move Packages • "Everything In Place The Day You Move" Into Plowshares Defense-oriented Israeli industries are revamping management and marketing approaches in a bid to survive in the civilian sector. JENNIFER FRIEDLIN SPECIAL TO THE JEWISH NEWS ack in 1966, when he founded Elron, Uzia Galil envisioned a company that would develop both mili- tary machinery and the mini- computer. With separate assembly lines working under the same roof, the company would simultaneously break into the defense industry and become a leading player in the fledgling personal computer market. Or so he thought. In reality, things turned out dif- ferently. Indeed, though Elron's highly skilled engineers had the know-how to make the company a contender in what is today a multi-billion dollar mini-comput- er market, Mr. Galil says it was his naivete as a manager that caused his dual vision to fail. "If we were structured along two separate companies, and the two entities were dedicated to producing different products, we probably would have been a main player in mini-computers today," B Ruth ASID Schwartz - IFDA (810) 352-2264 House To House EZ Move Professional Interior Designer, 30 years' experience Space & Home Planner Call for a detailed brochure! Is Your Financial House In Order?? To find out call PHASE FOUR Certified Financial Planning Professionals (248) 559-6980 TRISH WELLMAN, CFP JOEL LEVI, CFP 17117 West 9 Mile Road, Southfield, Ml 48075 T HE D E T RO T J E WI S H N E W S Phase Four Advisory, Registered Investment Advisor Securities offered through Vesta* Securities Corporation, Member, NASD & SiPC 1931 Georgetown, Hudson, OH 44236 (216)650-1660 says Mr. Gall, who ultimately turned Elron into one of Israel's largest holding companies, with stakes in both defense and civil- ian businesses. Recent years have been tough ones for the defense industry. The fall of the Berlin Wall sounded a death knell for many aerospace, munitions and arma- ments contractors around the world. In Israel, military manu- facturers had already suffered a blow of their own when the Iranian market collapsed in the aftermath of the Shah's downfall. As the worldwide defense bud- get continues to shrink and mil- itary-goods manufacturers scour the civilian market for alterna- tive sources of income, many com- panies are relying on trial and error to learn what Mr. Galil al- ready knows: Sword producers can't enter the plowshare mar- ket without dedicated manage- ment teams armed and ready with feasibility studies and busi- ness plans. Take TAAS. The Israel De- fense Ministry's veteran arma- ments manufacturer, which has "But in those cases where the technology applied for military systems is identical to commer- cial systems, they have been suc- cessful." However, even if defense con- tractors can develop products for the civilian market, they may still have problems making the right contacts and developing effective channels to make headway in the market. "The civilian market requires a different culture," says Yona Yahalom, TAAS's director of cor- porate business development, adding that the company has shed virtually all civilian prod- ucts. "Defense executives don't know the culture." While both military and com- mercial companies aim to devel- op top products that can earn a significant market share, the ways in which they go about do- ing this differ dramatically. Un- like civilian companies, that must identify a niche and then create products to satisfy a need in the marketplace. Defense companies tend to be customer driven. When a government puts out a bid for new mis- siles, manufacturers may spend up to $1 million de- veloping a tender-winning corporate presentation. Contracts in the defense indus- $30 million market. Inevitably, try tend to extend over several the plan failed. An attempt to en- years and once a company wins ter the medical electronics field a contract, it will spend as much with a line of ultrasound prod- money as it takes to satisfy its ucts also backfired when compa- customer. "The modus operandi of a de- ny executives realized they had fense company is primarily to no expertise in the field. Even Elbit, one of the sterling achieve a certain target within holdings in Mr. Galil's portfolio, certain specifications," Elron's got ensnared in the same trap. Gall! says. "If you make the best The company tried everything missile but you overspend, maybe from acquiring a medical diag- somebody will be upset, but so nostic imaging company to man- what. Money isn't the object." Most defense companies pay ufacturing televisions. But after a number of years of recording less attention to their bottom mixed results, Elbit decided that lines than commercial companies the only way to leverage its because governments — which strength was to focus on the sep- are their main customers, and of arate industries, and in late 1996, ten part- or full owners — hay( the company became three enti- a vested interest in making surf ties, focusing on electronics, de- they turn out the most dynamic fense and medical equipment. and advanced weaponry. TAAS accumulated $1.5 billiol Defense companies have not succeeded in understanding the in losses between 1985 and 199 1 way the commercial market op- and still received governmen erates. "Experience around the hand-outs of $800 million fro world shows that if a company is 1993 through 1995. Arms devel making tanks, machine guns and oper Rafael, which has a histor missiles and wants to go into of financial problems, is part arc kitchen utensils, it won't be suc- parcel of the Defense Ministry cessful," says former Israeli De- while Israel Aircraft Industrie fense Minister Moshe Arens, (IAI), a government-owned corn himself an aeronautics engineer. pany which hopes to enter th been registering non-stop losses up until 1996, initially took it for granted that the civilian market would generate profits. And so, several years ago it opened pro- duction lines that made locks, chemicals, sporting guns, car- safety devices and building ma- terials. All those projects failed. Their hunting rifle had a bar- rel that overwhelmed recre- ational hunters and marketing directors simply didn't know how and where to sell the other prod- ucts. El-Op, a leading manufactur- er of laser-based night vision and infrared equipment, also floun- dered in the civilian market. Thinking it could employ its imaging technology to scan ce- ramic tiles for cracks, the com- pany, which was successful in the military marketplace, decided to try its luck. Without conducting market research, El-Op set up a production line to enter a tiny