Buffett Backs Winning Culture

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 MC (Iscar Metalworking Companies), IMC way is, suggests Mr Harpaz, to do Iwhich includes cutting tool with the Israeli culture which is not manufacturers Iscar, TaeguTec, Ingersoll American and not European, but Cutting Tool, Outiltec, Metaldur and, something different. recently, Unitac of Japan, has sold 80 per ªOur 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 ªIMC is a family owned business in its companies.º third generation [third 20-year period]. ªA 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,º 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, º explained company achieve that goal? Well, IMC must ªmore the third largest manufacturer of such president Jacob Harpaz. It would have or less double its turnoverº, 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, ªWarren 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 ªhugeº 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.º 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 ªsimple letter, maybe one and a half delivers results with over half of IMC's parties, while another reaction to high pagesº, 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 ªdreamº for IMC is to be ªnumber For any acquired company, the IMC solid carbide cutter, for example, while one in the marketº. 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. ªThe 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.ºI www.machinery.co.uk G June 2006 17.

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