Nothing in the sterile tour of precision cutting tool company Iscar's factory in the Tefen industrial zone gave any hint of what happened that morning 200 meters from the company's gates; not the view of the Galilee from the cafeteria or the glistening production floor. Iscar has never especially liked the media, despite the cozy, sometimes sycophantic tour, but a journalist who asks the workers about employment conditions at the Wertheimer family's holy of holies that is apparently just too much.
Our unscheduled sortie to the factory's external parking lot was evidently enough to set the red lights flashing for Iscar's management. Their human resources VP came out to the parking lot accompanied by security personnel, who patrolled around us as though an Al Qaida sleeper cell had been activated, hoping that the pressure would make us capitulate. Another senior manager who came out to the parking lot, which is an open, public space, did not like our wish to document the conversation between the VP and the journalist, pushed aside the hand holding the cell phone that recorded the incident, and even threatened to break it. Even the nice policeman, who responded to our call, expressed to the company people his surprise that they were getting quite so excited over questions being asked in a public place, and at one point told them: "You're behaving like little children".
And just as the storm arose, it disappeared. It seems that a moment later someone in the company realized that nothing positive was going to come of the commotion in the parking lot, and invited us to tour the factory.
Afraid to talk
Employees at Iscar, controlled by Berkshire Hathaway, which bought an 80% stake from the founding Wertheimer family for $4 billion in 2006, were not entirely surprised by the sensitivity and the pressure exhibited by the management. "You have no idea how true that is," says one of the engineers, asked whether there was a gap between the company's image and working conditions there. Many employees agree; others make do with a telling smile. "No-one will talk to you, because people here are afraid; certainly here beside the factory," one employee said. "Carry on investigating," his colleague added, "you're going in the right direction." A veteran engineer at the company says that he recognizes these feelings, but adds that, as an older worker, he tends more to appreciate the fact that Iscar is considered a stable workplace.
G, a production worker with training in CNC programming, relates how, after nearly three years with the company, his pay rose from NIS 25 to NIS 27 an hour, even though he passed group dynamics and psychological tests. "It not like working in a metalworks in Umm el Fahm, but it's certainly not Intel or Elbit," he says. "If you compare our conditions to those in large, international companies, and not to a chicken abattoir, our conditions are clearly inferior. The only thing one can say is that the food is good, and that on Hanukah they give you free tickets to Peter Pan."
G describes strict and rather tough management, far from the family image Iscar chiefs talk about. "A family business doesn't ask you to come to work when you are ill with a fever," he says, "and in a family business there aren't managers standing watch in hand at the entrance to the building in case we by mistake leave the machine to go to the cafeteria a minute before mealtime. It doesn't happen all the time, but it has happened more than once. When you want to smoke, for example, you have to clock out so that those minutes won't be counted as work time. Only two people are allowed to smoke, so if you see that two people are already outside, you have to turn back."
G also talks about a direct hit to wages. "The company boasts about not having laid off workers in the slowdown of 2009, but for several months we worked a four-day week, and workers accumulated a serious deficit of vacation days. Our income also suffered. At the beginning of this year they reduced our nightshift hours, and our wages fell again (the change was introduced in order to comply with the law, S.N.), and only after workers threatened to leave did they agree to give us some kind of supplement. When the earthquake happened in Japan, we were required to "contribute" an additional vacation day to help in the rehabilitation of the factory that Iscar bought there, and that at a time when the company was posting a net profit of $1 billion. A voluntary contribution? They told us that anyone who didn't want to contribute had to write a letter. Can you see anyone writing such a letter?"
A, who is employed in administration, talks openly about discontent on the part of her friends in the company, which she says stems from the apparent gap between the workers' compensation and Iscar's profits. "There are people here who are exposed to the numbers and sign the deals, so it's obvious that they will be disenchanted, it's obvious that they will want salary raises and bonuses as well," she says.
You do not however need to be exposed to all the numbers to understand this. On the tour in which we were invited to participate, it was possible to gain an impression of the huge potential of this place. Company managers showed off a unique cutting tool that costs just $2 to produce, but for which customers pay no less than $90. This tool is far stronger than anything produced by the competition, it wears out incomparably slower, and anyone who stood there in the lobby of the marketing department could not but enthuse over the added value that Iscar manages to generate. On the other hand, if you work at a company that produces a piece of steel the size of a pencil that is sold at an extraordinary profit, you want a piece of the profits.
People do leave Iscar
Iscar is far from being an exploitative company. It employs about 2,500 people at very advanced premises, which have eleven cafeterias that even serve a breakfast that isn’t at all bad. While other industrial factories mostly make do with a sandwich and a can of drink in the morning, at Iscar they down tools at 9:00 and sit at a round dining table facing a breathtaking view. On a good day, one of the managers whispers, you can even see Syria. At Iscar, there's no self-service, a waitress comes to you.
For all that, a pampering cafeteria was always the last refuge of employers who pay middling to low wages. Two-thirds of Iscar's employees are production workers on low wages, many of them new immigrants and from Israel's minorities. A engineer who has completed his studies will be hired at a monthly salary of 10-12 thousand shekels, which is considered fairly competitive in the area, but the company is not outstanding for substantial salary rises later on. Iscar admits that the fact that there are not many employment opportunities in the area, compared with those that exist in the center of the country, allows them to be moderate payers.
This of course has its price: in contrast to one of the flattering advertisement that gave Iscar the image of "a workplace no-one wants to leave", people certainly do leave Iscar. Good engineers leave, fed up with waiting for a salary rise, or with the grinding work that starts very early, at 7 am. Other leave because of the rigid procedures, the Teutonic atmosphere, or else because 150 development workers sit in a crowded open space with no privacy whatsoever, and one day it simply gets on their nerves. "It looks like a rumor mill, not a cutting tools factory," G jokes. "Every other week, a rumor goes around that maybe we'll get an iPad or a laptop because of the profits. Not long ago, a group of managers went to Bulgaria, and the rumor arose that perhaps they were looking at a vacation resort for all of us, but there was nothing. No iPad, and certainly no vacation."
So where does the discontent come from, according to the management? There they say that this is the way of the world, and workers will always want to receive more, especially the younger ones, who are more impatient. On the whole, say sources in Iscar's management, the discontent is on the part of a few, but the minority makes a lot of noise. The disgruntlement at the level of compensation in relation to the company's profits is well known to the senior management, and for this reason, they explain, all the workers went on a 5-star vacation in Crete last summer, the previous year they received an extra salary of up to NIS 8,000, and after the Second Lebanon War they were given a choice of receiving a big-screen television or a computer. On the other hand, managers do not mention the distress of some of the employees during that war, because they got the impression that the salvos of rockets fired at the area were not considered a sufficient reason to stop work. The claim is that the company did not force its employees to come to work but that the indirect message was that that was what they were expected to do so (the claim was denied at the time).
Iscar, it seems, tries to have the best of both worlds. It seeks to portray itself as a high-tech company in every respect, but work there commences at 6:45 am, like in a traditional factory. Pay at the company is low in comparison with industrial companies, but, unlike those companies, the perks are also relatively thin. There is no 13th salary or regular profit-related bonus at Iscar, although mothers are paid a childcare supplement, and there is subsidized health insurance, with the subsidy rising with length of service.
The contribution by Iscar and the Wertheimer family as the employer of so many families in the periphery is admirable, and Iscar employees certainly appreciate this. Despite that, although they avoid negative messages about it at almost any price, they want it to be known that not everything is rosy in this place, sometimes far from it.
Iscar CEO Jacob Harpaz stated in response to the report, "Iscar is an international company, employing more than 10,000 people in Israel and around the world. The company is owned by Berkshire Hathaway, and operates in accordance with the procedures and policies of the parent company.
"As a leading company in Israel and internationally, Iscar is a model for others, and is highly esteemed by companies and investors around the world. The company's employees are the source of its professional and moral strength.
"The company's employees enjoy unique working conditions. The company looks after the welfare of the employee and his family, personal development, and employment security. For example, at the time of the economic crisis in 2008-2009, Iscar gave an undertaking to its employees that it would not dismiss any of them, and despite a dramatic fall in revenue, Iscar stood by this undertaking, and not a single employee was laid off.
"In addition, in the light of the company's achievements in the first half of 2011, the employees and their partners were sent on a vacation in Crete with full board at the company's expense. This was after the employees benefitted from substantial financial bonuses in 2010. The company's policy has for many years been to let the employees share in its financial success.
"The company looks after the welfare of the employees and their families. For example, participation in the cost of childcare, participation in the cost of summer camps, health insurance for the employees, medical treatment in Israel and overseas, and so on. As far as the work environment within the factory's premises is concerned, I presume that you were able to form at least some impression of the high standards during your visit.
"The salary level and rate of personal advancement of each worker are competitive, and so each progresses according to his job, his personal investment, and his contribution to the company.
"I regret if indeed there are among us individual workers who try to sully the good name of the company and its employees. I also regret that from a few isolated 'complaints' you have drawn a distorted and untrue picture of Iscar, and in particular of its dedicated employees."
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2012
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