A Visit with Iscar's Jacob Harpaz

Sitting with Iscar’s CEO and president of the IMC (International Metalworking Companies) Group, Jacob Harpaz, in the company’s cafeteria in Tefen, Israel, you never would have thought that you were talking to a man who is responsible for more than 12,000 employees in 140 subsidiaries and 61 countries. He's perfectly pleasant and charismatic and has achievements very few in Israel can match.

He has shaped today’s No. 2 cutting tool producer like no other since he joined the company in 1972, 20 years after its founding by Stef Wertheimer. From the company’s humble beginnings in an old shack in Nahariya, Israel, along with intense hard work and commitment to continued innovation, Iscar has become an industry leader.

Since 1982, Mr Harpaz and Stef Wertheimer’s son, Eitan Wertheimer, have run the company from a remote corner of the country, far from the commercial capital of Tel Aviv. Mr Harpaz’s office offers a commanding view of the region's open spaces, not far from the rolling hills that mark Israel's volatile border with Lebanon.

While he says he is happy to be No. 2, what Mr Harpaz really wants is to be No. 1. “That may take a while, but it’s our goal and the Iscarites’ goal to continue to patiently generate steady growth,” he says.

“The key is to love what you do,” Mr Harpaz says. “Right from the beginning, I was in love with the mechanical part of the cutting tool. When I joined Iscar in 1972 as a student doing research for Iscar, the company was hardly known.” After his studies, Mr Harpaz joined the small company in its R&D department.

Had he envisioned being in the position that he is in today? “Not really,” he said. “I never thought I would work for Iscar for such a long time, but I was ambitious and always aiming to achieve more. It was a big challenge to turn a very small company into the large one that we are today.”

When Mr Harpaz joined the company, 97 percent of Iscar’s sales were domestic. Today domestic sales are a mere 1 percent. Iscar remains privately held and is the largest company in the IMC Group, which has facilities in the United States, Korea, Brazil, China, Germany, India, Italy and Japan.

The breakthrough came in 1982/83 when Mr Harpaz became the marketing manager of the company. He realized that in order to be internationally successful, you have to think outside your local markets, travel a lot and work with companies where they actually tap into new markets. “I realized that in order to gain people’s attention, we needed a product that would be a breakthrough, something that people would ask for as an alternative to well-known names in the cutting tool business,” he says.

“I think that R&D is driving the company and as the head of R&D, I give the guidelines not only for Iscar, but also for the whole IMC Group. You need to have a vision. I believe I have a feeling for what products can be sold in the market.”

Indeed, Mr Harpaz does travel a lot. The first time I met him was in 1992 at a seminar in Australia. He prefers to appear in person and use subsidiaries instead of distributors in all the different markets. “You need your own people selling one product line, working for one company and not selling a basket of different products,” he says. “In the early 1980s, I started to open subsidiaries, but found it was hard to penetrate the Korean or Japanese markets. I decided to work with a local company instead. Every time I started to work with a local company, it became an important part of us, and we ended up discussing an acquisition. It happened with Taegutec, Ingersoll, Tungaloy and many other companies that are part of the IMC Group today.”

In 2013, Berkshire Hathaway completed the purchase of the IMC Group, paying $2 billion for the remaining 20 percent of the Group. Mr Harpaz emphasises that the acquisition never changed Iscar’s unique company culture.

But what is the often-cited unique company culture? Mr Harpaz finds the question difficult to answer, but says it’s an Iscar culture. “No matter if I am at Iscar Germany or Japan or any other subsidiary around the world I feel like I’m working here in Tefen. For us, it is easy to adopt all types of cultures.”

Mr Harpaz cultivates an open-door culture. “You will never see my door closed, no matter how important the meeting is. Everybody can come in.” To be successful you have to work hard and be good at what you do. This is true of many of the employees at Iscar. Almost all of Iscar’s managers have worked at the company for decades. They come in, and they don't leave.