Archive for August 2010

Global vote of confidence in Israeli economy

August 30, 2010

The international financial media is worrying about double-dip recession. In Israel, there is continuing concern that the high tech revolution is faltering; has there been a failure to convert an innovation prowess into global economic powerhouses?

For the meantime, the bland economic stats reveal that Israel’s economy is managing to rise above the “woe-is-me” attitude in Europe and in the USA. For the first half of 2010, growth was registered at over 4%, back to the heights of 2007. And much of this gain as prompted by a significant leap in high tech exports.

I have written several times that Israel’s economy is at the beginning of a structural change, which will reap many long term benefits; specifically, accession to full membership of the OECD and acceptance at the top level of the MSCI stocks index. There are now proven off-shore commercial reserves of natural gas, and it is becoming likelier that “black gold” is also out there – which together they will cause a major positive shift in the country’s finances.

You know that these are not meaningless words when you learn that international banks are starting to move into Israel. Until now, only HSBC and 3 other overseas groups have been offering commercial services. About 10 others have rep offices, mainly in Tel Aviv.

It has now been reported that banks from at least Germany, Canada, Holland, France, Italy and the USA have been conducting discussions with the Bank of Israel in order to offer their  full services in the Holy Land. And they would not be doing that just to win over a few household clients.

Any connection: Israel’s leading banks, Hapoalim and Leumi, are reporting strong profits for 2010.

Who needs a sales consultant, and when?

August 28, 2010

You send out a price proposal. Surely, it will be followed up. To my amazement, in the past 2 months, I have seen two companies totally fluff it and see leads go a begging. Net result? Well, very little actually –  the revenue columns remained flat.

It may be difficult to accept, but sometimes the obvious is only evident “after the fact”.

How many obvious bloopers can you recall in sales? I was told of one person who was advised to start an international marketing campaign…. without a website. Did you hear of the firm, whose contact details on the website referred back to the holding company, located in another country? And how about the cunning exec, who appointed a great strategist as head of sales, but the person had no idea how to sign off on any deals?

Many CEOs are reluctant to admit it, but they are not that good at selling. After all, surely they are providing a product or service that people just want to lap up. Maybe, but life does not work that way.

You have to brand, plan, price, convince and close correctly. Few people possess all those skills to a sufficient degree. And just because you are a CEO does not guarantee that you are one of this privileged group.

A sales coach or consultant is essential for most businesses, large or small. If you choose wisely, the ROI should be substantial and quick.

But here comes the second whammy. Once the consultant has delivered their verdict, you then have to monitor the follow up. Running, maintaining and supervising a modern sales force can be extremely demanding. Without a system in place, you could end up wasting months of planning and pipeline work.

Economic coexistence – a Middle East model

August 26, 2010

Can Israelis and Palestinians work together?

My own work experience includes a 7 year stint with a multinational in Jerusalem. Employees included Israeli Arabs and Palestinians. I recall how we all shared a joke about our Christian colleagues. They had the best deal, as they did not work on Jewish and Muslim holidays, as well as Christmas.

A one-off freak affair? No way. One of Israel’s most successful independent businessmen is Stef Wertheimer. He has just launched a new Arab-Israel industrial park in Nazareth. It was less than a decade ago, when the Christian and Muslim communities in the city were at physical loggerheads over a visit by the Pope.

And Israel’s largest newspaper, Yediot, ran a feature this week on economic cooperation in the West Bank. For example, the newest branch of the supermarket chain, Rami Levy, is located near Bethlehem. Jews and Muslims work and shop together. About 15 miles to the north, the town or settlement of Psagot has set up a winery, where the staff is also “mixed”. etc etc.

In previous writings, I have mentioned the brilliant work of Save a Child’s Heart in south Tel Aviv, the Peres Center for Peace and the Abraham Fund – all these making a quiet but significant difference in health, commerce, education and social services.

Is there a catch? It is disappointing not to find a similar level of initiatives coming from ‘the other side of the fence’.

And it is with disappointment and irony how several international groups have been boycotting Israel in some form at what they see as Israel’s punishment of the Palestinian population. The latest examples include a cultural protest by 140 Irish artists and a Norwegian oil fund has dropped 2 Israeli companies from its portfolio.

These people are effectively erecting barriers to progress, the very act they accuse Israel of. Maybe hypocrisy is a more accurate description than irony. Their policy creates mistrust, if not hatred, simply watering the seeds of wars to come.

There is a message here. Numerous NGOs, politicians, artists and others wage a war of words against Israel. If they were to judge the country by her actions that do not make the main news programmes – the actions that make a difference – boycotts could be replaced by increased greater economic benefit for all.

Is that too simple a dream to hope for?

Israel acts to endorse wind energy

August 25, 2010

A good friend of mine is director of business development at Leviathan Energy. Unlike competitors in the field of wind energy, Leviathan’s technology controls the air around the turbine rather than just improving the motor. The net result is a 20%+ benefit in extra energy.

Neat. So when the company invited me to attend a ceremony this week with the Israeli Minister of Infrastructure, I was curious to find out more. It turns out that Leviathan’s Wind Lotus turbine has been connected to the country’s national grid in a pilot project.

It is too early to assess the long term economic and social benefits of this new source of alternative energy. According to one report: –

The wind energy market was recently enabled by a new feed-in tariff of NIS 1.65 (US$0.40) per kilowatt hour for 20 years. A feed-in tariff is a guaranteed rate the government will buy all of the electricity produced for 20 years. It is a financial mechanism used to encourage renewable energy industries like wind and solar until the costs drop enough for them to become competitively priced with fossil fuels like coal and natural gas.

Leviathan shows what can be done when a determined entrepreneur struggles against the odds. We can look forward to seeing how it now moves forward as it looks to become an established company on the global cleantech scene.

Sea waves, rabbis and mentors

August 24, 2010

So my rabbi was trying to be “cool” and connect his weekly sermon to the holiday season.

It turns out that Rabbi Lior Engelman was at the seaside last week, when he started contemplating the waves. Yup – some of them roll in with “whites” on the top, an expression of anger. And Lior reflected how the way people deal with waves (and their anger) is similar to how we can deal with life. He pointed out 4 situations.

  1. Some people just let the waves hit them. They take in a mouth full of unwanted salt water and are often pushed back to the beach where they do not want to be. But they do not try for anything else. For whatever, they do not try to control the issue.
  2. In contrast, some people are clever and heroic. They watch the tall wave approach, judge it carefully and try to go through it head-on with minimal “fall out”.
  3. Most of us turn our backs on the wave. We try to ignore it or pretend that it is not so bad..if fact anything so long as it will leave us alone. The problem will pass us by, won’t it?
  4. And a few clever people say “please hold my hand and let’s jump this together”. They look for support.

Now, I could take this far and deep, but I will concentrate on the last point. So long as we are not talking about Hawaiin or Australian beaches, jumping waves can be fun. Yet amazingly not everyone likes to do it by themselves, and few of this group reach out for help.

In the world of sport, there is hardly a top personality that does not have their own trainer. However, when it comes to the world of commerce and business, few take on a mentor or consultant. 

Ask yourself why is that? And then contemplate how many companies you know could do so much better with an external person looking in, offering a few words of guidance. You never know; the added value generated might encourage the boss to give the staff an extra day off at the beach.

Israeli economy on the move upwards

August 23, 2010

It’s official. The Israeli economy is doing well.

Gross domestic product rose 4.7% on an annual basis in the second quarter, faster than the first three months’ growth rate of 3.6%. It was the fastest growth in more than two years. In the first six months of the year, the economy expanded 4.1%.

That is excellent by any standards, especially at a time when Europe was hit by the “Greek crisis”. Exports have continued to rise at over 15%. The heavily reliable “purchasing manager’s index” is also moving in the right direction.

It was only last week that the Finance Minister released a series of other stats, mainly painting a very healthy picture.

Evaluations based on initial data from various sectors of the economy suggest unemployment rates will decrease to 6%, reduced from the 7% forecast at the beginning of the year. Poverty rates are also expected to decline significantly for the first time in years.

 One figure of particular importance for me and which has received little coverage is the anticipated fiscal debt. In the UK, the coalition government is striking at several “holy cows” in order to control the excessive spending. In Israel, the figure will reach around 4%, and not 8% as originally feared by many.

The rate of interestlooks to remain unchanged for the short term at least. The shekel has ceased (temporarily?) to gain in value against the main trading currencies. So all-in-all, a good mid-term report.

So what’s really going on in the Palestinian economy?

August 22, 2010

Whether you look at Gaza or the West Bank, it is difficult to get a true picture of economic progress. The story is often heavily clouded by the spin of politicians protecting their own agendas.

Fox News reports of the spanking new shopping mall in Gaza. Erected despite the Hamas claims that there are no materials to build new homes, it remains debatable if local purchasing power is strong enough to provide profits for the retailers of fila shoes and barbie dolls.

Khaled Abu Toameh, a Palestinian journalist writing in the Jerusalem Post, takes another angle.

…the Orjuwan Lounge in the fashionable neighborhood of Al-Masyoun in Ramallah has become a symbol of the dramatic change that has taken place in this city in the past three years.

The improved security has encouraged Palestinians and foreigners to inject money into the city or even move to live there. Luxury apartments are on sale in most parts of the city.

(For example): Sources in the Ramallah Municipality revealed that more than 100 Palestinians from Jerusalem have relocated their businesses to Ramallah in the past few months. “Here they pay less taxes and have more customers,” the sources said.

And that is not all. The Abraaj equity group from Dubai will operate a US$50 million investment fund from Ramallah. Toameh goes on to describe how international hotel chains and “embassies” are moving into Ramallah, effectively converting the city in to a de facto bourgois capital.

It is interesting to note that the July inflation stats revealed a sharp rise in prices in the West Bank region, indicative of the reduced fighting and increased prosperity.

Meanwhile, in Hamas controlled Gaza, prices changes were flat. What has yet to be concluded is whether this deflation is a result of continuous authoritarian rule. On the other hand, the trend could be explained by the continued heavy flow of goods into the region via tunnels and Israel’s relaxing of border restrictions, which have thus combined to increase supply and reduce prices. 

Either way, the shouts of deep poverty and “woe is me” in these territories are becoming more exaggerated by the day.