Profits on the Kibbutz

Sitting on the barren, marshy frontiers of Israel, the typical kibbutz for years was rarely more than a commune of spartan farmers. But as Israel's economy has surged, the kibbutzim are becoming burgeoning industrial complexes and tourist attractions. Ferryboats, their decks crowded with sightseers, stand out among the austere fishermen on the Sea of Galilee. New hotels, some with seaside restaurants, are rising where banana trees once flourished in the subtropical sun. And daily from kibbutz factories flows a stream of products that range from machine tools and stainless steel kitchen equipment to shipping containers.

This year 170 of the 231 kibbutzim are either catering to tourists or running factories. Kibbutz hotels and restaurants in 1971 brought in only $5,000,000. But revenues from the kibbutz factories were $300 million, roughly 7% of Israel's total industrial production. At a symposium for factory managers last month, Winnipeg-born Dan Karmon, of the 212-member Kibbutz Industries Association, boasted that in the next five years revenues would more than double to $700 million. Already the kibbutz factories account for 35% of Israel's total plastics production, and in the past four years output has risen 30% annually. Factories that manufacture electronic equipment, such as radiation detection instruments, are growing even faster. Since 1968 the production of electronic gear has increased 40% annually.

The kibbutzim are well equipped to handle their industrial revolution. Many older kibbutz members were born abroad and came to Israel with polished technical skills, while others have been sent off to a university for managerial or scientific training. Money to build the factories normally comes from the kibbutz farm revenues, but when these funds are insufficient, development loans are available from the government or the workers' banks of the Israel Federation of Labor. Each kibbutz can decide what kind of factory it wants to build, but to eliminate duplicate projects their plans are reviewed by Karmon's association.

One of the largest and most successful industrial operations is Sefen, a joint venture owned equally by seven kibbutzim and Ampal, the foreign-investment arm of the Israel Federation of Labor. Sefen's first factory, built in 1952 on the torrid Jordan Valley floor south of the Sea of Galilee, converted waste from a kibbutz plywood factory into insulator board. When Israel's building boom began in 1953, Sefen switched to making construction board. Now Sefen is a four-factory operation that last year earned a profit of $725,000 on revenues of over $11 million. It produces adhesives, scientific radiation equipment and laminates for the construction and electronics industries.

Dream Team. Most other kibbutz industrial ventures are considerably smaller. Kfar Ruppin, for example, has 20 workers--v. 450 at Sefen--and makes only one family of products, laboratory equipment for teaching physics. In addition, most factories are not fully mechanized: they require teams of laborers to spend long hours doing simple tasks by hand. To reduce the monotony, workers in a plastics plant at Kibbutz Ma'Agan Michael rotate jobs every two hours.

Labor relations on the kibbutz sound like a factory manager's version of The Impossible Dream. The factories pay no wages to kibbutz members, though they deposit their profits in the treasury that maintains the collective farm. The workers nevertheless labor hard--kibbutz factories raised their productivity an imposing 11% last year --and none has ever gone on strike. The kibbutz plants consequently keep prices extremely low: high school and college lab equipment is sold in the U.S. at 20% below the price charged by American companies, and plastic flushing systems for toilets are sold in Africa at 15% less than competitive brands. Most of their output is sold to the Israeli government or large private firms, but the bargain prices are beginning to win a modest export market.

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