ELYON Making Business Better

In a turnkey project, Elyon sets up all aspects of production, including hiring and training personnel.

 In a turnkey project, Elyon sets up all aspects of production, including hiring and training personnel. 

The company, which also owns production facilities for textiles and apparel in Israel, Russia, the Ukraine and Moldova, is focused on responding to customers' needs, says Mandelbaum. For example, in a turnkey project, Elyon will handle everything, including building the facility, hiring and training personnel in programming and production planning, recruiting management and even marketing.

On the consulting side, Elyon Textile and Technology holds the exclusive distribution rights in Israel, Egypt, Jordan, Germany, Austria, Switzerland and the Commonwealth of Independent States for GSD, as well as GAD, SAPPHIRE, SHOE-DAT and OFFICE-DAT, programs used for methods analysis, time and motion simulations and product costing. Moreover, the company is closely associated with a series of academic organizations, including the Shenkar School of Textiles in Israel, as well as a series of institutions and universities in Germany and England. 

Privately held Elyon Textile and Technology was founded approximately 15 years ago, bringing Israeli know-how into what was then the Soviet Union. In the past 10 years, the company has started up around 15 to 20 plants, primarily in apparel, which range from relatively small operations in Israel to "Soviet-style giants" of 4,000 to 4,500 employees.

"We've set up plants for everything and anything. We've set up plants for ladies' underwear, for suits that go to Marks & Spencer to [other apparel] that goes to JCPenney in the States," says Mandelbaum.

In other scenarios, Elyon helps companies relocate and find partners. With the basic minimum wage today in Israel at about $800 per month, many Israeli companies producing lower-end merchandise have established facilities in either Jordan or Egypt, says Mandelbaum. Small companies, in particular, have sought Elyon's assistance in the move.

"Some of the bigger companies have asked us for assistance too, because one of our mode of operations is [to] find local people you can work with. They'll teach you the ropes." 

Elyon has Egyptian and Jordanian partners that advise the company on what will and will not work in their local regions. Moreover, they know government officials and the local industry. "To come in as a total outsider in any country is asking to lose money. So the first thing we do in most operations is to find somebody we can trust in that country and work together with them," says Mandelbaum.

Jordan and Egypt: Going In
As for doing business in Jordan and Egypt, Mandelbaum finds the two countries to be distinctly different. Egypt is ruled by a bureaucracy, which makes it very difficult to get things moving there.

"It's not only a problem of language, it's a problem of concept," he says. For example, if you hail a cab in the United States, Israel or any Western country, and you're 20 miles away from the airport in the middle of rush hour and have a flight in 20 minutes, the cab driver will tell you that it is impossible. In Egypt, the cab driver will say "inshalla," which means with God's help, or God willing. Basically, that means "if God will make a helicopter out of my [cab] and he can do it, then it will be done," explains Mandelbaum. 

"[The cab driver] will not say no. It's against his culture. It's not that he's lying. And this is something very, very important that people have to realize when they're working in different countries. You have to learn the culture before you learn the language."

As a result, in Egypt it is important to learn to phrase your question in such a way as to get an accurate response. For example a closed question such as "Will you be able to deliver 20,000 dozen a week on time?" will get you the response: "Inshalla, no problem." A better way of asking this would be: "How many dozen of this product can you produce in a week?"

"In short, people are really nice, and if they can give you an answer that will please you, they will," explains Mandelbaum. 

As for Jordan, Mandelbaum says he finds it to be "very pleasant" and remarks that a lot of Jordanian businessmen have a "go-and-get-it" culture. While Elyon has not yet set up a total plant in Jordan, it has done a lot of consulting work there. Because it's just a two-hour drive from the heart of the Israeli industry, most companies prefer working on their own or have found a local Jordanian to work with, he says, noting that most of the Israelis going into Jordan are setting up joint ventures. 

Currently, the company is working with a Pakistani company in Jordan to set up a multilateral operation in one of the Qualifying Industrial Zones (QIZs). The fabric will come from Pakistan and be sewn in Jordan, with 8 percent of the components coming from Israel. Finally, the product will be shipped out of Haifa, Israel, to the United States, receiving duty-free treatment.
 
 

"We've set up plants for everything and anything." -- Shalom Mandelbaum Director Elyon Textile and Technology Ltd.

As for the general direction in which the apparel industries in these countries will head, Mandelbaum says that there are a lot of "ifs" that will determine the path. For example: Is there going to be a final peace agreement? How much are the Jordanians and the Egyptians going to learn from the Israelis? How much can the Israelis teach companies without overstepping their bounds? 

As it stands right now, Mandelbaum believes that Jordan is heading in the right direction, and that the Jordan-Israel partnerships will continue to supply medium-range products to the U.S. market. He does stress, however, that to avoid "surprises," it's important to have a person on the ground checking production. 

On the other hand, Mandelbaum thinks that Egypt may be missing out on some excellent opportunities. For example, Egyptian cotton is among the best in the world, with extremely long strands of fiber that are so thin that they look and feel like silk and can be made into 90/1 or 80/1 yarn, he explains. Unfortunately, says Mandelbaum, he is not aware of a single cotton mill in Egypt that can produce this high-end cotton. "They are taking the best cotton in the world and making 30/1, which is the basic cotton you use for standard T-shirts and sweatshirts."

Furthermore, offers from Elyon Textile and Technology and other companies to trade, for example, two bales of standard staple cotton for a single bale of Egyptian cotton have been turned down. Mandelbaum believes the problem is more cultural than financial. With a textile tradition that goes back 5,000 years, the Egyptians are reluctant to accept advice from outsiders. The response is the same with respect to dyeing, he says, noting that product dyed in Egypt often comes out in five different shades in the same bundle. 

Production costs in Egypt are approximately 5.5 cents per minute, compared with Jordan's at around 7 cents per minute. However, Egypt's higher seconds rate and overhead — which stems from the fact that most operations have not been streamlined — may make Jordan a better bet.

Nevertheless, things in Egypt are changing, and Elyon has had good results with some plants in the country, stresses Mandelbaum. "What you need is the supervisor, the engineer, and the owner pulling the same way." Things don't always work perfectly, but "this is where we come in — what would you need consultants for if there were no problems?" he concludes.