Tool Story

One of the largest cutting tool companies in the world began as a kitchen-table operation in a remote part of Israel.

Stef Wertheimer is the founder of Iscar Metalworking, which began operations in 1952 as a one-man tool shop in northern Israel. Today, Iscar is a multinational business, 80 percent of which was purchased in 2006 by Warren Buffett’s Berkshire Hathaway Co. In a wide-ranging interview with Cutting Tool Engineering Editorial Director Alan Rooks, Wertheimer recounts the history of Iscar and his project of developing industrial parks throughout the Near East.

After serving in the Israeli army in the late 1940s and early 1950s, Wertheimer found himself unemployed and unable to find a job in industry. So Wertheimer—married with two children—started his own business, founding Iscar in January 1952 in Nahariya, Israel.

All images: Iscar Metalworking

Stef Wertheimer

More specifically, he started the company in his kitchen, he recounted. Contrary to some published information, Iscar did not begin in a garage. “I did not have a garage,” he recalled. “I didn’t even have a car!”

Iscar grew slowly through its first 25 years. Wertheimer eventually moved the business from his kitchen to a nearby rented space. “I also rented some grinding machines,” he said. “I didn’t have much funding, and not too much help.”

The first year, he noted, he worked by himself. During the second year, “I took two young apprentices. We then slowly moved up, and 4 to 5 years later, I had 20 people. We were a very small company struggling to find a market. We had a hard time getting raw materials because Israel didn’t have the funds to purchase them then, and we also had lot of technical disadvantages.

“My main asset was that people like to work with me—both my workers and my customers,” he continued, “and I was trying to educate them to use the tools better. So my point was not so much marketing, but the educational end. I would take my tools to a shop, put them on a lathe and tell them how to do a job quicker.”

In the early years, Wertheimer said finding enough business in metalworking was tough “because there weren’t enough machine shops in Israel.” So he began making tools for woodworking and mining operations. “I took any job that I could get in carbide tools,” Wertheimer recounted. “It was a very undeveloped market.”

Wertheimer, who started the business with brazed tools (because almost all carbide tools were brazed in the early 1950s), later developed the throwaway-tip side of his business.

About 20 to 25 years into the business, said Wertheimer, “I decided I needed a new angle.” That’s when he began a new product development project. Until then, he noted, the company focused mainly on specials.

The cutoff tool, which he considers the first good new product developed by Iscar, came to market in 1976.

Rooks: How did you get the idea for the cutoff tool?

Wertheimer: I went to a few trade shows, especially in Germany, to show my products, and I found that I had nothing special to talk about. We wanted to offer something that was an improvement on existing tools. The cutoff tool performed clamping by the forces of the taper instead of a screw. Most of the tools at that time had a screw to hold the tip. [Our product] made it like [changing cartridges in] a Gillette shaver. It was easy to exchange.

Rooks: Besides new products, what forces drove the growth of Iscar?

Wertheimer: It was mostly the disadvantage of being in Israel where the market is extremely small and not secure. In 1958, I had to go and look for export markets—in Greece, Yugoslavia and Switzerland. I immediately got exposed to the European market and to the American market, because in 1956, after 4 years in business, I bought a license to produce tungsten carbide from a company in Kenilworth, New Jersey, called Adamas, which doesn’t exist anymore, because I could not get a license previously to buy this material directly. I’m still very grateful to Adamas’ people for helping me. I bought the tungsten-carbide powder from them and made sintered parts exactly how they educated me to do so.

All my life, I’ve been a specialist in improvisation and problem solving. I wasn’t born like this, but I lived in an environment that pushed me in that direction.

Wertheimer at age 18 in Tel Aviv.

Rooks: How did you approach export markets?

Wertheimer: I did not have the money at first to set up multiple organizations. However, I established a small company in Holland in 1961 because I wanted to see how business was done in Europe. I stayed for 3 years. It was a partnership with Adamas (which was also trying to penetrate the European market) and it worked out fine. After that, we established companies in other markets, mostly sales organizations. It was all very modest, very small.

Rooks: Were there any major milestones or key developments along the way to Iscar becoming a large company?

Wertheimer: We first had to have a stable, skilled labor force, and that included learning how to do a better job of managing our company. Thirty years ago, I attended a course that Harvard held here in Israel to study management practices, and I also sent my son and daughter to courses there later on. Again, from the beginning we had to be a worldwide company and I wanted to understand international business.