Israeli trade winds are blowing in the Midwest

 

 

Click photo to download. Caption: Missouri Governor Jay Nixon (left) meets with Israeli Prime Minister Benjamin Netanyahu in Jerusalem in March. Credit: Government Press Office.

By Maayan Jaffe-Hoffman/JNS.org

Ask the average Israeli where he or she has visited in the United States, and you’ll likely hear New York, Los Angeles, or Washington, DC. But that’s beginning to change. According to Guy Cohen, Israel’s consul for economic affairs to the Midwest, there are substantial economic collaborations emerging between the American heartland and the State of Israel.

In March, Missouri Governor Jay Nixon led a delegation of state officials on a trade mission to Israel. The visit was focused on strengthening partnerships, increasing exports, and recruiting new high-tech foreign investment to the “Show Me State.” This week, from Missouri’s neighbor of Kansas, Lieutenant Governor Jeff Colyer joins a handful of other regional governors on a similar trade mission. 

“It sometimes kind of surprises people,” Colyer told JNS.org regarding his U.S. state’s ties with the Jewish state. “Israel is an important business relationship for us. A lot of things are happening here.”

In 2015, Kansas exported around $75 million worth of goods to Israel, according to Colyer, and imported more than $80 million, according to the International Trade Administration. Missouri imported more than $161 million from Israel, Iowa a bit more than $91 million, and Indiana around $109 million.

Consul Cohen explained that Midwest states are rarely home to the huge high-tech companies, such as Google, that will harness Israeli start-up technologies in the products they sell or even acquire the Israeli start-ups (like Google acquired the Waze navigation app). Rather, Midwest companies tend to use Israeli technologies to help them run their own businesses—for internal use. The top industry in the Midwest tends to be agriculture, but there are niche markets in nearly each of the 13 states that Cohen covers: in Michigan, it’s automotive; in Indiana (particularly the city of Indianapolis), cyber-security; in North Dakota, unmanned aerial vehicles (UAVs); in Kansas (particularly the city of Wichita), aerospace; among others.

“We have a lot of states that are big manufacturing hubs,” said Cohen. He noted that nanomanufacturing—the production of nanoscaled materials, such as powders or fluids that have practical applications for laser engraving—“is becoming important” in the Midwest, and he expects to see some new Israel-Midwest deals in that area soon.

In St. Louis, Donn Rubin launched GlobalSTL a few years ago, aiming to build a direct link with Israel by recruiting Israeli companies to establish a U.S. presence in St. Louis. Since its launch, the model has evolved to target additional countries. Rubin said GlobalSTL looks for more mature Israeli companies that have been vetted by third-party investors and customers to set up their North American presence in St. Louis. Four Israeli companies have launched businesses in St. Louis in the last 18 months, and GlobalSTL has a pipeline of 122 active Israeli prospects.

“This helps strengthen the St. Louis ecosystem and builds a pipeline of robust, innovation-based ventures,” said Rubin. “Israel has one of the largest concentrations of innovation-based enterprises in the world.”

Rubin explained that his method is a demand-driven approach.

“We work with major companies, health systems, [and] banks here to understand what their innovation agenda is and develop a shopping list of technologies and innovations these companies would be interested in,” he said. “We seek those Israeli companies that are in demand.”

During his recent visit to Israel, Missouri’s Nixon met with the Mobileye vision technology company, a global leader in advanced collision-avoidance systems. He said that Kansas City, Mo., is a finalist for a $40-million smart city grant for transportation. If the city receives the grant in June 2016, it can use Mobileye to help carry through its smart city transportation commitments. On his trip, the governor called Israel “a beacon of democracy and a vital partner.”

Giving a non-Midwest perspective, Barry Bogage—executive director of the Maryland/Israel Development Center—said the key to recruiting Israeli companies to your state is “to just constantly be there.” Bogage, whose organization promotes bilateral trade and investment to help create jobs in Maryland and Israel, has a representative on the ground in Israel. Bogage or one of his staffers attend all major Israeli cyber-technology, biotechnology, and other technology conferences. He ensures that when an Israeli delegation comes to the Maryland area, he gets the right people to meet with the companies.

“It’s just that constant presence,” he said.

For states in the Midwest—who have more limited budgets and fewer human resources than their prominent counterparts on either coast, such as New York and California—that can be a greater challenge.

“We are a non-profit with limited resources,” said St. Louis-based Rubin. 

The other challenge is awareness.

“Most Israelis know the East and the West, and not much in between,” Rubin said. “My expectation was that it might take a couple of years to build awareness before we could have any real successes. But our work has far succeeded expectations.”

In fact, St. Louis recently beat out Maryland in securing the presence of Forrest Innovations Ltd., an Israel company that focuses on reducing mosquito-vectored diseases and reducing citrus greening, a devastating bacterial disease that is wreaking havoc in the major citrus-producing regions of the world.

“The company representative came, and we had an Israeli real estate agent take him and his family around,” said Rubin. “They fell in love and they are delighted to be here.”

Guy Cohen said the Midwest is a soft landing spot for many Israelis. He told a story about one company that looked first at the East Coast, but ended up settling in Indiana, because the local bank was friendly and willing to sign some checks to help the owners get started. There were also more tax incentives in Indiana.

Lt. Gov. Colyer said more international and national companies are choosing to set up shop in Kansas for a similar reason.

“Kansas is the real heart of America—not just geographically, but really part of the soul of what people understand real Americans to be,” said Colyer. “We’re very welcoming.”

Convenience is also a factor. Less than a decade ago, Israel’s Teva Pharmaceuticals moved its neuroscience division headquarters to Overland Park, Kan., erecting a 150,000-square foot building there.

“It’s a big deal,” said Colyer, noting how he has heard from Teva that Kansas is a great place to work because it is right in the center of the U.S.—a two-and-a-half hour plane ride to and from essentially anywhere in the country. It’s also a very business-friendly state, with low business taxes and a well-educated population whose residents are willing to work.

Naturally, factors like money, increased imports and exports, jobs, and access to exciting new technologies are the basis for Israel-U.S. trade. But Andrew Rehfeld, president and CEO of the Jewish Federation of St. Louis, said there are benefits that extend beyond the economy.

“These relations play a role in strengthening the Jewish community’s connection with Israel through people-to-people economic relationships,” said Rehfeld. “The younger generation views Israel as a thriving democracy and economy, and a regional superpower, and it doesn’t understand the view that we need to support Israel no matter what.…They want to support Israel, but they don’t want to have to say they support its government or policies. This is one way.”

Further, Rehfeld said economic partnerships are a proactive way to quash the Boycott, Divestment and Sanctions movement against Israel.

“By and large, responses to BDS have been reactive and defensive,” he said. “St. Louis has taken a different approach. The opposite of boycott is not shutting down free speech, but strong economic partnerships that recognize the value of a free market and expanded trade.”

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Posted on April 8, 2016 and filed under Features, Business, Israel, U.S..