The competitive advantages of ISCAR and its competitor Sandvik
OK. Jonathan Brandt, who is a newcomer to the panel, his area is the other- than-insurance aspects of Berkshire Hathaway.
And I can assure you that no one has paid more… I played Jonny in chess when he was about four years old, and, I don’t know, I must have been 40 or something at the time, and he kept insisting during dinner that we play chess afterwards.
And we started playing, and, of course, he got me into some impossible position in a few moves, and I told his parents to put him to bed.
So, Jonny, I still have kind of comebacks in me, so be careful what you ask. Jon Brandt.
Good to see you, Warren.
A question about ISCAR: what do you feel are the specific competitive advantages that ISCAR has over its primary competitor, Sandvik, and, in turn, what advantages does Sandvik have over ISCAR as the larger player?
Yeah. Sandvik is a very good company, and ISCAR is a much better company.
The advantage it has is brains and incredible passion for the business.
It’s interesting to reflect on ISCAR because if you go back to… what would it be?… 1951 or thereabouts, when Stef Wertheimer, who had come from Germany, was in Israel, started ISCAR, just think of the prospect that was facing him.
Here was a company like Sandvik, or in this company… country… Kennametal, or different countries, well-entrenched companies, well-entrenched, well-financed.
And here’s this fellow in Israel, 25 years old, and the raw material for these cutting tools comes from China. It isn’t that the raw material is in Israel.
So everybody buys their tungsten from China, and they sell to customers that are using large machine tools throughout the world, but they’re selling it to heavy industry to a significant extent.
So they’re selling to people like Boeing or General Motors or big industrial companies in Germany, and there’s no great locational advantage, in terms of being in Israel doing this.
But here’s this 25-year-old fellow getting the tungsten from thousands of miles away, selling it to customers thousands of miles away, competing against people like Sandvik, and this remarkable business, ISCAR, comes from that.
And there’s no other answer you can give to your question when you see that result than to say that you have had some incredibly talented people who never stopped working, never stopped trying to improve the product, never stopped trying to make customers happy, and that continues to this day.
Sandvik is a very good company. I can tell you that based not only on the figures, but on every other aspect of business observation that I possess, that ISCAR is one of the great companies of the world, and we feel very fortunate to own it and to be associated with their management.
Well, it’s a good comparison. Sandvik is a fabulous company, and it’s a particular achievement to really do a little better in the competitive market, as ISCAR has done.
Quite a bit better.
Have you really ever seen much… a better operation than ISCAR in the manufacturing business?
It’s the only place I was ever in where I saw nothing but robots and engineers working computers.
You cannot believe how modern ISCAR is.
Yeah. And the game’s not over yet, either.
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