U.S. market serving as magnet for Israel

Trade between the
countries is rising rapidly.

ASSOCIATED PRESS

When future surgeons need to practice, some of them use medical simulators made by Simbionix Ltd., a company that was born in Israel but now calls northeastern Ohio home.

With a major investor from Cleveland, grant money from the city, and a concentration of medical facilities that includes the Cleveland Clinic, the decision to move Simbionix headquarters from the suburbs of Tel Aviv to Cleveland made sense.

“The U.S. is the largest medical market in the world,” said CEO Gary Zamler. “This is where we need to be to be closer to our customer base.”

Faced with a limited domestic market, Israel sees America as a commercial outlet for newly developed technologies with an extensive support system for startup companies. Trade between the countries is rising rapidly, as is competition among U.S. states to land Israeli businesses.

U.S.-Israeli trade has been steadily rising over the last two decades and increased from $19.4 billion in 2002 to $30.2 billion in 2006, making Israel the 20th leading U.S. trade partner.

Since arriving in Cleveland in 2002, Simbionix’s U.S. employees have increased from two to 22, and a new office opened in Denver. About half the company’s medical simulators — which depict various surgeries through computer generation — are now made in Ohio.

For Midwestern states like Ohio trying to rejuvenate their economies, the Israeli connection offers potential new business powerhouses, needed jobs and tax revenue.

“We’re fighting to achieve some business for us, for our state,” said Rick Schottenstein, managing director of Ohio’s Eastern Mediterranean regional office in Tel Aviv.

In northeast Ohio, 15 Israeli companies have opened up shop in the Cleveland suburb of Beachwood in the past four years.

Elsewhere in the state, Akron has invested in an Israeli incubator with a goal of producing medical-equipment companies to work among the city’s hospitals. Columbus plans a trade mission to Israel in the spring. Dayton officials are trying to put together a similar trip to recruit companies that can commercialize military sensors developed at Wright-Patterson Air Force Base.

Georgia is also seeing an influx in Israeli companies, with about 50 popping up in the Atlanta area, drawn by support from the city’s American-Israel Chamber of Commerce, a sizable Jewish population and nonstop flights between Atlanta and Tel Aviv.

Given Imaging Ltd., which makes medical capsules with miniature video cameras that are swallowed to take images of the gastrointestinal tract, opened an operation in the area in 2000 and has grown to about 150 workers.

EarlySense, an Israeli company that makes sensors designed for early detection of medical problems, is conducting pilot tests in Boston and may open an office there or in Cleveland.

CEO Avner Halperin said challenges for Israeli companies operating in the United States include cultural differences and time zone differences, which can slow decision-making.

With only 7 million people, Israel has a limited domestic market for its goods and little trade with its Middle East neighbors.

At the same time, Israel has been aggressive in developing new technologies by emphasizing engineer training, taking advantage of an influx of engineers and scientists from the former Soviet Union, and permitting soldiers to commercialize technologies developed in the military.

In addition, Israel spends about $300 million a year on about 30 incubators designed to commercialize ideas and create businesses, and about 400 Israeli companies receive venture capital each year.

“One thing Israel is clearly spectacular at is innovation,” said Jonathan Silverstein, a general partner at the OrbiMed Advisors LLC health care fund manager that has invested in several Israeli companies with U.S. operations.

The United States is often a source of financing and a good place to learn how to market products, said Dan Halperin, vice chairman of the Israeli-American Chamber of Commerce in Tel Aviv and former economic minister at the Israeli Embassy in Washington, D.C. And many Israelis are graduates of U.S. universities.

Schottenstein said there are 13 U.S. states with offices in Israel. One of their missions is to find a company with big potential that is interested in locating in America.

“I’m scouting them when they’re very small and young with perhaps earth-shattering technology that we can pick up very cheaply,” he said. “It’s not easy. We attend every single exhibit and trade show we can in the country. We go booth to booth and talk to every single company.”