Joel Orr
Chief Visionary
Cyon Research Corp.
Bethesda, Md.

Israel is now the 33rd richest country in the world on a per capita basis — richer than countries such as New Zealand and Portugal, and even Saudi Arabia. In numbers and frequency of start-ups, Israel is second only to Silicon Valley. The country’s hightech sector was given a tremendous boost by the influx of highly skilled technical people coming from the former Soviet Union.

In addition, Israel has become a world leader in sustainability. No less a light than Nobel laureate Al Gore has praised Israel for leading the world in environmental awareness. Former SAP Senior Executive Shai Agassi has launched a politically savvy, economically powerful effort to transform Israel and any of its willing neighbors through the design, manufacture, and marketing of electric vehicles.

The leading heroes and pioneers of Israel are no longer politicians and soldiers — they are engineers.

A typical day
Engineers in Israel work hard. The business results of this trend are impressive. A downside is the social results in terms of family stress.

Founder and CEO of Pennsylvania start-up KollabNet Igal Kaptsan was educated as a mechanical engineer in Israel. “Engineers there are squeezed daily,” he says. “They work 12 hours a day. Employers even serve meals so people don’t leave. Companies rarely pay overtime. Workers can get a ride home, at any hour, to keep them at work as long as possible.”

Another important influence on Israeli work culture is the army. The country has universal conscription — all young people serve two years. This has a powerful homogenizing effect on the diverse population because people from different countries are required to learn to work together as young adults.

The skills learned in the army are universal so young people carry them into their careers. “The army teaches that what matters more than anything is getting things done. Because resources are often limited, soldiers learn to improvise, while still staying in the allowed boundaries,” says Kaptsan. “The acquisition of these skills helps explain how things happen in the typical Israeli engineering department. Individuals often stretch policies and procedures, but get things done and usually with fewer people than engineering firms in the U.S.

Schooling for engineers
Israeli universities are organized a bit differently from American ones. An engineering student picks a “faculty” — mechanical, electrical, chemical, and so on — right at the start. It is rare to see students, especially engineering students, switching majors. And many engineers go back to school for a masters degree, to increase their earning ability. MBAs are popular.

In recent years, a new form of institution, the “mikhlala,” has become popular. These schools have lower admission standards than universities and are considerably more expensive. Their educational standards are quite good.

But cost is relative. Tuition in general is much lower than in the U.S., commonly no more than a few thousand dollars per year. “I probably never could have become an engineer in the U.S.,” says 24-year-old Anat Gilad. “My high-school grades were mediocre, so I probably would never have gotten scholarships. My parents could not have afforded to send me to school. But here in Israel, I managed to get a degree in mechanical engineering from Ben-Gurion University.”

Four-year institutions are not the only schools producing engineering professionals. Drawing on the German educational model, Israel has a class of school that produces “handasaim” or engineering technologists. The world-famous ORTsystem has schools that add an additional year to high school to graduate handasaim. There are also two-year schools for those who attend nonspecialized high schools. These graduates can later go back to school and become fullfledged engineers.

Good high-school students can be admitted to a special program in which the army pays for their college education. During breaks, students go through extensive military training. Upon graduation, they become commissioned officers and owe the army a number of years of service.

An Israeli innovation is the “mekhina,” a special school intended to help individuals who have gotten off the educational track for one reason or another. Sometimes high-school students have trouble resuming school after their army service. It’s also common for young people to take a year off after the army and travel abroad — to India, Nepal, Vietnam, South America, and other places. When they return and want to settle down, they often need refresher or other courses to get into demanding schools.

In general, the content of an engineering education is comparable to that of upper-level engineering schools in the U.S. For example, Technion, the top Israeli school, is on par with the best U.S. institutions. However, budgets are typically smaller than in the U.S. Consequently, labs and research facilities tend to be less well-endowed than in America.

Money engineers make
Israeli venture capitalist with Benchmark Capital Michael Eisenberg says the monthly salary of a good software engineer in Israel is now about $10,500, or about the same as the going rate in Silicon Valley. (Recent software-engineering graduates make about $5,000/month and senior mechanical engineers make about $4,500/month.)

What does this mean for Israeli high tech? Eisenberg suggests that Israel is being forced to outsource engineering to the Far East and India. This move to outsourcing is not easy because Israeli companies tend to distrust the capabilities and integrity of Indian and Chinese firms.

Higher salaries also raise the bar for Israeli start-ups because they must draw investments based on innovation, not price.

Still, start-ups are an important factor of the engineering scene. In fact, there are more start-ups in Israel than any country of the world, except the U.S. Eighty percent of the 3,000 Israeli companies involved in R&D are less than 10 years old. Another factor: The U.S. is the largest target market for most start-ups. It is better understood, and easier to address than Europe, where each country has its own language, laws, and regulations.

Problems engineers solve
Whatever their engineering degrees — mechanical, electrical, even chemical — most Israeli engineers are working in software. That is where the greatest growth is happening and where the most money is to be made, both in terms of salaries and entrepreneurially.

The arms industry is a major driving force in Israeli engineering. The Israel Aircraft Industry and Rafael Armament Development Authority are government-owned organizations producing weaponry and ammunition mostly for export. There are also private firms, most notably Elbit and Tadiran, that are heavily involved in defense projects.

Because of its highly developed defense and aerospace industries, Israel has an unusual focus on systems engineering for a country its size. Weapons such as the Arrow 2 missile, jet fighters, tanks, and ships are enormously complex products, demanding sound systems engineering and management.

Anyone attempting to understand engineering in Israel would do well to bear in mind that the country is poor in natural resources. Brainpower is what creates the nation’s wealth.

Offshore versus native work
Until recently, no white-collar work was sent offshore. Manufacturing has been outsourced for decades, to the same countries used by the U.S. and for the same economic reasons.

Recently though, the rising salaries of engineers, especially software professionals, has forced Israeli companies to reconsider outsourcing. But while marketing and distribution alliances with overseas firms are common, there is still not much outsourced software development.

Since much work centers around the defense industry, security considerations make it difficult or impossible to outsource some activities. “Most of my projects cannot even be mentioned to subcontractors in Israel. Sending any part of them abroad would be unthinkable,” says one senior project manager at Rafael Armament Development Authority. In such areas, Israeli companies must rely on ingenuity to maintain market competitiveness.

For a country its size, Israel hosts a disproportionately large number of conferences on academic, technology, and business topics that involve engineering. Since many engineers are graduates of U.S. schools, there are local alumni meetings, such as for the Massachusetts Institute of Technology. And with the increasing number of start-ups, many venture capital firms are active in the country. These groups are both local and branches of U.S. and European groups.

Everyday tools
Engineers in Israel use the same CAD, CAE, PDM, ERP, and other packages popular in the U.S., and there are active and avid users of each software package. Dassault Systemes’ Enovia SmarTeam originated in Israel and the company continues to develop and support the software from its offices in Kfar Saba, north of Tel Aviv.

AOL’s ICQ instant-messaging service was invented by Israeli firm Mirabilis. Recently, AOL acquired Yedda.com, an “answers” start-up founded by Avichay Nissenbaum, Yaniv Golan, and several other founders of SmarTeam.

CAM vendor Cimatron is based in Israel. And Iscar, a large manufacturer of milling tools headquartered in Israel, was recently acquired by Warren Buffet for $4.5 billion. Also, intelligent numerical control (NC) was first developed in Israel.

Too, there is a close cultural tie between Israeli and U.S. engineers, despite the large number of professionals from the former Soviet Union. English is the professional language and there is little demand for engineering software to be translated into Hebrew. Many Israeli engineers travel to the U.S. and Europe for user group meetings and training.

Getting a job
Software professionals and electrical engineers are snapped up by the burgeoning start-ups. Companies such as Microsoft, Intel, Siemens, IBM, and Google have major development centers in Israel. Many of their leading products were developed there. Mechanical engineers, however, are not in as much demand. Many make their way by getting graduate degrees in business or software.

Software is the most popular and best-paid engineering discipline, with computer engineering and electrical engineering trailing closely. Out of a population of 5.5 million, there are approximately 15,000 engineering professionals. There are about 1,000 engineering graduates coming out of engineering colleges and universities each year, at present. Their numbers are dominated by software, electrical, and computer engineers. Other disciplines have fewer graduates. For example, there are only about 200 biomedical engineering graduates each year.

The future
Engineering in Israel is on the increase, especially in computer and telecommunications professions. With its nourishing environment for start-ups, wealth of venture funds, excellent schools, and close ties to the entire world, Israel’s position as a world hub of innovation and creativity is sure to be strengthened. The political situation is beyond the scope of this article, but Israeli engineers and their overseas partners are optimistic.

Thanks to: Igal Kaptsan, founder and CEO of KollabNet, Anat Gilad, recent ME graduate, Ben-Gurion University, David Elbaz, Meir Shlomo, Dan Rozen, and many other Israeli engineers.