Edward L. Maul and Sam Rappaport walked into a New York hotel a year ago to meet an Israeli government delegation.
The subject was housing. Israel was anticipating a tidal wave of Jewish immigrants from the Soviet Union and quickly needed to build a lot of houses. Maul, president of Shelter Systems Group of New Jersey, and Rappaport, a Philadelphia real estate investor, believed they had the answer.
It took until August to complete contracts and months more to work out details, but last month, the company started shipping the first of 114 modular two-bedroom houses destined for Beersheba.
It is hard to know who is more pleased.
The Israeli government, which received more than 200,000 Soviet immigrants last year, expects a million more during the next three years and is facing a desperate housing shortage. Shelter Systems, a Hainesport, N.J., company, had laid off 60 of its 150 workers because of the housing-industry slump and needed work badly.
"It's a totally positive situation," said Pat Carr, the company's chief financial officer.
The $2 million contract allowed the company to rehire 20 workers. At the same time, Carr said, it will help Soviet immigrants, who are being temporarily housed in army camps, hostels and hotels.
"This is putting a roof over people's heads," Carr said. He found the idea so inspiring that he volunteered to work to help pack parts for the houses. Now the houses, which come with cement-board exteriors with a stucco-like surface, rolls of gray carpet, stainless-steel sinks and cans of tintable white paint, are on their way.
Shelter Systems was one of eight American companies that won contracts from Israel to build modular housing units for Soviet immigrants.
Another is Penn Lyon Homes Corp. of Selinsgrove, Pa., which landed a $3.5 million contract. Penn Lyon has begun manufacturing 89 two-family units for Soviet immigrants, said William Murray, general manager and vice president of marketing. The houses, with 600 square feet of living space in each half, will be assembled in Arad, a city in southeast Israel.
Until the connection was made with the Israelis, "we were scrambling" for business, Murray said. During 1990's fourth quarter, he said, the company, with normal annual sales of $32 million, was operating at 50 percent of capacity and workers were on a three-day week.
"In the domestic market, obviously, the outlook hasn't been the brightest for the last six or eight months," Murray said. "This is certainly filling a void ... . At least in the short term, we're back to full production. And we hope to be building more for the Israeli government on other offerings."
Maul said Shelter Systems was doing well in the mid-1980s when housing developments were sprouting like mushrooms in a damp forest. It was about to go public with an initial stock offering when the market crashed on Oct. 19, 1987, Carr said.
Shortly thereafter, he said, it became clear that the building industry, already slowing down, wasn't going to bounce back. "It got worse," he said. "Much worse."
Moreover, the company was slapped last October with a $2.4 million suit filed by a group of Willingboro, N.J., homeowners. They allege that Shelter Systems violated its 30-year-warranty by making defective parts for their homes. The suit, which Maul said is unfounded, is pending in Burlington County Superior Court.
Maul said he anticipated the downturn in the domestic market years ago and began looking abroad for business. He arranged to supply houses for the earthquake victims in Soviet Armenia, and has contracts in the Azores and St. Croix.
While the export business has helped, he said, it has not been a miracle cure. During the boom years, the company was producing 25 houses a day. Today, even with the Israeli contract, the company is producing only 10 a day.
It took some time to convince the Israelis in the New York hotel room that Shelter Systems's houses, made of factory-manufactured parts, would not collapse in the first gust of desert wind, Maul said. Rappaport, long a supporter of Israel and a man with strong business connections, helped bring the parties together.
One of Maul's first tasks was to dispel the negative stereotypes about "prefab" units. It is an unfortunate term, he said. A prefabricated unit "has the connotation of cheap post-World War II housing. We prefer 'wood components,' " he said.
In the company's 25 years, technology has advanced. That was what he had to convince the Israelis of. They were skeptical, he said, about the strength and durability of mass-produced houses.
He explained to them that the company, which has $50 million in annual sales, had plants in four states. It primarily makes roof supports, walls and floors in the Hainesport plant.
Although some of its products end up on the low end of the housing market, in $40,000 condominiums, for example, they also are found in the palatial homes of the wealthy.
Maul told them about the multimillion-dollar house for hotel magnate William Marriott in Baltimore, and the 18,000-square-foot house they built on Long Island for Peter Kalikow, commercial-residential developer and owner of the New York Post. Both were made of Shelter Systems's wood components, he said.
The Israelis apparently believed him. And the fact that if necessary, the company could fill orders in 30 days, was persuasive.
Israel's housing plan calls for building 45,000 apartment units, 15,000 prefab units, 15,000 trailer homes and 33,000 mini-trailers.