Why Neot Mordechai: How Czech and Austrian Shoemakers Built Naot, Israel's Last Footwear Manufacturer

Naot Footwear is the last shoe manufacturer of meaningful scale still producing inside Israel. The company makes handcrafted leather sandals, shoes, and boots on Kibbutz Neot Mordechai in the Upper Galilee, five kilometers from the Lebanese border. Estimated annual revenue runs between $50 and $100 million. Roughly 60 percent of sales go to the United States. The company opened a flagship store on Broadway in SoHo in 2022. Production has never left the kibbutz, even after the kibbutz itself was repeatedly under fire during the 2023–2025 northern war. The reason this kibbutz produced this company is the most direct skill-transfer story in the cluster.

Czechoslovakia, 1939, with shoemaking apprenticeships

The founding members of what became Kibbutz Neot Mordechai were not chosen at random. In the late 1930s, a Hashomer Hatzair training group in Czechoslovakia made a deliberate decision: members would acquire shoemaking apprenticeships in Czech and Slovak factories before immigrating to Palestine. The reasoning was practical. The kibbutz movement of the period was explicit about needing more than agriculture; productive trades had to come with the immigrants. Several members spent the years immediately before the war training as shoemakers. The Anschluss, the partition of Czechoslovakia, and the outbreak of war forced the group to leave earlier and more chaotically than planned. They arrived in Palestine carrying the only thing the Nazis had not taken: the skill in their hands.

By 1942, the group — joined by additional immigrants from Germany and Austria with similar shoemaking backgrounds — was producing work boots and clogs from locally tanned leather in a one-room workshop. The customers were the founders themselves and the other kibbutzim of the Galilee. Field work needed durable footwear; the existing supply was inadequate; the workshop built what its members and neighbors needed. The formal kibbutz, Neot Mordechai, was established on the site on November 2, 1946, named for Mordechai Rozovsky, an Argentine Zionist activist whose estate had financed early Hashomer Hatzair settlement work.

The Bar-Nahor turnaround

For four decades, the Naot factory ran as a kibbutz workshop. It served Israeli demand — kibbutzniks, teachers, workers — with rugged, comfortable footwear. The Israeli cost of living rose sharply through the 1980s and the country lowered tariffs on shoe imports by roughly 40 percent in the 1990s. Birkenstock and Merrell entered the comfort-sandal market with serious commercial weight. Naot, committed to producing exclusively in Israel, was operating at a loss by the late 1980s.

In 1988, a Tel Aviv consulting group sent a young business strategist named Ami Bar-Nahor to evaluate the factory. Bar-Nahor spent six months at Neot Mordechai and produced both a financing strategy and a product strategy. The product strategy was a sentence: Israelize Birkenstock. Take the existing platform — an anatomical cork-and-latex footbed lined with suede, adjustable leather straps — and modernize it for the global health-conscious consumer. Bar-Nahor hired young designers from Bezalel and Shenkar, introduced colors that Birkenstock did not use at the time (purple, teal, mauve), and reframed the product for export. The strategy worked. Naot revived.

A Hashomer Hatzair training group in Czechoslovakia, 1939, deliberately apprenticed in shoe factories before fleeing Europe. Six years later they were a kibbutz. Eighty years later they are Israel's last shoe manufacturer.

Two ownership transitions: Shamrock 2006, Lax 2014

Naot's first sale to outside capital came in 2006, when Shamrock Holdings — the Burbank, California family office of the Roy E. Disney family — acquired 66 percent of the company for $31 million. The kibbutz retained the balance. Shamrock professionalized management, expanded the international distribution network, and held the asset for eight years.

The second transition is the more consequential one. In March 2014, Steve and Susan Lax acquired the entire company for approximately 260 million shekels. Steve Lax had been Naot's primary US distributor since the late 1980s through Yaleet Inc., the Farmingdale, New York company he and Susan had founded. The Lax acquisition beat two competing bids that would have moved production from Neot Mordechai to China. The Laxes paid a premium specifically to keep manufacturing in Israel, in the kibbutz, with the original workforce. In a sector where almost every other Israeli shoe manufacturer had closed or offshored, Naot survived because its largest distributor chose to buy it rather than watch it disappear.

The SoHo store and the global footprint

In November 2022, Naot opened a flagship retail store on Broadway in New York's SoHo neighborhood. The project was led by Ayelet Lax Levy, daughter of Steve and Susan Lax and US president of the company, with her sister Netta-Lee Lax serving as project manager. The store positioned Naot alongside the design and art galleries of SoHo, leaning into the handcrafted, made-in-Israel narrative as a competitive differentiator. The brand also launched Ayelet by Naot, a dressier line aimed at a fashion-forward demographic, with some of those styles manufactured in Italy.

Core production, however, remains at the kibbutz. Roughly 50 people on the factory floor handcraft the company's signature sandals and shoes. Subsidiaries and distributor relationships span the United States (Yaleet), Canada (Solemates Inc., Toronto), Germany (Naama Naot), the United Kingdom (AJJH Ltd.), and Australia. Naot products are sold in 80-plus locations globally.

The structural lesson

Neot Mordechai is the kibbutz where the founding generation arrived with the product skill already in their hands. Hatzerim had to invent its product. Yizrael had to translate its engineering culture into a new domain. Sasa had to industrialize its experience of being attacked. Neot Mordechai imported its product from interwar Czechoslovakia and never stopped making it. The shoe is the same product the founders had been training to produce in 1939. The skill base, the leather, and the handcraft tradition arrived together. The kibbutz was, in effect, organized around an existing trade that needed land, workers, and a workshop. Eighty-four years later, that same workshop is the last shoe factory of scale still operating inside Israel, sold from Broadway flagship stores, and produced by people who can trace their craft back to the Czech and Austrian apprenticeships of the late 1930s.

Part of the Olam series on the kibbutz industrial complex. Read the pillar.