One day last summer, a very young Israeli boy named Zohar rode his tricycle out onto the floor of a factory near his home. He was looking for his grandmother, one of the packers. But she wasn't there at her usual station; gone to the bathroom, apparently. So someone found a little chair for Zohar where he could wait and help his grandmother when she returned.

This factory, oddly enough, is a suitable place for small boys to visit their grandmothers. The big shed is filled with sunlight from a glass wall that looks out over some sand dunes to the Mediterranean. The machines, mostly injection molding devices, are clean and safe. And many of the workers are the age of grandparents, and seem to know one another very well. Many of them seem to know Zohar, too.

An interesting sort of factory, clearly. But also the engine room of a very profitable business, Plasson, which last year had sales of $15 million for its owners, the 550 members of a kibbutz called Ma'agan Michael on the coast of Israel."Plass" stands for plastic, "on" for the Hebrew word for power; a kibbutznik won a contest by coming up with that name about 21 years ago when Ma'agan Michael decided to go into business. It proved prophetic. Plasson now generates about 70% of Ma'agan Michael's revenues (the rest comes from the much more traditional kibbutz activity of farming), and has lifted its collective owner to a position among the richest kibbutzim in Israel. Plasson has production facilities -- partly owned and partly subcontracted -- in Italy, Venezuela, and Mexico, and its products are sold all over the world. In the United States alone, the company has conquered as much as 90% of certain segments of its market. Its crowning success came when Taiwanese imitators shamelessly started to brand their knock-offs "Plasson-type." In a keenly competitive, worldwide field, Plasson is the undisputed standard of excellence.

But the company is extraordinary in other respects as well. Allowing children on the factory floor is the least of it: The factory was designed with just that sort of thing in mind, certainly with grandparents in mind.

Yosef "Yossi" Cohen remembers how it happened. He is over 60 himself, a brawny, blue-eyed man, also a packer in the factory. "He's from our Mayflower," they say of him to visiting Americans: one of those who founded the kibbutz back in 1949, leading a band of young like-minded idealists out to the desert coast just north of the ancient Roman port of Caesarea, there to plant a Utopian garden in the wilderness. Cohen's moral authority at Ma'agan Michael is immense, and through his philosphical writings it extends across the whole of Israel's kibbutz movement.

The decision to found a factory didn't come easily to Ma'agan Michael, Cohen explains. Factories seemed to go against every kibbutz tradition and ideal.From the beginning, the kibbutz movement was uncompromisingly socialist and egalitarian. On a kibbutz, all wealth (except personal possessions) is supposed to be held in common; all work is shared according to each person's ability; all goods are distributed according to each person's need; all decision making is arrived at democratically by all members of the kibbutz.

Factories threatened those ideals, Cohen goes on. Factories meant -- what else? -- going into business, and going into business implied, in a socialist scheme of things, a whole host of evils: money-envy, bosses and workers, class hostility, alienation, and all the other dreadful consequences of capitalism. For years, then, the kibbutz movement remained basically agrarian. Only in farming -- "with the wind in our hair and the soil beneath our feet," as kibbutzniks put it -- only in this most basic of human enterprises could the kibbutz hold fast to its ideals of equality.

And Ma'agan Michael prospered as an agricultural community.Its dairies, fisheries, banana and cotton plantations, and poultry farm were among the most productive in Israel, perhaps in the world. But the kibbutz wanted to grow, both in membership and in influence in Israeli society; and there was no way it could do this without establishing a growing economy for itself. Once they had cultivated all the land, built all the chicken coops, and stocked all the ponds, agriculture could never provide such a growing economy. So they had to find some engine of economic development -- a factory.

Even so, Cohen recalls, they might never have done it, certainly not in the way they did it, if it hadn't been for the kibbutz's elderly. The founders' parents, then the founders themselves, would be getting old; and kibbutz ideology knows nothing of retirement and the "sunset years." On a kibbutz, self-worth is measured in work, in a person's contribution of labor to the community. Old people could not work indefinitely in the fields and fisheries. A factory, therefore, if it were designed to be clean and safe, would extend their productivity, and hence perhaps their very lives.

So Ma'agan Michael got itself a factory, and entered the capitalist world. Has it watered down the kibbutzniks commitment to absolute equality? Certainly not, says Yossi Cohen. The company belongs to the community as much as the land does. The community founded it, put up the money for it, provided all its personnel. Naturally, therefore, it is the community that decides what to do with its profits -- plow them back into the business or invest them in such community improvements as schooling or color television. "The entire system of the kibbutz," says Cohen, "makes anything but completely horizontal decision making impossible."

In effect, the kibbutzniks of Ma'agan Michael practice a form of socialism in one company -- and it is a highly entrepreneurial, innovative, and profitable company at that. All of which leaves the capitalists with whom they do business a little bewildered. "I wouldn't call them Communists," says Jack Dubrovsky, a partner in Diversified Imports, D.I.V. Co., of Lakewood, N.J., Plasson's exclusive import agents for the United States and Canada. "It's a large democracy they've got there. But you'd have to call it a social democracy. It's more like a big family.You have the feeling you're doing business with a family. There's a lot of concern, a lot of pride, all the good things you've got in a family. And the guy you're dealing with, he's tough. But you're not dealing with someone who stands personally to make a profit. Mr. Kantor is different from some John Doe who's just making a buck out of all this."

Mr. Kantor is Yitzhak Kantor, or Itzik, as everyone calls him. He is in charge of developing all of Plasson's export markets, and he is the closest thing to a founder that the company has. Almost 25 years ago, the kibbutz sent him out to find a factory of some sort. What he came back with was a proposal for the plastics factory that eventually became Plasson. Since then, he has continued to play a key role in the company.

"He's impossible, an impossible person," says Dubrovsky, by which he means that Kantor is almost impossible to locate these days. "He's in Brazil. He's in Holland. He's in Italy. Then the phone rings, and he's right here in New York."

Four or five years ago, it wasn't so hard to reach Kantor. Back then, he could usually be found in the factory or elsewhere on the kibbutz; he might even have been on kitchen duty. Dubrovsky, who goes to Ma'agan Michael at least once a year, was once briefly disconcerted to hear of Kantor doing his turn at the washing machines. But wherever he was, the telex between the kibbutz and Diversified would have gotten the message to him, and sooner rather than later. Now, however, Kantor is international sales coordinator, doing business all over the globe.

Job rotation has been part of kibbutz ideology for generations. Four years ago, for example, Eli Zamir, a kibbutznik, left his post as general manager of Plasson, which he had held for five years, to become general secretary of the Israeli kibbutz movement. His place was taken by Ilan Tassler. Job rotation serves the ideal of social equality by undermining occupational specializations. The assumption is that by diversifying each individual's work throughout the enterprise, indeed throughout the kibbutz, cliques will be broken up, incipient hierarchies will be flattened, and everyone will gain a good deal of common experience with everyone else. But at Plasson, job rotation has another point as well, a business point as tough-minded as any American could wish for. Movements like Kantor's, from this job to that, ensure a constant circulation of fresh ideas and enriched experience through every workstation in production and sales.

Seeing Itzik Kantor at Ma'agan Michael, it is difficult to imagine him as a globe-trotting businessman. Easy-going, clad in typical kibbutz attire (blue shorts, blue shirt, sandals), as accessible to a younger man with domestic troubles as he is to an engineer with a new design on his CAD/CAM system, Kantor looks as though he would be uncomfortable anywhere else. Especially, perhaps, cutting tough deals in the capitalist world.

"Look," he said last summer, "a long time ago I thought about this matter. And I decided that basically if one is honest and has a good product, even a socialist can be a good salesman. Honesty is the basis of all good sales. Because if you're honest, the customer will come back for more. On the other hand, when I go abroad, I'm a businessman. I'm not extravagant, but I stay at a businessman's hotel instead of looking for a cheaper deal. I don't try to force my kibbutz ways on my customers or business colleagues."

Of course, in 1961, when the kibbutz sent him on his first venture into the capitalist world, Kantor didn't have any customers or business colleagues, let alone products to sell. He was 35 years old, working as a sort of master mechanic, assigned to keep the farm's machinery in good repair. His other qualifications to lead the kibbutz into business were no more impressive -- or wouldn't have been, say, to a typical venture capitalist. "What can I say?" one of Kantor's friends offered. "He was a garagenik."

On the other hand, Itzik Kantor didn't need venture capital. He had that already. It was in Ma'agan Michael's treasury, the collective savings of his fellow kibbutzniks, and, if necessary, additional funds that would be supplied by kibbutzim of the same ideological bent. He also had a fairly clear mandate as to the sort of factory he should be looking for. The machinery had to be safe, clean, and physically easy to use; this for the elderly, of course. It also had to conform to the principle that the means of production, the machinery, should be as much as possible like hand tools, which can be picked up or laid down at the will of the worker, not at the dictates of an assembly line.

With these guidelines, Kantor went off to find a factory for Ma'agan Michael. The research took him and a few fellow members about a year and a half. Almost from the start, he realized that whatever they made, it would have to be for export. Israel's internal markets were too small to sustain the kind of growth that Ma'agan Michael expected. Export meant the possibility of government loans, but it also meant mass production, and as Kantor searched around Israel he discovered that the Israelis' mass production of sophisticated industrial goods was at least 10 years behind the times. In Europe, however, he found what he was looking for -- injection molding machinery for plastics.

So Itzik Kantor, former mechanic, came home to propose that Ma'agan Michael set up a plastics factory. With this proposal, the "horizontal decision making" process went into action. In fact, several recognized institutional bodies were already involved: the kibbutz Secretariat, for example, whose two officers are elected on alternate years, and an Economic Resources Committee, composed of the elected managers of the money-making kibbutz enterprises, at that time fishing and agriculture. The final decision, however, rested with the General Assembly, which is composed of all members of the kibbutz, 550 of them today, 350 when Kantor proposed his factory, who meet every Saturday evening to debate, often with classic Israeli vehemence, everything from kibbutz morals and direction to the triumphs and travails of individual members.

It was an extraordinary decision that Kantor put before them. Used to thinking of themselves as sitting in a political assembly, or even as a court of law, here they were being approached as investors: to put up some portion of their community's wealth to establish a company and compete for profits in the capitalist world. And they were being asked to commit more than money. The investors in this business would also be its board of directors, its labor union, its stockholders, and its sole source of manpower.After hearing the recommendations of the kibbutz committees, the General Assembly told Kantor to go ahead: They would take the risk.

The degree of risk may be imagined from the fact that Kantor was for some time unclear about what products they would make with their injection molding machines once they got them. "I knew we'd have to make something of higher quality than was being made in Israel at that time," he recalls, "and most importantly it would have to be something new." The machinery would take care of the "higher quality"; it would be state-of-the-art. But what about the "something new"?

To answer that, Kantor looked to his own and his comrades' experience. "We could draw on the expertise available on the kibbutz," he says. "Something that we, as farmers, would be able to come up with that other farmers worldwide would be able to use, would find necessary, or at least better than anything else on the market." The practical as well as the philosophical underpinnings of the new enterprise would remain in the soil.

A new design for chicken cages was what they came up with first. The kibbutz's experience with chicken cages was the same as that of poultrymen all over the world. They were either made of wood, in which case they didn't last long, or they were made of metal, which made them heavy. Plasson's first product was plastic poultry cages, which were durable and light. A bit later they went into toilet reservoirs, the first sophisticated ("and aesthetic," Kantor insists) ones on the Israeli market. Neither product was what one would call an instant success; nobody remembers what the revenues for Plasson's first year of business amounted to. The break-through chicken cages moved slower than the toilet reservoirs. On shipment of cages sat on the Amsterdam docks for three years before anyone bought them.In Israel, distributors stubbornly clung to iron cages -- until they were forced over to the plastic by porters, the men who actually schlepp the birds to market. Plasson had little difficulty persuading the porters of the merits of the plastic cages.

The chicken cages were Plasson's first international success. Then, in the late 1960s, the company began coming out with a line of products that has made Plasson a byword for excellence throughout the multibillion-dollar poultry industry, especially in America.

The line was designed around a new invention for an old necessity -- watering chickens. Plasson's drinker is a bell-shaped plastic device, colored a distinctive bright red, that is hooked up to a water source by valved tubing. The valves keepo the water level constant, while the bell keeps it free of mash and other impurities. Nothing so effective had ever before been made for the purpose. But because it was novel, and because it cost more than rival products, Plasson's bell encountered heavy going.

By the mid-'70s, however, the kibbutz's American distributor, Diversified Imports, was reporting that Plasson had 35% of the American market for broilers and 90% of the breeder market. (Poulterers have a much bigger investment in breeders and so can more easily justify the greater cost of the Plasson bell.) Then in January 1978, at an Atlanta trade fair, Diversified Imports introduced Plasson's turkey drinker. "It was wild," says Dubrovsky. "Plasson's factory couldn't even begin to keep up with orders that came in. In one year, we had 80% of the turkey market."

Last fall, Plasson entered the 15-million-to-25-million-units-per-year American commercial egg market, another subset of the industry, with a new patented product that the kibbutz has been researching and testing for the past three or four years. In addition, Plasson's engineers and machinists have prepared a patented entry into the broiler market, for introduction late this year. They want to lift their share from their current one-third to the 80% they enjoy in the turkey coops. After that, they plan to develop something for the baby chicks, the last drinker market still eluding Plasson's products. Each product must be designed specifically for the size of the different types of poultry.

Kantor had understood from the chicken-cages days that the kibbutz was in markets in which the business cycle was short and merciless. Plasson was thus committed to innovation, whether it liked it or not. "Before the sales start to slump," Kantor explained to his fellow workers, who are also, remember, his investors and neighbors, "we have to find something new to produce." The market's whip hand in this instance belongs to the kibbutz's Taiwanese competitors. From the moment a new Plasson product makes a market for itself, the Taiwanese crank out a cheaper version. The quality, of course, is not always comparable.Dubrovsky tells the story of a farmer who complained to one of Diversified Import's distributors about the priciness of a Plasson item. The farmer had in his hand a familiar bright red bell which, he said, had cost him a whole lot less than what the distributor was charging for his bright red bell. The distributor thereupon endeavored to instruct the farmer in differentials of quality and price.

"Take a hammer to it," he said, pointing to the farmer's bell. The farmer did, and put a bi dent in the plastic. "Then," says Dubrovsky, "he told the guy to take a hammer to the Plasson bell. Well, that hammer bounced right back and damn near clawed the farmerhs eyes out. Since then we tell people who can't tell the difference between our products and the Taiwanese, 'Take a hammer test -- and watch out for your eyes!" Dubrovsky laughs with great gusto as he tells this story. He does not laugh when he notes that Plasson's attorneys are moving in on the Taiwanese for patent infringement in countries where Plasson has patent protection.

But there is another reason that Plasson is so relentlessly driven to innovate -- namely, Ma'agan Michael's refusal, so far, to employ outside labor. Byhiring workers from nearby towns, the kibbutz could relieve a number of problems. It could buy more machines, expand production capacity, and thereby hang on much longer to the market demand for any given product. With this lengthening of the business curve, in turn, the pressure to innovate would relax slightly.

A number of kibbutzim in Israel have, in fact, recruited labor, both Arab and Jewish, from outside the collective. Ma'agan Michael will not; voters in the General Assembly have repeatedly turned the proposal down. Everyone has his own reasons for refusing this "opportunity." For Yossi Cohen, it reminds him of a visit he made in 1963 to a plastics factory in the Bronx, just to see what they were like, these machines that Itzik Kantor proposed to bring to Ma'agan Michael. "Frankly," he recalls, "I wasn't very impressed. The manager told me that of five machines, only three were working. I asked about the others, and he told me something I couldn't believe, I couldn't understand. He said that one of the workers threw -- deliberately threw -- something into the machine to make it stop and slow down production." The tough old man pauses for effect. "That, my friend, could never happen here."

Kantor makes the same point in ideological terms. "We are now all workers and owners," he says, "union members and stockholders. This is right. With outsiders here, there would be two classes of workers, and I wouldn't want that. It would immediately result in different motivating elements for different workers." For Boaz Tamir, Kantor's son-in-law and a PhD candidate in political science and management at Massachusetts Institute of Technology, it is a matter, almost, of domestic continuity: "Besides the problems of salaries, pensions, and all the rest of it -- problems which don't exist among ourselves -- with hired labor you wouldn't be able to count on the workers the way you can count on the person who lives next door to you, who eats dinner with you on the holidays, who takes picnics with you, and whose children go to school with your children."

Meanwhile, although the question of hired labor does continue to arise, most people at Ma'agan Michael would prefer to wait -- at whatever cost in profits and under the constant pressure to invent something new -- for the coming of robotics.

Such stands of principle notwithstanding, there are those who say that the growing wealth of the kibbutz is undermining its simplicity, the purity of its idealism. Recently, for example, the General Assembly voted to allocate funds for color TV sets for those families that wanted them.To Emanuel Klebanov, the man who manages export operations from Ma'agan Michael, this was an instance of the "extravagant demands" people are making these days, "asking for luxuries." Yossi Cohen takes a more philosophical view. "As if color could improve the garbage you see on [Israel's single, state-run] TV channel!" he says.

Yet even such "extravagances" as these are still the exception, rather than the rule.The General Assembly regularly votes to allocate a significant portion of Plasson's profits for kibbutz services. In addition, Ma'agan Michael performs an ongoing service to the kibbutz movement as a whole by passing on lines of production (and sometimes machinery) that no longer fit in with Plasson's business strategy but still have plenty of commercial life in them. These are given, at no cost, to other kibbutzin, so that they too may grow by developing their own industries.

Meanwhile, the remainder of Plasson's profits are plowed back into the company -- and rightly so, says Kantor. For Ma'agan Michael, money is not a means of exchange between consumers; it is rather, in the Marxist sense of the phrase, "a means of production." In Kantor's mind at least, it is especially a means of agricultural production -- "a tractor."

"Of course it's not all idyllic around here," says Yossi Cohen."Kibbutzniks aren't angels. We're flesh and blood like anybody else. But our system makes it possible for social tensions, the ordinary tensions of daily life, to be dealt with in ways the city doesn't allow. And that gets reflected in the way people work here. They are committed to the kibbutz and, therefore, to the job."

The primacy of work shows up in any number of ways. Nobody ever gets fired at Ma'agan Michael, and codes of behavior permit personal eccentricities that many Western enterprises would frown upon. (One grandmother at the factory, for example, comes to work at two o'clock in the morning, puts in her six hours, returns home for a nap, then spends the rest of the day with her grandchildren.) On the other hand, with respect to work, to pulling one's own weight, the social and moral pressure can be as firm and uncompromising as any "capitalist boss." Idlers don't belong.

From the business point of view, however, perhaps the most extraordinary aspect of this "workers' capitalism" is something else. Jack Dubrovsky describes it as confidence. "They've got this incredible confidence in the value of their products," he says. He attributes the confidence to experience. The factory, in a way, is just a service for the kibbutz farm, where its products are tested and retested by the people -- friends, fellow workers, fellow investors, farmers -- whom it was set up to serve. If the products prove good for the farmers of Ma'agan Michael, then, and only then, will they be marketed to the other farmers of the world.

And there is another aspect of this confidence -- the trust that the workers/stockholders/neighbors give to Itzik Kantor or whoever else happens to be circulating around the globe as international sales coordinator. It is a job that brings with it a terrible responsibility. Decisions must be made that risk the wealth of his neighbors and friends, his entire community -- often under circumstances that don't permit calling a meeting of the General Assembly. Trust is the key factor in this arrangement. "Itzik can travel and make decisions," says Boaz Tamir, the young management student, "decisions that involve many millions of dollars. He can do that because he knows that the kibbutz is behind him, is ready to accept his decisions." And Itzik, for his part, is conscious of this trust every moment that he is abroad. "Of course, I'm aware of the fact that this isn's my own money," he says. "It's the whole kibbutz's money that we're dealing with here. That's a huge responsibility, and it sometimes frightens me. But that's why I work so hard."

But, naturally, there is trust on his side as well. Many times, having just clinched a big, unexpected order, Kantor will call back to Plasson to order what is known at Ma'agan Michael as a "mobilization." With that one word, posted on the bulletin board, he can summon volunteers from all over the kibbutz to work the machines of the factory. They will work on Saturdays, their only day off, giving up drives into the Galilee or picnics on the beach; everybody will -- teenagers and grandparents, agricultural workers and engineers at the research and development facilities, everybody. And the only "overtime" they will be paid is in gallons of free ice cream.

In Israel, "mobilization" is a military term; and if Itzik Kantor can trust his community to come through in an emergency, part of the reason is surely that Israeli society is in a condition of semipermanent mobilization. Military service, universal in Israel, is even a kind of rite of passenge at a kibbutz: Only after having served does one become a member. Much of what American businesspeople would call Plasson's corporate culture can be explained by such circumstances. When a Ma'agan Michael worker sees himself or herself as laboring "under the gun" to meet a production demand, or as being "on the front line" of Israel's struggle to earn foreign currency, these cliches come close to describing an actual state of affairs. Last December, the entire kibbutz of 1,200, including all of the children, mobilized to put in a day's work -- and profits -- to aid the famine-stricken people of Ethiopia.

Yet societies and individuals may respond in all sorts of ways to emergencies -- selfishly as well as altruistically, by hunkering down and by opening up. Military metaphors can't explain all of Plasson's high morale. There is also the kibbutz ideals -- and maybe, too, little details like having a factory where small boys can go visit their grandparents.