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Next, we have the story of a highly regulated business. It's a business whose proprietors don't think about regulation the way you might assume. The story involves matzo, a central feature of the Jewish holiday Passover, which continues this week. The matzo business is one of the most heavily regulated in the world. Those regulations are kosher law, and the regulators are rabbis who stand on the factory floor and keep a close eye on production. Turns out, the regulations are good for business. Here's Adam Davidson from NPR's Planet Money team.
ADAM DAVIDSON, BYLINE: One of the world's leading authorities on making matzo, according to strict Jewish law, is not a rabbi. In fact, he's not even Jewish. He's a guy from Georgia named Randall Copeland.
RANDALL COPELAND: I was raised Southern Baptist and my wife is Roman Catholic, and I'm running operations for the country's largest Jewish food company - only in America.
(SOUNDBITE OF LAUGHTER)
DAVIDSON: Copeland manages, among other things, the matzo production line at the biggest kosher food manufacturer in the country, Manischewitz. His job is to keep it running fast and efficiently. But then there's this on-site regulator he has to answer to.
YAAKOV HOROWITZ: If someone violates kosher law, they are immediately terminated on the spot because they're jeopardizing the entire kashrus of the product.
DAVIDSON: That's Yaakov Horowitz, the rabbi on site making sure that every piece of food that Manischewitz makes follows all the Jewish rules having to do with kosher. And there are a lot of rules. He takes me to his office, which seems more like the library of a yeshiva.
HOROWITZ: We have Talmudic commentaries. We have, obviously, a large amount of traditional law texts behind you. That's the Shulchan Aruch.
DAVIDSON: Here's one rule: Matzo bread must be unleavened. But what, precisely, does it mean to be unleavened? Rabbis debated this issue for centuries, and gave a very precise time limit for how long dough can be left uncooked.
COPELAND: We operate under a strict, 18-minute-maximum rule. That rule says that once the water and the flour have kissed and formed that batch and you start agitation, you have to have it in the oven, cooking, in 18 minutes.
DAVIDSON: Suppose some glitch slows down the production line. The dough doesn't get to the oven within that 18 minutes. That's going to cost you.
COPELAND: We have to stop, clean those lines - strip off all that dough, throw it away; clean the lines just as if you were starting fresh for the day; and restart the whole process.
DAVIDSON: There are dozens - hundreds - of other rules. Matzo dough can't include any additives at all, including those that make modern bread production more efficient. The dough can never be folded or misshapen. The oven temperature can't drop below 600 degrees by Jewish law, even though 400 degrees would be more than enough to cook matzo.
There are so many potential missteps that Horowitz has five kosher law experts stationed throughout the factory. They're toting clipboards; they wear these white smocks over their traditional Hassidic, black jackets. We saw one guy in a hardhat with the word "rabbi" printed across the front.
If anything doesn't look kosher, they can pull a lever that stops the operation, diverts the matzo into a waste bin.
Rabbi Horowitz says yes, of course all these rules are hard to follow. They have to be hard to follow. The whole point of eating matzo is to remind Jews that we were once slaves, suffering in Egypt.
HOROWITZ: It's a contradiction in terms. If there wouldn't be difficulties, it wouldn't be a matzo.
DAVIDSON: A hard process is also a costly process. Copeland estimates that kosher law add abouts 20 to 30 percent to the cost of production. Now, that might sound bad for business, but the owners of Manischewitz told me those kosher laws may be the best thing they have going for them.
Here's Alan Bankier, the co-president and co-owner of the company.
ALAN BANKIER: The capital investment in the matzo line - those are huge barriers to entry that no business person would really start thinking that they could get around without a huge capital investment. They'd want to buy our company. Before - you know, that's the only way it could make economic sense.
DAVIDSON: So rather than just being a big, difficult challenge, the owners of Manischewitz say all these rules are a near-guarantee that they will never have a lot of competition.
Adam Davidson, NPR News.
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