Industry

Motor industry

Poland has a rich motoring tradition – the first license to make Fiat’s here was signed at the start of the 1930s. The development of the industry was put on and held for many years by the Second World War.

Today in Poland pretty most all the major global carmakers have factories in Poland. The biggest investor is still Fiat, which has invested over the years almost $1.64 billion, the second largest share of any foreign capital engagement in Poland to date. Korea’s Daewoo is in third place, investing more than $1.5 billion in car production. In the top rank is also General Motors, which has to date invested $800 million. Some of the other larger carmakers – like Volkswagen and Toyota - do not have factories in Poland, but instead produce sub-assemblies to their cars. Vehicle sales – personal and heavy – in 2000 represented about 6.5% of total sold production, in second place after food products. Thanks to exports of Fiat Seicento, Cinquecento, Uno, Siena and Palio Weekend, the car industry is the second largest exporter in Poland.

Chemicals industry

The Polish chemicals industry is a cause for pride. Companies producing basic chemicals (fertilizers, plastics, synthetic dyes, rubber, etc.) and rubber products noted a combined growth in value of production of over 12 billion euros. The sector also has great room for growth.

Rising demand for chemical sector products obliged Poland in the 1990s to raise production. Alongside the development of the motor vehicle sector, the demand for rubber goods also rose (mainly tires) and growth in the construction sector meant greater demand for PVC products. Investment outlays in the chemicals sector rose by the end of 2000 by 21.4%. Their combined value totaled almost euro 1.1 billion.

Polish chemicals firms are in the overwhelming majority traded companies and co-operatives. State-owned companies represent about 0.5% of all companies in the sector. The best-known companies of the domestic chemicals industry are Zaklady Chemiczne Police, Zaklady Azotowe Pulawy, Anwil Wloclawek, Stomil Olsztyn, Firma Oponiarska Debica and Zaklady Azotowe Tarnów. Foreign investors hold about 15% of shares in the largest chemicals firms in Poland. The largest foreign firms in the sector are France's Michelin, Britain’s BOC Group, the U.S.'s Goodyear and Japan's Bridgestone. Overall, the sector employs about 210,00 people.

Steel and iron mills, defense industry, shipbuilding

Before 1989 the metals and defense industries were very closely linked. The break-up of the Warsaw Pact, the main customer of goods manufactured by these sectors, hit these giants of the Polish economy sectors particularly hard, cutting off the contracts from which they had depended.

Before the transformation, the , as many other sectors, was characterized by over-employment, high-energy insensitivity, low productivity and low quality of production. Restructuring was therefore inevitable. The reform of the metals industry is a long-term process, although the first effects are already visible. One success is the reduction in employment in the sector and the rise in the quality of products offered, today on a world standard. The industry has a chance in the nearest future to compete successfully on the competitive market and make a stand against the flood of cheap, but low quality, products from Asian countries. Consolidation is designed to aid the process, lowering production costs, more effective and dynamic development and greater competitiveness. A step in this direction was the creation by the government of the Polskie Huty Stali S.A. consortium. The goal in setting up the Consortium is was the creation of an attractive economic entity from the point of view of foreign investors.

The entry of the Polish army into NATO has also meant the need to have the latest equipment, fulfilling the organization’s standards. Poland’s defense industry, which before 1989 produced for the Warsaw Pact, was not in a state to meet these demands and it was essential to rebuild this important branch of the Polish economy.

The project for restructuring the Polish defense industry was comprised of purchasing military equipment from abroad and simultaneously rebuilding and privatizing existing defense factories. The first step is striving to consolidate the production facilities with an R&D component on the Western model. The offset system, obliging purchases from foreign producers, is designed to support the process of reforming the sector.

Legislation lies down that the suppliers of equipment to the Polish army are obligated to buy from Polish producers or related arms firms a similar or higher quota. This principle also holds in the tendering process for multi-purpose planes for the Polish air force worth about $4 billion. Evaluations of three similar offers would be determined by the preparedness to invest in Poland’s arms industry.

An attribute of Poland's arms industry is above all its huge scientific potential: in engineering and R&D. The projects of Polish engineers are highly evaluated by Western armies. Arms factories have well-educated and flexible personnel and are able to adapt rapidly to the production of modern weaponry. Several Polish firms already co-operate with foreign companies. A further argument in favour of production in Poland of modern arms is the still relatively low cost of labor.

This temporary crisis in the industry did not hit factories producing army electronics, though. Warsaw's Radwar, which makes high quality radars, is turning increasingly high profits counted in the millions of zlotys. The situation at Gdynia-based Radmor, which enjoys great success on the international radio station market, is also positive. Many foreign companies see its communications products as of a higher quality than many foreign rivals. Przemyslowe Centrum Optyki (industrial optical centre), which deals with developing and producing targeting systems, and explosive materials producers also hold strong positions on the arms market. WSK PZL Rzeszow, which makes engines and jet plane parts, also does not complain from a lack of customers. Supply contracts to Asian, African and South American clients also represent opportunities for the sector.

Poland is one of the largest ship makers in the world, successfully competing with the Asian shipyards. In 2000, Poland was in fourth spot, after South Korea, Japan and china, in the world ranking of shipbuilding, with 5.7% of world orders on trading vessels. It was in top spot in Europe. The strong shipbuilding industry will help the EU compete with the shipyards of the Far East.

Polish ships had a strong reputation even before the changes of 1989. Stocznia Gdynia S.A. was set up in 1922 and in 1952 started to build large freight ships. Today, Poland has two main centers of shipbuilding: Gdynia and Szczecin. Grupa Stocznia Gdynia S.A. (to date, about 550 ships built there, a hundred different types for fleets from 20 countries; in 2000, it completed the largest ever freight ship ever built on the Baltic, with a capacity of 165,000 dwt) and in Gdansk (the largest repair yard in Poland; its main clients are fleets from the Baltic region – Germans, Norwegians, Danes). Stocznia Szczecinska, over 50 years old, has built more than 600 ships. In 2001, it had orders for 32 ships from German, Dutch, Russian and Danish fleets with a combined value of over $1 billion. It specializes in building large chemicals tankers and container ships.

Energy and the Mining Industry

Energy security is the most important element of Poland's energy policy (meeting the current and future fuel and energy needs of end-users by diversifying access to natural gas and oil supplies, improving domestic competitiveness and protecting the natural environment).

Future EU membership will mean taking on board all the EU's legal requirements. Poland sees this not only as an obligation but also a unique chance to skip the middle stages and benefit from the many years experience of more developed market economies, enabling its energy enterprises to effectively compete on this demanding market and offering the chance of diversyfying energy sources, something which has already been partially realized.

Rebuilding the northern port in Gdansk also created conditions for making Poland independent of a single source of oil supplies. This investment created the conditions for diversifying oil and oil-product supplies. The problem remains natural gas supplies to Poland. In the period 1992-98 three-gas pipeline connections were realized linking Poland to the German system. However, in 2001 a contract was signed to build a pipeline linking Poland and Norwegian gas fields, though 90% of gas supplies still come from Russia.

The Polish power grid system was, however, linked up to the Western European grid, thus increasing the country's energy security in the case of emergency and making it possible for Poland to sell surplus power. Poland's grid operator  Polskie Sieci Energetyczne(PSE), the largest seller of electricity in Poland, is also looking for revenues from other sources. It has invested for example in the telecommunications sector, buying shares in companies offering mobile phone services and inter-city fixed line telephone services. PSE has also engaged in a new project to link up to the net via the power grid. Soon it will be possible to use the Internet via computer and ordinary electrical socket. A telephone line will not be necessary. Thanks to activity outside the energy sector the power sector has noted high profits in recent years.

In Polish energy policy, as in EU policy, one can notice a clear rise in the importance attached to protection of the natural environment . Activities have been undertaken aimed at eliminating the sources, not just the symptoms, of pollution, for example. A key element in this strategy will be a greater role played by renewable energy sources. The necessity of setting up such technology was expressed clearly in legislation in Poland in July 1999. The share of renewable energy in Poland is gradually rising. Amongst other things, this is due to: the significant increase in the use of wood and wood-related sources, the setting up of several geothermal heating systems, several wind-powered power generators and many small water-powered generators, many heating plants and generators powered by gas from communal refuse dumps.

Reform of the coal industry Polish is closely linked to changes coming into effect in the energy industry. Having said that, the main source of energy in Poland remains coal, though it in recent years its share has consistently fallen. The multi-year plan to reform mining comprises, amongst other things, limiting production by closing unprofitable mines, reducing employment (with high compensation for miners at the same time), modernizing production and privatizing the mines. The first two points have in large measure already been realized - almost 40% employment reductions, and 23 out of 64 mines closed. There are also examples of mines, which, thanks to lower employment and simultaneous modernization of production, have managed to turn profits for the first time in many years. 

Brown coal mining is also an element of the mining sector. Poland has for many years ranked high on the world list of producers. The situation here is significantly better and the basic reforms needed in hard coal mining are not needed. This is mainly down to the low costs of exploitation (via the opencast method) and transport, as directly neighbouring brown coal mines is power generation plants. The largest seams are located in the area of Belchatow (in central Poland). The power generator there provides power to about 20% of consumers in Poland.

source: www.poland.gov.pl