Poland - Shipbuilding
| yard | GRT 2004 | ships 2004 |
|---|---|---|
| Gdynia Group | 240,000 | 9 |
| Szczecin New | 184,000 | 8 |
| Others | 26,000 | 8 |
The Polish commercial shipbuilding and repair industries increasingly benefitted from work placed in its yards by the Soviet Union, the 1986-1990 Soviet 5-year plan called for the acquisition of 500 ships from Polish yards. This compared with expected deliveries of 180 ships during the 1981-1985 5-year plan and the 76 ships which were delivered during the previous 5-year plan (1976-1980). If future goals with respect to the Soviet Union were met, only approximately 25 percent of Polands's shipbuilding output would reach purchasers in the West, compared with 50 percent to Soviet Bloc countries and 25 percent to Polish shippers.
These developments would mean that deliveries from Polish shipyards to Western customers would be expected to decline by 25 percent when compared with those in the first half of the decade. Meanwhile, Polish shipping companies, reportedly desperate to replace out-of-date and commercially uncompetitive vessels, would be forced to go out of business, cut back their operations, or turn to Western suppliers of vessels to meet their requirements.
By the end of the Cold War the Polish industry was composed of six shipbuilding and six ship repairing concerns. Employment in the Polish construction and repair industries declined only slightly during 1979-81 from 59,500 workers to 59,200 workers. Declines in recent years have been more pronounced, however, with reductions decreasing the workforce by 9 percent to 54,100 workers in 1982 and then by 3 percent to 52,600 workers in 1983. Data are not available for employment in Polish shipyards in 1984. The level of commercial shipbuilding and repair operations in Polish shipyards declined during 1979-83. Commercial shipbuilding fell from 484,200 grt in 1979 to 416,000 in 1983, or by 14 percent. The number of ships repaired in 1979 totaled 768 (2.5 million grt). Repair activity decreased annually through 1982, when it totaled 588 vessels (2.0 million grt). In 1983 the Polish ship-repair industry repaired 599 commercial ships.
Before 1989 the metals and defence 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 Polish metals industry, as many other sectors, was characterised 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 organisation's standards. Poland?s defence 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 defence industry was comprised of purchasing military equipment from abroad and simultaneously rebuilding and privatising existing defence 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 lays 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. Its communications products are seen by many foreign companies 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 Rzeszów, 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 ship-building, 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.
At the end of the 1980s, the industry suffered greatly from drastic reduction in orders from the Soviet Union and other customers, the loss of government subsidies in the midst of production, and a rapid rise in domestic material costs for ships already contracted. Nevertheless, the shipbuilding firms were able to attract many Western licenses, and they retained a highly skilled labor force.
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 centres 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 specialises in building large chemicals tankers and container ships.
If modernized and restructured, the industry had the potential to significantly accelerate its production of modern ships, including fishing vessels, factory ships, trawlers, car ferries, container vessels, roll on-roll off ships, and tankers. The wellequipped Gdynia Shipyard was capable of building very large bulk cargo ships, but it operated at only 30 percent of capacity in 1991. Large new contracts were expected to more than double that level of production by 1994, however. In 1992 it seemed probable that the shipyard's very high debt would be eased by a two-step transition, first into a partnership with the State Treasury and ultimately into a private enterprise.
In 1991 the Ministry of Industry completed a restructuring program for the entire shipbuilding industry in cooperation with Western experts. In the larger size band, up to 20,000 dwt, European shipyards predominate with a strong export order book. The Gdansk Shipyard became a leading builder in this sector, and has taken over from Danyard. The problems of the Gdansk Shipyard highlight the potential problems of emerging Eastern Bloc shipyards and casts some concern over the very large number of orders taken by other Polish builders. Gdansk was unable to cope with the backlog taken and spent 1993 and 1994 extricating itself from bankruptcy.
Shipbuilding, including ship repairs, plays a significant role in the Polish economy. The industry was the third major Polish export in 2001, and it accounted for 5.2 percent of total export sales of industrial products. Between 1996 and 2000, Polish shipyard production was stable, at the level of approximately 500,000 compensated gross tons. Polish shipyards have always main?tained good portfolios of orders. They built a reputation for quality and timely execution of orders.
However, the industry faces enormous competition from shipyards in South Korea, Japan, China, and Germany. Internal and external factors pushed the Szczecin Shipyard into bankruptcy. The problems at the Szczecin Shipyard resulted in problems in arranging financing from Polish and foreign banks not just for this shipyard but also for the whole shipbuilding industry in Poland.
In 2003 the U.S. Overseas Private Investment Corporation (OPIC) agreed to provide a $10 million loan to a U.S. company to undertake the development of a downtown hub in the former Gdansk shipyard in Poland. The project -- a business and cultural center, plus housing -- "will ensure the preservation of key Solidarity buildings and monuments, as well as the environmental remediation of a former heavy industrial site, while ensuring continued productive use of the slipway area by the shipyard".
By 2009 the Polish shipbuilding industry faced one of the biggest challenges in its history. Assets of shipyards with a huge production potential were offered for sale. The sell-off rules, conditions and procedure are set out in the Polish Act on the compensation procedure at entities of special importance for the Polish shipbuilding industry, agreed upon with the European Commission. The Act, which became effective 6 January 2009, governs the sell-off of assets of Stocznia Gdynia S.A. (Gdynia shipyard) and Stocznia Szczecinska Nowa sp. z o.o. (Szczecin shipyard).
While the privatisation of Poland's shipbuilding industry continues to cause headaches, the privatisation of the steel industry has been described by analysts as a success. The EU shipbuilding industry was hit particularly hard by the current crisis, characterized by a complete lack of new orders, major problems in financing existing orders, overcapacity for construction of commercial vessels, irreversible job losses with further lay-offs forecast, and an ever growing number of bankruptcies and closures of shipyards and ancillary businesses. Additionally, in Poland and Romania specific circumstances contribute to a profound crisis of the industry. The situation in Poland was reflected in the current collapse of two major production shipyards in Gdynia and Szczecin.
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