Machine Market Poland: Good economic situation a boost for Polish machinery industry
Positive feedback from the Polish economy over the last few months, especially the growing economic situation in the industrial processing sector, are promises of bright future for the machinery industry in Poland, and it can be almost for sure assumed now that 2017 will be the fourth consecutive year to see the record numbers of machines and equipment sold.
Although the machinery and equipment industry in Poland has recorded production growth since 2014, it is noteworthy to see its marked slowdown between 2015 and 2016. During that period, the production volume increased, but only at a rate of 3.6-3.8%. Almost 20 per cent increase in the last three years can be attributed mainly to the very prosperous year of 2014. It was when the production increased by over 10%.
2017: Very good beginning
The first months of 2017 have brought not only a promise to repeat this result, but even to beat it significantly. In the first quarter of this year, the sales of machines and equipment increased by nearly 14%, while in the same period of 2016, a 3.6% decrease was recorded. Such a huge increase is a result of the above-mentioned improvement of the economic situation in the whole industry faced from the beginning of this year.
According to the Central Statistical Office (GUS), 14 out of 23 industrial processing sectors have recorded better results after the first quarter than they did a year ago. The following three recorded a slightly lower production dynamics but with a marked slowdown in the downward trend.
Production growth in the first three months of the year was achieved mainly thanks to existing pro-duction capacity reserves. Uncertain about the economic situation in the country, the entrepreneurs were reluctant to invest more. At present, however, they will rather have no choice. Firstly, they have already used up their reserves and, secondly, the economic situation encourages investing. In this situation, the manufacturers of machinery and equipment meet an exciting opportunity to win new contracts which, in long run, should translate into improvement in the financial performance of the entire industry, which was not at its best in 2016. Despite the increase in sales to over PLN 40 billion, the net profit was 6.1% lower and the profitability index decreased by 0.5 percentage point.
Challenges to give the entire industry a chance
Good prospects the industry is facing now should not, however, overshadow the threats that Polish companies will have to tackle. If not addressed properly, they might severely limit the development opportunities.
Polish machine manufacturers are still not very competitive on the European market in terms of products with complex design and technologies incorporated. As a result, Polish entrepreneurs are less likely to expand on foreign markets, and even in Poland they are often outrun by foreign com-petitors. To change this, there are three areas which need improvement: low innovation level of products and manufacturing processes, low specialisation of production, and entrepreneurs' unwill-ingness to invest.
This last thing appears to be of particular importance. According to GUS, every third company op-erating in the machine industry in Poland introduces innovations. In this respect, this industry occu-pies only the tenth place in the ranking covering all branches of industrial processing. A slightly bet-ter position (6th place) takes the machine industry in terms of the number of industrial applications to automate production processes.
At the same time, apart from the improvement in the afore-mentioned areas, Polish companies have a good opportunity to emerge in niches of the global markets, especially in production of large-size custom-made machines. These involve often single orders or short production runs at most. In this field, the competition from global concerns is not as strong as in the case of the most popular ma-chines in serial production. Some niches already identified in business practice of Polish companies include production of mining machinery and equipment for machining of heavy and oversized parts, such as marine engine shafts, aircraft engines and power turbines, components for metallurgical machinery or large excavators for open-pit mining.
Furthermore, the ever-changing industrial environment behind the Industry 4.0 concept poses a great challenge, but also a splendid opportunity. The manufacturers of machinery and equipment are challenged with increasingly new demands. Is is the ability to adapt product portfolio to new condi-tions that will continue to determine the chances for further development of the Polish industrial sector.