Markets Poland: The need for more innovation
The significant dynamics of Polish economy fosters the growth of production of machinery and devices, the value of which reached almost PLN 49 billion in 2018. In Poland, there was a unblocking of investments, which resulted in more orders for machinery industry from various sectors of domestic production. Furthermore, the machinery industry itself is investing in production capacities, strengthening its market supply and technological lead, thus slowly reaching the standards of industry 4.0.
The picture of the economic and financial situation of the machinery industry, however, is not absolutely clear. It is true that between 2016 and 2018, the net revenue from the sales of goods increased by the total of 20 %, reaching the level of PLN 44.7 billion in 2018. However, the net financial result in 2018 (PLN 2.3 billion) was lower by 5 % compared to the previous year. Furthermore, there was quite a significant – by 0.8 percent point – decrease of the net turnover profitability index which was 5.7 % in 2017 and 4.9 % the year later. Of course, the quoted GUS (Main Statistical Office) statistics have the nature of collective data and reflect the average situation in the industry. Machinery industry, however, consists of enterprises with a strong market position in excellent economic and financial position and entrepreneurs who are much worse off.
The industry’s potential
Poland, with its share of the European machinery industry’s production at the level of 1.7 % belongs to the group of smaller (12th place) producers of machinery and devices. However, the country plays an important role in certain sectors of this market. In the machinery industry (PKD 28), there are almost 5900 entrepreneurs in Poland (2017), the great majority of which are small companies. There are approx. 400 medium enterprises (employing up to 250 people) and as few as 80 large enterprises (employing over 250 people).
In 2017, the machinery industry was responsible for approx. 4.6 % of the gross added value generated by the whole Polish industry. In terms of that, it ranks 8th in the group of 24 industries comprising industrial processing. The machinery industry is an important source of domestic employment – at the end of 2018 it employed the total of 128 thousand people, i.e. 5.3 % of the total workforce employed in the enterprise sector. In favourable economic situation, this number has been growing successively for the last five years. The factor, that limited the sector's labour demand and is responsible for the fact that, despite positive market prospects, employment growth has not been and will not be particularly significant, is the improved labour efficiency in the domestic industry as a result of technological progress and pressure on the rationalisation of production costs.
The structure of production
The machinery industry’s offer consists of five main segments which include the production of, amongst other things, general use machinery (e.g. engines, bearings, cogwheels), machine tools for metal and other materials, machinery and devices for agriculture and forestry, specialist machinery and devices for the mining industry, construction industry, food industry, paper industry etc.
Production of machinery and devices is generally scattered across the whole country. The largest numbers of such companies operate in the Mazovian, Silesian and Great Poland Provinces with the industrial traditions of the given region impacting the type of manufactured machinery. In Łódzkie Province, there are quite a lot of companies supplying textile machinery: Warsaw, Poznań and Wrocław are the leaders in machine tools whilst in Silesia there is a concentration of entrepreneurs manufacturing machinery and devices for the mining, steelworks and construction industries.
The domestic producers’ offer is supplemented by a wide selection of machinery and devices imported by the representatives of international concerns operating in Poland which are keen to open their branches and departments here. This is the consequence of the fact that Poland is an absorptive market as well as a convenient base for entering other countries of Central and Eastern Europe.
With a slight minus
Domestic producers of machinery and devices are not able to fulfil the total demand of Polish industry in this respect, especially since some of the products manufactured in Poland end up abroad. Therefore, import (especially from Germany) plays an important role in supplying the market with machinery and devices. It is also necessary because some types of machinery, particularly the ones of high technological quality, are not produced in Poland. Poland has a small deficit in the market exchange of electromechanical industry products which was in the middle of € 0.4-0.5 billion between 2017 and 2018. The imbalance in trade in machine tools (including spare parts, additional equipment and accessories) is greater and, according to the statistics of the German Association of Producers of Machinery and Devices (VDMA in 2017 only trade with Germany amounted to € 334 million, Polish exports to Germany € 97 million and imports of German machines to Poland € 430 million. This does not change the fact that the exchange’s results within the area of machinery and devices confirm international competitiveness of Polish suppliers, at least within the scope of products of medium technological advancement.