Business report:

Poland Poland’s track record as a contract boatbuilder for a number of key European and US yards is well documented. However, demand for home-grown brands is on the rise too — and not just in export markets, as early indications suggest that an increasing number of ‘middle-class’ Polish consumers are slowly waking up to the pleasures of boating. Words: Bransom Bean

Poland has a proven boatbuilding track record, and there are early signs that its domestic market may be taking off too. This is the now spruced-up marina at Gdansk.

In this report: Facts and figures

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Oar inspiring

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Business report links

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o say that an awful lot has been happening in Poland’s marine industry since IBI’s last survey of Poland in 2003 would be an understatement; and although the activity in the boating industry in Poland is impressive indeed, it goes way beyond the marine industry. Real estate prices, for example, have risen from 300 to 500 per cent and not just in the cities where there’s a building boom and hotel shortage. “Poland is developing at all social stratas and in wealth in general,” says Götz Linzenmeier, president and owner of

International Boat Industry • www.ibinews.com | November 2007

Aluship Technology and newly formed Aluyachts in Gdansk. On the marine front, perhaps the most significant change is that the long dormant domestic boat market may be stirring at last, although still waiting for a larger middle class and for facilities like marinas with just the basic facilities. Of course, for the country, Poland’s entry into the EU on May 1, 2004 is perhaps the most significant event. But for the marine industry that’s been both good and bad news, although most Polish builders say they are coping with the

Poland in summary:

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Strengths

• Low-cost workforce • Respected boatbuilding tradition • Strong work ethic Weaknesses

• Poor infrastructure • Workforce increasingly lured abroad • Negative image of ‘Made in Poland’ higher wages and associated exodus of skilled workers to other parts of the EU. “Every time I go out there, there’s a new boatyard,” says Philip Scott of Parker Poland. From narrow boats to superyachts, if it floats, the Poles are building it and shipping it all over Europe and increasingly far afield to North America, the Middle East and the Antipodes. In his recent speech at the September opening of Brunswick’s new Polish facility in Augustow, which coincided with the signing of a 10-year deal with Delphia, Slepsk and Balt to buy Polish-built fibreglass boats, Brunswick’s Jacques Bronchart said: “Everyone seems to be discovering what we’ve known for a long time, Poland is a great place to be in the boat business.” And the attraction is not just lower wages; a reputation for a high work ethic, build quality and a tradition of building boats factor into Poland’s boating USP. Indeed, on most fronts, things generally look rosy for the boat industry in Poland, at least as a source of exports — but there are at least one or two clouds growing on the horizon and interestingly, what’s happening in Poland mirrors in many ways what’s going on on a much grander scale in China. Tomasc Kosek, although educated as a journalist, is Yamaha Marine’s sales and marketing specialist. “Young people are coming into the industry, which is a good thing as many in the industry are 50 to 60 years old,” he says, “Five years ago the computer was a problem and people were sitting in their shop waiting for someone to come in. Now younger people are coming in with a selling orientation.” Some in the Polish boat industry who wish not to be named muse that despite being the sixth largest export industry in a country previously known for agriculture,

Boating geography: Boating is, unsurprisingly, in its infancy in Poland. On weekends, the three million residents of the Polish capital, if they go boating at all, drive north to Zegrzynskie Lake and Kruszywo marina — a roughly converted commercial port where a rusting hulk of a sand dredger rests to remind of its origins. Depending on the source, reasons given for the lack of freshwater facilities range from very tight planning controls on waterside construction to lack of capital as well as lack of will on the part of the local and national authorities. Having said that, commercial harbours like Gdansk and Gdynia are being gentrified and mature marinas such as Marina Gdansk in Gdansk and Gdynia Marina in Gdynia have virtually doubled in size. The Baltic holiday resort of Leba (in English pronounced “Web bah’) provides another hopeful

example with a new 180-berth marina and facilities including fuel, repair, showers, hotel and chandlery. People from the south of Poland actually see driving through the Czech republic and Austria to the balmy Adriatic just as easy as braving the current state of Polish roads for a less than tropical holiday beside the Baltic.

Facts and figures: Population — 38.1 million. Language: Polish. Currency — Polish Zloty (PLN): UK£1= 5.44 PLN, US$1= 2.67 PLN, E1=3.75PLN Government — Following the collapse in August of the unstable coalition between the right-wing Law and Justice party (PiS), the populist Samoobrona (Self-Defence) and the Catholic-nationalist League of Polish Families (LPR), an early parliamentary election will be held on October 21. The opposition centreright Civic Platform (PO) is likely to emerge as the largest party from the election, but will find it difficult to form a government. Unless the PO and the PiS can come to some kind of agreement, which seems unlikely, political instability will continue. Economy — Real GDP growth is forecast at 6.5% in 2007 (up from 6.1% in 2006), but is then expected to slow to 5.1% in 2008 and to just over 4% per year in 2009-12. Export performance will continue to be good, but the recovery in investment will push up imports, widening the current-account deficit.

the Polish government “thinks we’re just an ‘interesting industry’.” Others cite an infuriating amount of red tape along with planning and pollution regulations far more strict than Europe. Having said that, three years ago the government eliminated the 40 per cent

Boat Park:

82,000 Boat ownership per capita:

1:756

Inflation is still low, although price pressures are rising. Emigration and continued employment growth will lead to a gradual fall in unemployment. Consumer price inflation will rise to 3% in 2008, but, assuming that the National Bank of Poland continues to raise interest rates, it should return to close to the NBP’s target of 2.5% by 2010. Industry body — Polska Izba Przemyslu Jachtowego i Sportow Wodnych (The Polish Chamber of Boating Industry and Water Activities) Email: [email protected] Web: www.polskiejachty.com.pl

luxury tax which, when added to a 21 per cent import duty and 22 per cent VAT, almost doubled the cost of boats entering Poland, which can only do good things for Poland’s indigenous market. Continued on p141

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Brunswick’s opening of its Augustow base in September coincided with a 10-year deal to buy Polish boats.

• Big yards are expanding • Boats are getting bigger • Boats are finally appearing in the

regular press Builders are advertising their products to attract a more exclusive audience Customer service is improving, and Distributors are having more open days and corporate events

• • •

But to understand the current state of play in the Polish boating industry the first step is to try to look at recent history and attempt to stratify the players.

Embracing the future The first might be termed “export”, those companies selling for export almost exclusively and those selling largely for export but also the tiny domestic market. Each of these in turn can be divided by those selling through big intermediaries like Brunswick and those like Galeon, who see such associations as stifling. Then there are ‘immigrants’ like Sunreef, Aluship/Aluyachts and Aqualine, where non-Polish interests — in these cases French, German and British — came to Poland as economic pioneers some years ago and have now become part of the Polish boating industry fabric. Until late in Poland’s communist era, although Poland was known as a deep-sea maritime and shipbuilding country, its pleasure boat industry wasn’t so well known and any exports were carefully camouflaged to hide their Polish origins to please the sensitivities of Western

marketing departments. With the fall of communism, a now substantial Polish boatbuilding industry with great skills in building in fibreglass went through a shake-out as the lessthan-commercial mentality of state-run industries gave way to capitalism. Most of those “businesses” like PTTK “FOTOPAM”, accustomed to “marketing” through central buying agencies, had collapsed by the early 1990s, spinning off Polish entrepreneurs who happily went off to establish their own enterprises. The likes of Delphia, Balt and Slepsk were born and, through lots of experimentation and old-fashioned hard work, they began to grow. Although some marine interests outside of Poland long had positions in the country, other outside interests scrambled in over the crumbling Iron Curtain to capitalise on lower wages and Polish skill with GRP. Freedom from communism, however, didn’t mean wealth to spend on boats. So Poles who were true nautical enthusiasts continued to sail and putter around in various craft they loved, assuming they didn’t move to the UK to take higher paying jobs, that is. In 2004, entry into the EU burst open markets, knocking down administrative, customs and travel barriers in what was to become a two-edged economic sword and a two-way labour street — or rather, as it turned out, an eight-lane motorway that siphoned off around one million skilled workers. The rising level of wealth fuelled

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If you were to sum up what’s going on in the boat industry, you could say:

Continued on p144

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Oar inspiring: A modern performer in an old-fashioned world The drum beat of technology sets the pace for most industries. However, a small oar manufacturer is bucking the trend with its crafted products for a niche market. From its address, you might assume that Szmagli´nski Zakład Szkutniczy is just another Polish boatbuilder stuck in the middle of the countryside. Certainly, if you don’t speak Polish the company’s name offers no clue. Even as you turn into the drive, the impression from the exterior is that you’ve arrived at a barn and you might expect to hear the sounds of cattle from inside the building and have the characteristic barnyard smell accost your nostrils. But when you visit Szmagli´nski Zakład Szkutniczy, the only odour is the special perfume of wood shavings and fine varnish because at Szmagli´nski Zakład Szkutniczy they make fine wooden oars. In fact, they are the second largest producer of wooden oars in Europe. And lest you think in the days of broadband internet connection and carbonfibre technology there’s no market for wooden oars, Czesław Szmagli´nski and his 15 person team struggle to keep up with demand by producing a derisory 40,000 oars a year. No giant cranes, no queue of lorries jockeying for position to haul away another score of fibreglass boats — just lathes and sanders and saws. In fact, Szmagli´nski says he tried making oars out of aluminium but there was certainly not the demand

increased demand for housing and cars, but only lately luxury items like boats. So even today, three years after joining the EU, satisfying any local demand for boats is not exactly a big target on most manufacturers’ radar screens. And anyway, like much of the rest of the world, if every Polish family who had the money rushed out tomorrow and bought a 22ft boat with a 150hp outboard, they’d have no place to put it, except on a trailer in their new backyard.

Czesław Szmaglinski ´ in the modest factory that is producing around 40,000 wooden oars a year.

to make it worth the effort. Twenty years ago Szmagli´nski ran the oars department in a national shipyard. Finding himself out of a job when the yard collapsed, he set up making 100 oars each month — alone. Szmagli´nski confirms that most of his 40,000 oars, from canoe paddles to 5m (16ft) monsters for the German life-saving agency, are for export. Szmagli´nski says the secret to his success is good quality wood with no knots and a happy workforce. He thinks he has lost only one person to Europe since

Poland joined the EU, but agrees that overall, Europe has been good for business, helping with customs and bringing more clients from Western Europe — but most importantly, bringing a constant demand to what had been a seasonal business. A huge kitchen and dining room that looks like what you’d see in a home of a 15-member family is his employee lounge, which possibly explains how Szmagli´nski has dealt with employee retention. No knots in the wood and the Polish reputation for quality explain the rest.

“When it comes to composite experience, these people have resin in their blood.”

So who’s building what? Most Polish boatbuilders are located in the north of the country and surprisingly, many builders have their manufacturing facilities literally in the middle of the Polish countryside, on former farmland surrounded by various types of agribusiness. This means ironically that you seldom find one beside a convenient river, lake or canal or in a port like Gdansk or Gdynia. Of course, this presents logistical challenges because finished boats must be trucked out over a tired and inadequate road system, thus limiting size.

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“You’ve heard of Silicon Valley, well this is ‘laminate valley’,” says Christopher Scott, sales manager for Parker Ribs. “When it comes to experience in composite, these people have resin in their blood, they’re GRP’ing at home.” Delphia’s Wojciech Kot echoes that, “We’re here because the skilled people are here; we can sort out the transport.”

The Brunswick Trinity In September in the lakeside village of Augustow, with lasers slicing through

International Boat Industry • www.ibinews.com | November 2007

artificial smoke, the giant marine conglomerate Brunswick cut the ribbon on its new Polish distribution facility. Any doubt of the importance that Brunswick associated with this event was eliminated by the fact that the event was presided over by none other than Brunswick’s European president, Jacques Bronchart. Obviously, the bricks and mortar commitment of its new modern facility was significant on its own, but according to Bronchart it was also defensive move to

“For us it is a stable situation, almost a guarantee from a substantial, good-paying partner; Brunswick brings a big dealer list, takes over the marketing costs and pays for the development of prototypes; they also bring help with logistics.” Balt builds over 2,000 boats per year. Under the Quicksilver brand name they include the Quicksilver 360, 410, 430 Flamingo, 470 Sport, 540 Pilothouse, 555 Commander, 555 Walkaround, 640 Pilothouse and the 720 Commander and under the Arvor brand the 190, 210, 215 and the 215AS.

Management at J W Slepsk confirmed that the deal with Brunswick still allows them the right to sell to Polish market while, “… getting all of our parts from Brunswick, contacts, new relationships and training.” Slepsk actually started business in 1989 as a construction company, built five boats in 1990 and is now one of the largest boatbuilders in Europe with 600 employees and two yards turning out over 2,500 boats a year including Sea Rays for Continued on p148

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protect Brunswick’s Polish source of supply and to capture, without smothering, the entrepreneurial spirit of three big Polish builders Delphia, Balt and Slepsk. While the pleasure boat market in the US was tumbling, Bronchart explained that his vision involved a long-term joint venture which, at the total production rate for these three builders, could amount to 60,000 or so boats over the next decade. The satisfied looks on the faces of the owners confirmed that they, not surprisingly, thought it was a good deal too. Besides shifting much of the marketing burden to Brunswick, the integration process includes Brunswick embedding its own staff in each of the Polish operations to assist with quality control and provide systems and logistical support. From the sprawling modern facilities of Delphia to the cosy but efficient operation of Balt, how much help each individual company will actually need, of course, varies. But all three seem more than happy to accept it within their own strategies. Interestingly, all three have “back doors” left open by Brunswick to do their own thing; and their own thing is that old Polish staple, sailboats. The effect of the Brunswick deal is, while almost guaranteeing sales of their powerboats, Delphia, Balt and Slepsk are allowed to build and sell sailboats to anyone, anywhere they want. Balt’s Marek Kozłowski confirms his satisfaction with the deal.

Top: Marek Slodownik and Wojciech Kot at Delphia. Above: Women join the work force at Sunreef.

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Business report: Poland

the European market. Interestingly, and perhaps an endorsement of Bronchart’s strategy, they also refurbish moulds for the US Sea Ray factories.

Business report links

www.ibinews.com/ibinews/replinks

Aluship/Aluyachts

www.alushiptechnology.com

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Independent thinking

Bakista

www.bakista.pl

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Delphia’s Wojciech Kot, who owns and manages Delphia with his brother Piotr, is satisfied with the deal with Brunswick as well but, while Balt and Slepsk might be said to have only dabbled in sailboats, a visit to Delphia’s new facilities just down the road shows that Delphia is doing sail on its own, and in a very big way. After all, Wojciech Kot is an avid ocean sailor and his company a leading sponsor of yacht racing. “Actually, our total production is now only 55 per cent Brunswick,” says Kot, who characterises Delphia as a small family business turned into a European yacht leader. A visit to Delphia’s website shows why. There’s not a powerboat in sight. Delphia bills itself as, “The biggest sailing boat producer in Poland”. Delphia has been building sailboats from the start in 1990 when its brand name was Sportina, and hasn’t been waiting around to have Brunswick help him with the marketing. Delphia has an expanding dealer network in the USA, Russia, Japan, Australia and South Africa, selling the 300 or so sailboats the company produces as the Delphia 40, 37, 33, 29, 28, 26 and the 24 sport type. Employing approximately 650, Delphia also produces the motorboats Cortina 480, 555 and 620 and for Brunswick over 2,500 Quicksilver motorboats. As Delphia builds ever larger boats, Kot admits that the inland location presents transportation challenges but is unperturbed. At the other end of the spectrum and proud to be independent, is Galeon, founded and run by Polish deep sea master mariner, Captain Wieczysław Kobyłko, who woke up one day, asked himself if he was going to retire at sea and went out and bought half of a company that employed five people building Lasers for the Polish market. As the company grew it went on to in his words “cooperate” with the likes of Brunswick and Jeanneau.

Balt

www.balt-yacht.com.pl

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Delphia

www.delphiayachts.com.pl

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Galeon

www.galeon.pl

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Galeon and Sunreef But as of 1997, he describes the company’s status as totally independent. “I escaped from that umbrella,” he says. “Now it’s one decision maker, no long-lasting contracts and nobody telling you what they want.” Except presumably the market. Today employing over 800 people in its current facility, Galeon can build boats up to 16m (53ft) and is marketing them to

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Parker Poland/Parker RIBs www.parker.com.pl

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Sunreef Yachts

www.sunreefyachts.com

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Slepsk

www.slepsk.com.pl

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Gdansk marina has virtually doubled in size as the once commercial harbour undergoes a facelift.

Europe and the Persian Gulf with three dealers in Germany, one in the UK and possibly the first soon in the US. Unlike the Brunswick Trinity, Galeon does not build sailboats, building instead a range of outboard motorboats under the Galia brand name from 4.25m (14ft) open to a 7m (23ft) cabin. Galeon has reached outside Poland for design to the UK’s Tony Castro. Its inboard models are marketed as Galeon and range from the Galeon 260 cruiser at 8.37m to the twin-engined, three stateroom Galeon “530 Fly”. But with a Galeon 640 and 850 on the drawing board Kobyłko’s solution to narrow roads is a new riverside yard on the six hectare site of an old brick factory in Wislinka with 300m (984ft) alongside a 10,000m2 harbour. Another Polish builder of big boats is hidden away in converted brick buildings in the Gdansk shipyard. Just a few minute’s walk from the gate where Lech Walesa and Solardarity set out to change the world, a French expatriate is building catamarans, big luxury catamarans, in

International Boat Industry • www.ibinews.com | November 2007

aluminium and fibreglass, sail and power, under the brand name Sunreef. In 1993 engineer Francis Lapp set up a company in Warsaw providing electrical and sanitary systems, HTEP, which by the way continues to thrive dealing with the ongoing hotel room shortage in Poland. Having bought two catamarans in Madagascar, he decided that because most people wanted stability at sea he would build catamarans starting with a 74 footer in 2002 which he built on spec. Production ramped up in 2003 with 15 yachts from 19m-23m (62ft-74ft) launched to date and now the company also provides management and chartering services. All design work is handled in-house.

Getting bigger Sunreef’s order book now shows two 62’s, two 67’s power, two 67 sail and in spring of this year they signed an order for a 31m (102ft) cutter-rigged, double deck. With business good and designs for boats Continued on p150

Business report: Poland

up to 46m (150ft), like other Polish builders, Sunreef is building a new yard. Eclipsing both Galeon and Sunreef in the Polish big-boat stakes is Aluship Technology and Aluyachts, owned and managed by another expat, this time from Bavaria via Hamburg. Of the three, Aluyachts is probably the closest to being a superyacht builder in the classic sense. Trading now for 17 years, the business was established in 1990 in Hamburg by Götz Linzenmeier to build aluminium hulled sailboats of between 10m-17m (33ft-56ft). “After two years, we moved to Gdansk to take advantage of production efficiencies, especially labour, Polish workers have a tradition of quality,” says Linzenmeier. “We’re interested in value, that means at least the same quality at the best price and generally we are 15-20 per cent lower in price.” In 1995/1996 the company moved into specialised marine aluminium construction and now has 120 permanent employees with up to 150 more on subcontract status joining as work requires. The physical plant includes an enclosed 10,000ft2 building hall and a 3,000ft2 administration building on three hectares. “We have plenty of room for expansion,” says Linzenmeier. Aluship Technology engineers and builds hulls, superstructures and yachts, generally in the 40m-50m (131ft-164ft) range but the smallest is 36m (118ft). In the last four years Aluship has built all of the superstructures for German builder, Oceanco and its production starred in this year’s Monaco Yacht Show as the superstructure of the largest yacht, Alfa Nero. Other superyacht clients include Heesen and Tyssen Krupp’s NobisKrug.

for the British canals and an 18m (60ft) sea-going Dutch barge. The company began producing bare hulls in Poland over five years ago using various independent fabricators. To date they’ve completed 150. “We came first to capture the value created by cheaper labour coupled with a better skill set, but frankly, it was not as easy as it might seem; in fact, it was very capital intensive,” Chris Hill, head of Aqualine, observes. “There’s a different set of problems; we were really surprised at the amount of red tape there is; it’s far worse than the UK.” Obviously pleased with the result however, for the last four years it has been doing it themselves out of their own 40,000ft2 facility with 70 Polish employees in Gdansk, no longer building just bare shells but now completely outfitted boats — engines, woodwork, cabinetry, kitchens and baths — aimed at the high end of the UK market— and their order book backlog is running at almost a year’s production. As if that’s not enough diversity, Britishborn Phillip Scott is building RIBS.

Having married a Polish girl in 1972, Scott moved to Poland in the depths of the Cold War. In a gross understatement he says knowingly, “business was different then. Poland used to be a sailing country.” Scott was actually involved in two businesses, the Mercury distributorship and distribution business just outside of Warsaw and a joint venture with Model Art, the company that produces the RIBS largely for law enforcement and SAR. Currently producing six models from the 16.7ft Parker 510 to the full wheel house Parker 900 Baltic the first of six 10m (32ft) boats have been delivered to Bulgaria. He started building RIBS for export then bought moulds and imported tubes. Now at full capacity with over 100 employees, Scott expects to treble production and expand into the leisure market.

Proud to be Polish in the EU Of course, the biggest thing to happen to Poland in the last five years is Europe, Continued on p153

Superyacht expansion Last year the company established a dedicated superyacht company, Aluyachts, staffed by a team of German and Dutch Engineers to build vessels in aluminium and steel of 35m-50m (115ft-164ft), the upper size limited to avoid competing with its sister company. Linzenmeier says the company is now anticipating contracts for a 43m (141ft), a 47m (154ft) and a 50m (164ft) and is planning on building two yachts per year. A new 50m (164ft) yacht is expected to be laid down in the spring of 2008 and the yard is now building a 46m (151ft) “commuter” capable of 26kt for the Mediterranean. Not far away from Aluship, also in Gdansk, the UK company Aqualine is building narrow boats, wide beam boats

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Leba’s new marina may provide a glimpse of the future with its 180 berths, fuel services, hotel and chandlery.

On a mission: a unified voice for the industry Founded in January 2007, and for three years previously the ‘Polish Society of Marine Industry’, the body representing the pleasure boat industry in Poland is the Polish Chamber of Marine Industry and Water Sports, currently chaired by Delphia’s Wojciech Kot with recently appointed executive director Marek Slodownik. Membership now stands at 110, including engine manufacturers, builders, distributors, charter companies, sailing schools, equipment distributors and publishers. The Polish Chamber of Marine Industry and Water

International Boat Industry • www.ibinews.com | November 2007

Sports defines its mission: • To influence legislation affecting the industry in Poland providing expert advice to Parliament as they consider new regulations. • To provide a unified voice for the Polish marine industry. • To promote Polish products at boat shows around the world but particularly in Europe, also organising trade missions and study tours to different countries. • To prepare annual reports and the other publications regarding the potential of the Polish Marine Industry.

Business report: Poland

Zegrzynskie Lake and the Kruszywo marina, a 35km drive north of the capital, Warsaw.

Improving the infrastructure In general, the benefits of Europe include no borders, no customs, no barriers, harmonious laws and now it’s easy for builders to visit boats for after sales service. For those wanting to follow the example of marine giant Brunswick or British Aqualine, Europe means even more comfort in relation to the legal system and government stability. And of course European money is doing wonders for the infrastructure. Warsaw’s Frederic Chopin (Okecie) International airport with its fascinating collection of Western and former Eastern bloc aircraft could not be closer to downtown. And the new terminal, which will bring capacity up to 15 million passengers per year, is already a challenge to any in Europe. In Poland, if you want to see the Polish version of those winding cobbled Spanish

roads of a quarter century ago, you’d better be quick; those blue European Community roadside signs are sprouting up everywhere in the Polish countryside confirming where much of the money is coming from to pay for all those Caterpillar bulldozers moving in to build new roads —but don’t lower the suspension on your Ferrari quite yet. Roads in Poland are terrible and traffic all but stops cities like Warsaw at rush hour. Talking to business people, it is almost inevitable to hear eventually, “…and in communist times…” But politically and economically, the country has moved on and not just because salaries, pensions and jobs ‘guaranteed’ under communism are gone. “Young people want to finish and forget,” says Tomasz Kosek, but he goes on to emphasise that while Poles are enthusiastically embracing Europe, “Uniquely in Europe perhaps, we have an almost American style patriotism.” However integration with the EU has had a major negative impact, particularly on the labour pool. It has been estimated that over one million Poles have left the country for work in other European countries where wages are higher, for now anyway. Even for a country of 38 million, that’s significant. “The joke is, in England now, boatbuilders are having to hire Polish translators because that’s all they speak on the shop floor,” comments Marek Kozłowski of Balt. Now freed of the artificial restraints of communism and ruled instead by the very unforgiving capitalist law of supply and demand, Polish boatbuilders are finding it harder to retain skilled workers.

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or more precisely, membership in the European Common Market and all that means for business. And while most people think that it will be four or five years until the redoubtable Zloty yields to the Euro, that minor monetary inconvenience doesn’t seem to be holding Polish business back at all. If you had to sum up Europe’s effect, Poland is like Spain 25 years ago with a little bit of Ireland stirred in for good measure. Remember the creaking Iberian infrastructure back then, the infuriating afternoon siesta and that long, dusty ride downtown from Madrid’s Barajas Airport? However, in Poland today, you get the feeling that the Polish have always been too busy to take time out for a siesta anyway and aren’t going to break that tradition now that the economic sun is shining brightly.

Continued on p154

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Acknowledging that take-home wages are up 10 per cent, Delphia’s Kot projects a lack of concern. “Labour’s cheaper because Polish workers work harder and more efficiently, creating more value,” he says. “Four years ago, one Delphia took 1,040 hours to build. Now it’s less than 1,000 and, three years ago, engines were actually more expensive for us.” “Yes, we think labour is up 30 per cent just last year and maybe 20 per cent the year before, but it will never level out with Europe,” says Galeon’s Kobyłko. Having said that, he admits, “We squeeze every cost today.” Most builders see it as a challenge but none see it as being fatal any time soon. “At Delphia, we see the challenge as continuing to provide value, and with the consistent quality of Polish workmanship and our ongoing innovations in production there should be no problem,” says Kot. To retain employees, Sunreef is using long term contracts. Slepsk is offering more benefits, training and company excursions. Aluship acknowledges that many skilled workers have gone to the EU but they see many returning. However to make sure they wander no more, the company has improved pay and benefits including a football team.

Still sailing after all these years Trying to understand the embryonic Polish domestic market is slightly more complex than you’d think at first. And it’s not like there’s nowhere to go boating in Poland. With almost 10,000 bodies of water larger than one hectare (two and a half acres), Poland has more lakes than almost any country in the world and in Europe only Finland has a higher density. Poland’s largest lakes, covering more than 100km2 (62m2), include Lakes Sniardwy and Mamry in Masuria. Poland’s largest rivers, the Vistula, the Oder, the Warta and the Bug, total almost 5,500km (2,200m). The country’s sandy and largely undeveloped coast along the Baltic Sea is pristine — once you get out of Gdansk and Gdynia — and 528km (328m) long. One problem is wealth, or rather the lack of it, even after entry into the EU. “Boating is still a very expensive sport in Poland,” says Kosek. “It needs a bigger middle class to grow.” And it’s easy to see why. At the moment a boat with, say, a 150hp outboard engine costs 100,000 zlotys or E25,000. If you work in Warsaw your salary is in the order of E1,500 per month; in the rest of Poland it’s only E800-E1,000. “First thing people want is a flat, then a car, then a house, and only then a boat,”

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Wojciech Kot and a Delphia 38 due for shipment to the USA. 55 per cent of its production is for Brunswick.

observes Balt’s Kozłowski. So it’s not so surprising that there’s a big market for small fishing boats and sailboats. The tradition of sailing has been borne out of necessity, springing from Poland’s recent history. Under communism petrol was scarce but there was always plenty of very inexpensive free wind. While really accurate domestic statistics for boat and motor sales are difficult to come by, again the Polish government considers the pleasure boat industry as merely, ‘an interesting industry’, vendors are beginning to see a change. “Over the last two years we’re not just seeing tire-kickers,” says Kosek. Interestingly, most boats are sold for cash, typical of most former communist countries. Also like former communist countries, Kosek observes, “It’s getting more and more like Russia, Poles are starting to want the biggest, the most expensive and they want it now.” Kosek sees a gradual shift from longtime boating enthusiasts spending evenings and weekends putting up with something less than state-of-the-art:

International Boat Industry • www.ibinews.com | November 2007

“Ready to go package deals with engine and boat are becoming popular, it’s no longer just the boat aficionado.” “Five years ago the average boat sold in Poland was seven metres, now the average is nine metres,” comments designer Jacek Centkowski. For someone who has seen 50,000 boats of his design produced, Jacek Centkowski is an unassuming man. In the marine business for twenty years and a graduate from Polish Academy of Sciences his entry into the marine industry was his job in ship propulsion division of a large Polish shipyard.

Growing motorboat market Although he is a keen sailor, Centkowski presides over various aspects of design for Poland’s biggest builders, Delphia, Balt Slepsk and also Galeon and Ostruda and therefore has a front row seat on the Polish boating industry Historically he says Poland doesn’t produce big boats because they must go by road, 2.55m (8.37ft) is the widest possible Continued on p157

Business report: Poland

without an expensive escort which means most boats — 80 per cent of the market are less than 7m (23ft). But the Polish market for motorboats is growing, he observes. “In the world, 70-80 per cent of pleasure boats are power; in Poland, it’s the reciprocal. The cost of fuel has been a problem and, of course, the Mazurian Lakes are not good for motorboats. In general, Poland needs more marinas and a bigger middle class.” And it’s not like the people of Poland aren’t looking at boats either. There are now three Polish boat shows with the biggest in Warsaw each March, another in Lodz in early autumn and the Gdansk Wind & Water show in August. But you have only to walk along Warsaw’s waterfront beside the Vistula River to realise that there’s a long way to go before boating in Poland is going to rival The Solent. Even on a warm, late summer afternoon, on the wide, slow-moving Vistula that sweeps through the centre of town, there’s not a boat in sight, possibly because there’s nowhere to moor one. Indeed, on weekends, the three million residents of the Polish capital, if they go boating at all, drive 35km north to Zegrzynskie Lake and Kruszywo marina — a roughly converted commercial port where a rusting hulk of a sand dredger rests to remind of its origins.

— unspoiled sand dunes or not. Another issue is the popularity of Polish boats with the rest of the world. “Such is the demand for Polish-built boats in Europe that Polish builders don’t worry about Poland,” says Kosek. To prove the point, a natural craft for the beautiful but shallow Mazury lakes and their connecting canals could perhaps be the British narrow boat being built in Gdansk. “We know about those lakes,” says Chris Hill, owner of The New Boat Company and head of Aqualine. “We just have so much

to do in our own market, we haven’t really considered it.” To get another angle on the domestic market, a look at the chandlery business shows that Poles are spending money on boating. Bakista is a mail-order chandlery with a 200m2 shop at the marina in Leba. In business for only three years, the company saw growth of 300 per cent in its first two years. Its 2007 catalogue is 20 per cent bigger than the previous year and a second Continued on p158

Growing domestic interest

No.175 Reader Enquiry Service at www.ibinews.com/enquiry

Depending on the source, reasons given for the lack of freshwater facilities range from very tight planning controls on waterside construction (which long term will thankfully no doubt prevent some of the lakeside eyesore and overbuilding common in other countries), to lack of capital as well as lack of will on the part of the local and national authorities. Having said that, commercial harbours like Gdansk and Gdynia are being gentrified and mature marinas such as Marina Gdansk in Gdansk and Gdynia Marina in Gdynia have virtually doubled in size. “I’m getting more and more enquiries about places to berth boats in Gdansk,” says Kosek. The sleepy fishing village come holiday resort Leba (in English pronounced “Web bah’) provides another hopeful example with a new 180-berth marina and all of the facilities including fuel, repair, showers, hotel and chandlery. Then there’s an interesting geographical challenge. People from the south of Poland actually see driving through the Czech Republic and Austria to the balmy Adriatic, just as easy as braving the current state of Polish roads for a less than tropical holiday beside the Baltic

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Business report: Poland

“The future of Poland’s marine industry may depend on the cost of labour.”

One common failure in Polish boatbuilders’ marketing materials and websites is the quality, or not, of their English translations. While their graphics and website functionality excel, the almost word-for-word literal translations detract from the image of quality. Sunreef has taken a major step towards dealing with that by hiring an in-house marketing person, Polish Ewa Stachurska, whose linguistic abilities span seven languages including English.

Crystal ball gazing

A growing middle class should fuel boating interest in Poland. This is the new marina at Leba.

shop of 400m2-600m2 is planned. For them, the Polish domestic market is growing very quickly, thank you very much. One other problem for the domestic market is that it’s not easy to register a boat in Poland and licensing regulations have been very strict for boats over 5m (16ft). Some relaxation occurred recently raising the minimum length to 7.5m (25ft). The good news is Balt’s Kozłowski sees more and more boats being sold to Poland, most of which are around 6.5m (21ft). “The rich people want eight to nine metres, we’re seeing more interest in bigger boats each year.”

As for doing business in Poland Despite rising labour costs, the business climate in Poland is good. “Fortunately the economy is working well despite the perception you see in the media,” says Götz Linzenmeier of Aluship. “But remember, you can’t take a short term view in Poland,” says Aqualine’s Hill. “These people are not much more than 20 years out of Communism, and although they are more than willing to work, and work hard, they have a different ethic. For example, we spend proportionally much

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more on clothing for our workers than we would in the UK.” One of the difficulties in doing business in Poland, if you only speak English, is that for the older segment of the Polish workforce, English is a third language, if it’s spoken at all, behind naturally Polish and Russian. “Under communism, we were taught in primary schools only Polish and Russian, and it wasn’t all that easy to get outside of Poland to learn another,” says Marek Slodownik, executive director of the Polish Chamber of Marine Industry and Water Sports. “Only in this generation do you see children learning English as a true second language.” Of course, Polish is not necessarily all that easy to learn for most people. Although the Polish alphabet is Latin and certainly more readable for non-speakers than languages such as Greek and Russian, the 32 letters in the Polish alphabet (36 with digraphs — for the uninitiated, those squiggly little lines shooting off from what otherwise appear to be Latin characters that drastically alter their sound) make getting lost in the Polish countryside without a GPS or translator a real challenge.

International Boat Industry • www.ibinews.com | November 2007

If there are threats to the Polish boating industry on the horizon, they are, of course, those global concerns which all industries and countries must face but particularly industries producing ‘luxury’ discretionary purchase products. The other is internal prosperity and the rise of the Polish middle class. The current state of the pleasure marine industry in the US shows this only too clearly. “While the state of the US dollar is of cause for concern, our superyacht clients don’t seem to be worried about it,” says Götz Linzenmeier. “Five years ago we talked about 100 feet being big, now we talk about 100 metres as if it was nothing.” Of course, not all Polish builders operate in the rarefied air of the currently seemingly indestructible superyacht industry. But as the Polish marine industry continues expanding exports into more and more countries, the risk is at least spread. Infrastructure problems will continue to irritate, but EU funding means that the roads will gradually improve. So, barring a global economic meltdown, the future of most of Poland’s marine industry would seem to depend on the cost of labour relative to the rest of the world. And here, the main weapon in the Polish arsenal lies in a growing reputation for quality and workmanship — but perhaps most importantly, the ability of managers in the industry to continue to find ways to add value, increase efficiency and provide their people with an attractive work environment. In the end, it comes down to the Poles themselves and whether they will — there’s no doubt they can — rise to the challenge. For a country whose history has seen armies march back and forth across the landscape for centuries, pillaging, conquering and dissolving, Poland’s time seems to have arrived, certainly for the boating industry. Tomasz Kosek perhaps best sums it up: “It’s the Polish character. Wherever we find ourselves, we’ll work it out.” IBI