Export To Poland Presentation 2nd June 2009

Export to Poland

Bi-Lateral Trading between Poland and Britain

Michael Clay, Board Member, BPCC

Export to Poland
WHY POLAND?

• Poland as the biggest new member of the single
European market offers the right balance between low
business risk, and high growth opportunity
• Attractive domestic market of 38m consumers – larger
than the other seven 2004 EU entrants combined in
terms of population and GDP
• CEE gateway to regional sales, manufacturing and
logistics hub – EU expansion opportunity
• Human capital – young, skilled demographic

Export to Poland
The story so far...

• 20 years after the downfall of communism, 20 years of economic
transformation

• 10 years in NATO, five years in the EU

• Strong GDP growth

• Inflation tamed

• Unemployment has fallen rapidly (Feb ’04 to Oct ’08)

• EU funds flooding in

• ...and then the global economic crisis hits Poland.

Export to Poland
Main themes
• Dramatic changes in global economy have changed prospects
for Poland

• Fall in value of zloty

• Entire CEE region tarred with same brush

• New opportunities opening up as others disappear

• EU structural and cohesion funds will shore up Polish economy

• Consumer spending falling slower, unemployment growing
slower than across EU15, opportunities not only to cut costs
but to find new market opportunities

Export to Poland
EU Structural & Cohesion Funds

• 2004-2006: €12.8 billion

• 2007-2013: €67 billion
(plus matchfunding – another €23 billion)
Money earmarked for infrastructure (€28 billion), regional
development, enterprise development, skills training,
business competitiveness, is being spent between now
and 2015/6 (‘n+2’/‘n+3’)
Will change the face of Poland.

Export to Poland
And yet...

Poland Hungary

• GDP 2009 forecast • GDP 2009 forecast
to contract by 0.4% to contract by 6%
• Debt rose by 24% • Debt rose by 65%
between 2000-07 between 2000-07
• S&P rating A- • S&P rating BBB

Export to Poland
Poland has a competitive economy
The Alllianz/Lisbon Council study,
2009 2008
published on 9 March 2009, ranks 1 Finland 1
EU countries according to six key 2 Poland 2
criteria including economic growth, 3 Netherlands 9
4 Greece 5
productivity growth, jobs, human 5 Sweden 3
capital, future-oriented 6 Spain 12
investment and sustainable 7 UK 6
8 Belgium 10
public finances. 9 Germany 8
10 Austria 11
Overall, Poland comes in at No. 2 11 Denmark 7
with strong performances on 12 France 13
economic growth and productivity 13 Ireland 4
14 Italy 14
growth, where it finishes No. 1 and
No. 2, respectively.

Export to Poland
Central and Eastern Europe

Latvia, Hungary,
Ukraine – these
are the countries
with most serious
problems.
Poland, Czech
Republic,
Slovakia, and
Slovenia – these
are the countries
likely to be least
affected by crisis

Export to Poland
Public Private Partnerships

New law came into force on 27 February, less proscriptive than
old law from 2005 (under which no project was initiated)
Will PPP finally get moving?
• EU funds – projects need local matchfunding
• Municipal bonds and loans – 60% debt/budget limit
• Banks showing far less appetite to lend
• Yet projects have to be delivered.
Is PPP the answer?

Export to Poland
Poland’s skilled workforce

• Young, skilled, motivated and flexible working population
• Multilingual – 71% of students have passed English at
‘A’ Level equiv.
• Record numbers of graduates and school-leavers have
been entering the labour market
• Poland’s student population quadrupled during ‘90s –
today, 1.9m in tertiary education – more than entire
population of Estonia
Source: OECD, GUS, Eurostat

Export to Poland
Have employers cut too far?

• Multinational investors cutting regardless of local
conditions on Polish market
• Polish employers have seized opportunity to get
‘leaner and fitter’
• Skills shortages have not gone away in cities
• Temp workers likely to become more popular

Export to Poland
Announced job losses across EU

Export to Poland
The British Polish experience so far

• UK 6th largest investor in Poland – dominated by large
corporates

• UK ranked 4th largest Polish export market

• Poland ranked 17th largest UK export market (up from 25th
in 2005)

• Very low presence of British mid-caps and SMEs on Polish
market (different legal system)

• Unrecognised export opportunity for British exporters

Export to Poland
Largest British investors in Poland

Tesco Unilever

BP Arcelor Mittal

GlaxoSmithKline Aviva (Commercial Union)

Pilkington Provident

Cadbury’s Associated British Foods

Shell HSBC

Export to Poland
Trade between UK and Poland

4.35
4.5

3.61
4.0

3.20
3.5

3.03
GBP billions

3.0

2.39
2.32

2.31
2.5

1.83
1.54

1.65
1.46
2.0

1.41
1.32
1.30
1.36

1.35

1.30

1.26
1.21

1.17

1.17
1.5
0.91
0.68
0.67
0.57

0.60

1.0
0.5
0.0
Fill
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008
UK exports to Poland
fill
Source: Office of National Statistics, UKTI
Polish exports to UK

Export to Poland
Catalysts for future growth

• Re-orientation of investment sourcing – new global economies;
Middle and Far East seeking EU platform; private equity funds
looking for M&A opportunities, public sector investment
• Cutting costs in western Europe – upping investment in Poland
(this affects only investors already present here!)
• EU funds and grants
• Eurozone entry planned for 1 Jan 2012 (???!)
• Climate change, environment and energy
• UEFA Euro 2012
• 2015 deadline for ensuring all water pumped into rivers is treated
– otherwise local authorities face fines

Export to Poland
Summary

• Poland’s downturn likely to be far more mild than in rest of EU

• Strategic location, several large, high-growth cities

• Infrastructure projects offer promise

• Greenfield FDI once again becoming attractive

• Poland offers the right balance between low risk and higher
growth opportunities

Export to Poland
growing old’
GDP growing faster than ‘old’ EU

7%
6%
Growth compared
5%
4%
3%
2%

1%
0%
Poland UK Eurozone

2004 2005 2006 2007 2008* 2009*
Source: Eurostat *2008, 2009 forecasts (Economist)

Export to Poland
FDI destinations and unemployment

19.5%
20%
18%
16% 14.1%
13.2%
14% 12.2%
12%
10% 8.5% 8.7%
6.6%
7.1%
6.7% 7.4%
8%
6%
3.0% 3.8%
4% 2.2% 2.2%
1.7% 2.2%
2%
0%
Warsaw Poznań Katowice Kraków Tri-City Wrocław Lublin Łódź

Feb '04 Jul '08
Source: GUS

Export to Poland
FDI destinations and unemployment

70,000 67,100 66,100

60,000

50,000
39,800 38,200
40,000 31,500
24,000
30,000 21,600
22,700 21,800
16,900
20,000 11,100
11,200 11,500
10,000 4,000
5,500 6,800

0
Katowice Poznań Tri-City Lublin Wrocław Kraków Łódź Warsaw

Feb '04 Jul '08
Source: GUS

Export to Poland
The weak Pound

Zloty appreciation in %age terms (1 May ‘04=0%)
£1 = 7.15 zł £1 = 4.85 zł

43%

40% 31%

30%
20%
10%
0%
IV '04 IV '05 IV '06 IV '07 IV '08 IV '09
Monthly average value of PLN. Source - NBP

Export to Poland
Labour availability in Poland

• Smaller towns and rural Poland have high unemployment; large
amount of undisclosed employment in grey economy

• Labour mobility – both high and low (Poland and UK!)

• Over 44% of Poles of productive age are not working

• 45% of Poles registered as unemployed live in villages

• Age is important factor – older Poles less flexible, less mobile,
less prepared to work in market economy. Only 28% of
Poland’s over-55s are working (58% in UK)

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Where to find human resources

Polish unemployment

Tri-City
Warszawa
Poznań Warsaw
Poznań
Bydgoszcz Torun

Łódź
Wrocław
Wrocław
Poznan Łódź
Warsaw
Lodz

Wroclaw Silesian agglomeration Source: GUS, July 2008
Silesian agglomeration
Silesian agglomeration
Kraków
Kraków
Krakow

Export to Poland
Business opportunities

Inward investment
Manufacturing: look to produce for local and regional markets,
rather than as low-cost source
Outsourced services (though S. Poland overheating)
Consumer market
High-growth conurbations – Warsaw, Katowice, Krakow,
Wrocław, Poznan, Tri-City and Lodz –
several million prosperous consumers
Property & Construction
Residential, commercial, retail; EU-funded infrastructure
projects; Euro 2012; PPP expertise
Business-to-business
Consultancy, HR (training, coaching), legal services

Export to Poland
Poland: The bottom line

• Economic growth expected to be reasonably
strong over coming five-six years
• Poland insulated against harshest effects of global
downturn
• EU funded projects will change the way Poland
looks and works
• Get involved before it’s too late!

Export to Poland
Next steps

•The
Export to Poland program can bring your
Company into Poland
•We can help you in Marketing, Distribution,
Translation, Partner search,
•Most
Importantly, we can provide the SALES in a
manner that keeps your costs low
Web: www.export-to-poland.com
email: mc@export-to-poland.com

Export to Poland


Export to Poland

Thank you

Michael Clay
Member of the Board

www.bpcc.org.pl
www.exportpoland.co.uk

Export To Poland Presentation 2nd June 2009

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Export To Poland Presentation 2nd June 2009