On 5 April 2016, representatives of the Polish Cluster of Construction Exporters management attended 8th Conference for Construction. The topic of the panel discussion were the perspectives for growth and export of construction materials and services. The participants answered questions on long-term perspectives for exports, existing limitations, legal environment and government support.
Jan Styliński, Chairman of the Polish Association of Construction Employers, opened the debate by asking the panellists about the condition of export of Polish construction services. According to the cited data, export of construction services currently makes up just 3.6% of overall services exports. The value of construction services export in 2014 was nearly PLN 5.5 billion, while sales of construction services amounted to ca. PLN 170 billion. The main recipients of Polish construction exports are EU countries (PLN 4.17 billion). The top ten countries include Germany, Belgium, Sweden, France, Holland, Denmark and Italy. The fourth largest recipient of Polish construction exports is Russia and the seventh is Angola.
Chairman Mikołuszko described Poland as one of the most promising construction markets in Europe. He also pointed out that this fact is well known by foreign businesses who continue to invest their capital in Poland. According to Mr. Mikołuszko, it is the fact that so many foreign companies were allowed to participate in the construction and renovation of Polish infrastructure using EU funds that prevented Polish companies from building a strong position. It is a strong position on domestic market that gives real chance for expansion and exports. In his opinion, Mr. Mikołuszko used Spain as an example – for 15 years of taking European funds, the country had refused to admit foreign general contractors to its construction projects. According to Jan Mikołuszko, protection of domestic market allowed Spain to grow strong exports. Many Iberian companies have grown to become construction tycoons operating all around Europe. He also pointed out the need to consider the future of Polish construction industry and the vast numbers of engineers and specialists working in it. In the next 4 to 5 years, the reduction of the EU funds influx will force many businesses to downsize due to dropping number of orders. According to Jan Mikołuszko, the natural direction of development and diversification of orders portfolio should be the export of construction services. “It is the reason why we created the Cluster. It is an institution that will help us,” he said.
The role of the Polish Cluster of Construction Exporters in creating strong exports and internationalising Polish construction services was also discussed by Mr. Tomasz Szuba (Chairman of the Exports Board of PKEB). “I believe the Cluster will be a success. However, what we need is time. No one before in the industry has taken up such a challenge,” he pointed out in his opening words. He also highlighted the importance of government and diplomatic services in the process of internationalisation of Polish construction services. According to him, their role on new, difficult markets and those of strategic importance is crucial.
“Germany, France or Czechia know how to do it. There are markets where we don’t stand a chance without government support. And there are hundreds of millions of dollars to be made there,” he emphasised. Developing an efficient model and procedures for supporting Polish businesses abroad is all the more important because many prestigious contracts are executed in a model requiring own funding. Particularly on the vast African market.
“The government should listen to us. Only by working together can we reach the same level as the largest global players in the construction industry. We will use the Cluster to make ourselves known as businesses fully prepared to export, with considerable experience on international markets,” he said.
The issue of support for exports was followed up by Jan Mikołuszko. Answering the question if the government should help Polish businesses in exporting their services, he said: “If the government is willing and able, then absolutely. This is how it works all around the world.
Most importantly, however, the government should simply not stand in our way.” The Chairman also addressed Minister Mateusz Morawiecki’s idea to combine all institutions that support exports into a single organisation. “The dispersed support system isn’t working. What we need is a strong organisation with competent personnel,” he said.
Further in the debate, Jan Mikołuszko pointed out the role of KUKE and banks in supporting exports. Without financial backing, foreign expansion is a very risky venture. According to the Chairman, in Poland, the scope of financial backing is the weakest link in the exports support. In his opinion, only one bank, namely the National Economy Bank (BGK), is an institution that could help in “conquering” foreign markets.
“However, it is a political bank. It is burdened with hundreds of different initiatives that it must implement,” the Chairman added. Mr. Mikołuszko pointed out the need for other banks to take steps encouraging businesses to expand to foreign markets. “The number of experts in Polish banking sector that are competent in export credits is just 5 to 10 persons,” he said.
The matter of potential directions and destination of export activities was discussed by the Vice-Chairman of PKEB, Mr. Andrzej Czapczuk, PhD, Eng. Answering the question about realistic chances of Polish businesses for investing in Africa, he pointed out the Cluster’s first success in Senegal. At the moment, the Cluster is engaged in advanced Polish-Senegalese negotiations on expanding the infrastructure in Senegal. Vice-Chairman Czapczuk described Africa as “the last place on Earth with such investment potential.” He also pointed out that own funding of projects was key to investing there. Without own funds, entry barriers to many African countries can be too difficult to overcome. All the more so because of strong competition of players such as China or Turkey, whose export banks are exceptionally efficient. According to Vice-Chairman Czapczuk, Polish companies have the high ground on African markets. This is mainly due to the history of our presence on that continent.
“In Africa, we are perceived as partners, rather than as threat. We have no colonial history and our engineers and specialists in 1960s, 1970s and 1980s established a solid brand for our services,” he said optimistically.
“It is high time we restored our tradition of cooperation. This is why we have united in the Cluster. I believe that we can only succeed, if we work together. Even if profit is divided between several businesses, it is still profit. In cooperation, trust is essential,” he concluded.
The conference was organised by the Union of Employers – Manufacturers of Building Materials for the Construction Industry and the Polish Association of Construction Employers.