BOOM potential for Polish steel - prediction

series: Article of the month on PICC site
source: www.prnewswire.co.uk


"The Polish steel industry has a prosperous and successful future in front of it if it can rise to challenges and opportunities posed by the continuing restructuring of the central European markets". This was the view of worldwide steel industry specialist Dr Rod Beddows, of the London-based international strategy consultants Beddows & Company which has a dedicated steel industry practice. He was speaking at a Polish national steel industry conference in Southern Poland, held to commemorate the 200th anniversary in November of the construction at Huta Baildon of the first coke-fired blast furnace in Europe.

Private labels – a strategy for the crisis

series: Article of the week on PICC site
source: PMR Publications/www.retailpoland
Patrycja Nalepa
Retail Analyst, PMR Publications

     The economic crisis favours the development of private labels in Poland. The worsening financial condition has prompted Polish consumers to look for savings and to choose a chain’s own products more often because of the lower prices. This encourages retailers to expand their own label offers.

     Poland has, so far, lagged behind the Western European countries in terms of the share of retailer brands as a proportion of the sales of grocery and chemical categories. According to Nielsen, in 2008 volume and value shares stood at 21% and 13% respectively, whereas in Switzerland and the UK these exceeded 40%. Because of the economic crisis these differences may be reduced a little this year.

     An economic slowdown is a time of development for private labels in Poland. Growing unemployment and a reduction in the purchasing power of Poles prompt consumers to cut spending and to look for savings. In order to spend less on everyday shopping they search for cheaper goods and are now more willing to choose the products bearing a chain’s own label, which prices, because the marketing of such goods is kept to a minimum, can be 30-40% lower than those of A-brand products. According to Nielsen, almost one-third of the consumers surveyed claimed that they have started to do more shopping at discount stores, whereas one in four have decided to buy private label products.

Automotive market in Poland and the global crisis: is the worst still ahead of us?

series: Article of the week on PICC site
source: polishmarket.com.pl
Paweł Sionko
Economist, PMR Publications
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     The global economic crisis that started in the autumn of 2008 hit the automotive industry particularly hard, causing a sudden slump of demand for new vehicles across the world. Although the Polish automotive sector, like the country’s economy as a whole, seems to be doing rather well in these difficult times, it is in a significantly worse condition when compared with the previous year.
 
 
Foreign scrappage bonuses and weak zloty support sales

     According to the data of the Automotive Market Research Institute Samar (IBRM Samar), 214,626 new passenger cars were sold in Poland in the first eight months of 2009. This is a minimal increase (by 1%) from a year ago[1]. In ordinary conditions, such a rate of sales volume growth would not impress. However, in light of the crisis, which significantly affected sales of new cars across Europe, the fact that last year’s sales levels were maintained commands respect.

     Although compared with other countries this data seems quite good, a more in-depth market analysis demonstrates that the situation does not look so optimistic. Even though domestic demand in Poland has in general turned out to be relatively invulnerable to the crisis so far, in the case of new passenger cars a considerable part of this year’s sales (approximately 15-20% according to various estimates) was a consequence of purchases made by foreign customers, in particular Germans and Slovaks. The significant weakening of the zloty[2], accompanying the crisis on financial markets, made vehicles offered in Polish car showrooms much cheaper than in the majority of EU member states. This was rapidly reflected in higher foreign demand, in particular in borderline regions. The Germans demonstrated particularly high activity following the introduction by the German government in January 2009 of a program supporting new car purchases, offering a bonus of €2,500 to each citizen who scraps a car older than nine years in exchange for a new one. Although initially €1.5bn was allocated for this purpose, in the face of the enormous popularity of the program, the total value of the scheme was increased to €5bn in April. According to its authors, the program was intended to support the domestic automotive industry, sustain employment in the sector, and favour economic growth in Germany. However, in the absence of restrictions on the place of purchase, the Polish automotive industry also benefitted. The weak zloty also lured Slovaks, who adopted the common European currency in January 2009, to shop in Poland.

Boom and bust

series: Article of the week on PICC site
source: polishmarket.com.pl

     Poland is likely to end this year with positive growth, unlike most of its neighbours East and West. Professor Leszek Balcerowicz, former National Bank of Poland governor, explains why. The crisis began in the United States. It has its dynamics and when it seemed in August 2008 that it might peter out, it suddenly exploded much more fiercely instead. Discussions continue to this day on whether it was the failure to bail out Lehman Brothers that escalated the crisis or whether it was because other banks had been earlier bailed out. However, the only thing certain is that the crisis erupted in the United States and that it lasts to this very day. There are ever more indications that it is bottoming out. The most important thing, however, is how fast it rebounds.

     What determines the impact on other countries of what began in the United States? This impact is determined by two basic factors. First – the strength of commercial and financial links with the developed world. Countries that have been more strongly tied up with the United States and with the developed world, have suffered the most. Those, which have not, include North Korea. It is a country completely isolated from the outside world and represents a devastating example of civilization's failure. It should, however, be kept in mind that negative consequences of the current crisis ensue from a country’s opening itself up to the world even though in itself the opening represents a major driving force in its long-term development. South Korea, for example, has been hurt by the crisis. It is worth recalling that living standards in North as well as South Korea in 1960 were equally low. But by 2008, per capita GDP in North Korea stood at 7% of that registered in South Korea. That is a lesson that a distinction has to be made in the economy between short-term and long-term mechanisms. Another factor is the scale of earlier committed economic sins. The more sins there were, the deeper are the consequences of economic collapse. Sinning in the economy, speaking in a popular way, amounts to stimulating the economy through increasing demand on such a scale that the economy is eventually bound to collapse. Stimulating the economy is in fact tantamount to spurring the crisis. When expenditures rise faster than domestic production, a gap opens up causing an imbalance. Indebtedness – and that includes foreign debt - grows. In the end, everything breaks down.