Using Poland as an eastern gateway

Case studyMr John Concannon made his first trip to Poland four years ago and liked what he saw.

In 1987, he founded JFC, a small plastics business in Tuam. JFC is now exporting €1 million of goods a year to Poland and next month it will open a factory outside Warsaw that will manufacture products for export to the accession states and central Europe.

"We want to use Poland as a stepping stone to export to the Ukraine, Russia, Latvia, Lithuania and the Czech Republic," says Mr Concannon, who will send his son out next month to manage the 3,200 sq ft factory on a five-hectare greenfield site outside Warsaw.

JFC started out as an manufacturer of agricultural products and has gradually expanded into a range of other industrial sectors. It opened its first overseas office in Britain in 1988 and later set up an office in the Netherlands.

Mr Concannon admits Poland can be a difficult place to do business. To help it enter the Polish market, JFC recruited a Polish national with knowledge of the country's industry sector to head its subsidiary.

"If you go into a new market, you need to know what its potential is, what products will be successful and whether the necessary skills are available. We were very lucky with the guy we chose in Poland and we gave him 15 per cent of the business.

"There are a host of language and bureaucratic problems that can arise when establishing business in central Europe. We encountered a few problems when trying to acquire a site for the factory, with sellers trying to back out of agreed deals," he says.

The design of the plant was subject to rigorous bureaucratic checks, with 54 separate books of maps outlining the design of the project required.

"It's funny that people earning about €100 per month can often hold up industrial developments worth €10 million." Exporting from Poland can also be subject to bureaucracy and it is not uncommon for a truckload of goods to be held up at customs for days because of a single document.

Mr Concannon says there was little or no help from the Polish investment agency, which is generally focused on much larger projects. "But on the plus side, people are plentiful and we could get plenty of builders on site as labour is an awful lot cheaper.

"Wages in Poland are about €200 per month, compared to €400 per week in Ireland. Fuel is also cheaper and transportation is cheap," he says.

"It will be tough to get people up to the production rate at which we work in the Republic because of a high rate of absenteeism," says Mr Concannon. "But at least we now have a level playing field with our competitors."