Riveting times

Poland's Gdansk shipyard caught the world's eye in 1980 when Solidarity was born there after an 18day strike which forced the communist authorities to recognise free trade unions.

But the yard was never able to turn its legendary fame to commercial advantage. Indeed, once Poland regained its freedom in 1989, politics proved to be the company's downfall as the Solidarity trade union came to dominate a weak management. The managers in turn relied on the trade union's political connections to ensure financing for contracts which were rarely viable.

The end for Gdansk came when Lech Walesa, its most famous employee lost the presidential election in 1995, and the yard's political umbrella folded. It was declared bankrupt two years ago even though Polish shipbuilding is one of a handful of Poland's industrial sectors which is capable of manufacturing world class quality products.

Indeed, other Polish yards like Szczecin and Gdynia have taken advantage of the fact that labour costs in Poland are around 10 per cent lower than in neighbouring Germany to recover under their own steam. Nor are they, for the time being at least, looking to foreign investors to ensure their survival in the medium term.

But even now politics continues to bedevil the latest rescue plan for Gdansk mounted by Gdynia, which has agreed to pay $32 million for the bankrupt yard's assets and to invest a further $21 million in the company over the next five years.

The deal signed almost two months ago is being held up by Emil Wasacz, the treasury minister who is backed by the Solidarity led AWS which is the dominant governing coalition partner. The hiccup comes as the trade unionists and their nationalist right wing supporters, unable to accept the yard's downfall, lobby behind the scenes to preserve it as a separate entity.

MEANWHILE Gdynia, managed by Janusz Szlanta, has taken the lead in the sector. Szlanta, who is first a financier and then a shipbuilder, plans to make further acquisitions after completing the takeover of the Gdansk yard.

He says that the Gdynia shipbuilding group, which also plans the takeover of the Cegielski marine engine plant in Poznan, would have a turnover of $1 billion in five years. Last year Gdynia sold ships worth $280 million and declared a net profit of $15 million returning to the black for the first time since 1990.

This year Mr Szlanta expects to report a $29 million net profit on sales worth $441 million. He is also planning a new stock issue worth around $20 million aimed at financial investors which would be followed by a flotation on the Warsaw Stock Exchange.

Szczecin, which is Poland's other major yard near the German frontier on the Baltic, returned to financial health earlier. There, a determined management team headed by Krzysztof Piotrowski, followed up a debt reduction programme in the early 1990s with increases in productivity from the workforce which helped the yard capture the German market for medium sized container ships.

The effort was helped by the fact that the yard's suppliers improved their delivery schedules enabling drastic cuts in the time needed to build new vessels. Last year Szczecin reported a $7 million net profit on sales worth $570 million.

At one point the Szczecin team, planned to takeover the Gdynia yard in a bid to expand its capacity. Janusz Szlanta, at Gdynia blocked the takeover, and begun his own race for growth by merging with Gdansk. The development leaves Szczecin with little alternative but to mark time or to look to a takeover of capacity abroad in order to continue with its expansion.