views on business structure - oecd · 2016-03-29 · description fast moving new ideas, best...
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Views on business structure:
The example of ship-building/repair activities
www.forumokretowe.org.pl
Jerzy Czuczman
Sławomir Skrzypiński
Set-up:
- business recovery
- opportunities perceived
- challenges faced
- shifting into offshore
POLAND – case study
Start with an earthquake ….
1990
TRANSFORMATION
LOW COST
LEADER
… and build to a climax.
SPECIALISATION
Process
complexity
http://ec.europa.eu/enterprise/sectors/maritime/files/fn97616_ecorys_final_report_on_shipbuilding_competitiveness_en.pdf
Business strategies – by ECORYS
http://ec.europa.eu/enterprise/sectors/maritime/files/fn97616_ecorys_final_report_on_shipbuilding_competitiveness_en.pdf
Business strategies – by ECORYS
Poland
Low cost leader
Specialisation
But the „way” was NOT like a „high way”
… it was more like THAT way……
So, let’s take a view
on business structure
0
100
200
300
400
500
600
700
% p
er y
ear
Interest rate - POLAND
644,5%
1990
Economical changes – hyper inflation
http://www.indexmundi.com/facts/poland/lending-interest-rate
Markets versus politics
HOME 34%
WEST EUROPE 8%
SOVIET UNION 58%
Source: REMONTOWA
1990 – direction for sales
COSEQUENCES
LOST
difficulties
The only hope?
ISSUE SWOT
Government strategy –> ? W O
Privatisation –> sensitive issue T O (?)
Financing -> hiper inflation W T
Market economy –> new environment T O
Social partners –> strong social demands T O
Managers –> learning process W T O (?)
Banking system –> cash flow bottleneck W T
Human factor –> overemployment, ratio, social unrest W T O
Debts –> conversion into equities, no capital injection W T
Market –> lost W T O
Business environment
ISSUE SWOT
Ownership – fully controlled (by State) W T (O?)
Efficiency – not an issue W T (O?)
Yards – 3 big NB yards, 4 repair yards (medium to big) S O
Supply chain – strictly tightened (politically) S (?) T
Financial standing – fully dependent (on State) S (?) W T
Products – labour-intensive W O
Business structure
Description Fast movingNew ideas,
Best technical equipment
„only” repair yard not a NB yard,
left of „public interest”
Products Containers,
introducing new products
Containers, introducing new
productsIntensive search
Ownership structure
Management buy-out
Struggling for management buy-out
Assets being released Involve employees
Managerialstructure
Dramatic shiftEfficiency under
controlNot efficient Strongly centralised
Business cases
19901996
„Golden Age”- ?
SPECTACULARS
A few
- European leader in container ships, 35% of European production
- Over 30 ships per year (3/4 of them are containers)
- SIGNIFICANT SHIPS OF THE YEAR
- Production level - almost 500.000 cGT
==============================================
- HUGE debts problem (transformation and consequences)
- debtors agreement
- Public support
CENSEQUENCES
TURMOIL on suppliers’ market:
- Numerous bankruptcies,
- Lost credibility,
- Damaged supply chain,
Szczecin Shipyard & Gdynia Shipyard – debtors agreements
…… „buts” …..
No capital injection,
Full dependence on bank’s loans
Very high cost of capital
Cash flow problems
PRODUCTS
Containers:
2000TEU – ab.34 mln EUR 3,35 eur/kg
Cars:Fiat 126p - ab. 9400 zł4,61 eur/kg
Ford Mondeo 1,6 ab. 27.000DEM, 10,50 eur/kg
OBSERVATIONS
INTERNAL
- Low hour rate,
- Labour-intensive product
- LOW COST LEADER
EXTERNAL
- Poland negotiate OECD agreement
- cup of 600.000 cGT imposed on Poland
- cGT „cup policy” brought no success
- administrative way of controlling market brought no results
- supply-demand factors runs their own way
19901996
2001
No spectaculars
COSEQUENCY –> PERSISTANCY -> REMONTOWA
- „too small to bother politicians”
- No public support
- First real privatisation - money paid to (not taken from) the State Treasury,
REMONTOWA
2001 – direction for sales
Former SOVIET UNION 4%
HOME 10%
WEST EUROPE 86%
REMONTOWA sales 1990-2001
[USD thousands]
1990
19901996
2002
2001„checking”
Big Yards
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
EUR/cGT
EUROPE
POLAND
POLITICAL GAMES
- Again in debts,
- Possibly new debtor agreement
- Re-nationalisation – YES, YES, YES
- Policy over economy
- New products? Innovation? – NO, NEW PRESIDENTS, NEW BOARDS
- Efficiency?
REMONTOWA
PRIVATE - too small to bother politics
- Economy, economy, economy
- Generate positive cash flow
- Paying back loans
- Building up capital
- Buy out strategy (eg.: Northern Yard)
- Re-structuring
- New products, new markets, design office
- Steadily building a group,
- GROWING
- PEOPLE – participants, involved, not just viewers (only)
19901996
2002
2001
2004
EU
2004 – joining EU
- No interim period for Polish shipbuilding/repair sector
- Low rank at negotiation table, („forgotten” sector),
- Facing all constrains, eg. free flow of people
- Any benefits for the sector ?
Source: REMONTOWA GALATEA - Buoy-Laying Vessel – 2007
19901996
2002
2001
2004
2008
Too big to fall down ? (really)?
EU decision 6.11.2008
Liquidation of Gdynia & Szczecin NB yards
- Assets divided and sold out
- Employment cut dramatically
Source: Stocznia Gdynia
New business
Gdynia
- New opportunities
- New products
- Employment steadily growing
- Turnover reached „momentum”
Szczecin
- no significant success, yet ….
Source: Stocznia Gdynia/Crist
Source: FORUM OKRĘTOWE
19901996
2002
2001
2004
2008
2014
Specialisation and shifting into offshore
Source: REMONTOWA/FORUM OKRĘTOWE
Lloyd's List events & Lloyd's Maritime Academy2010 - Green Ship of the Year
Source: Sunreef Yachts
Source: REMONTOWA
Specialisation and shifting into offshore
Next please ….
People
Structure
Product
PrivateParticipationResponsibility
SpecialisationNiche Innovative
DeterminationContinuitySkills Learning process
Processingsteel
Selling Intellectual
skills
COMPLEXITY OVER TONAGE
COMPLEXITY OVER TONAGE
NB efficiency in [EUR/cGT]
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
EUR/cGT
POLAND
EUROPE
source: FORUM OKRETOWE/CESA/SEA Europe
Conclusion
PEOPLEVision
Determination
Dedication
Leadership
ECONOMY versus POLITICS
Short sight (politicians’ sickness)
Goals(political always first)
Consequences(pay: companies, business -> PEOPLE)
INSTITUTIONS
Set field
Monitor field
Level playing field
Public support ? (other side of the coin)
DR
IVER
S
Thank you for your attention
www.forumokretowe.org.pl
Questions, Clarifications, Comments ?
WELCOME
Jerzy Czuczman
Sławomir Skrzypiński
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