table of contents · 2015-01-21 · information on the polish construction industry for the years...

Information on the Polish construction industry for the years 2012-2013 0


TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................ 2

I. THE IMPORTANCE OF THE CONSTRUCTION INDUSTRY IN THE CREATION OF ECONOMIC

GROWTH ...................................................................................................................................... 4

1. GDP AND ITS COMPONENTS .................................................................................................... 4

2. EXPORT ................................................................................................................................... 5

3. CONSTRUCTION AS THE FASTEST GROWING INDUSTRY IN POLAND .......................................... 8

4. THE GROWING IMPORTANCE OF CONSTRUCTION INDUSTRY IN CREATION OF GDP ................... 9

II. DETERMINANTS OF GROWTH OF CONSTRUCTION SECTOR ...................................................... 10

1. CONSTRUCTION AND ASSEMBLY PRODUCTION ...................................................................... 10

4. BUILDING PERMITS ................................................................................................................ 17

5. NON-RESIDENTIAL BUILDINGS ................................................................................................ 18

III. EXPORT OF BUILDING MATERIALS AND SERVICES ................................................................... 24

1. EXPORT OF CONSTRUCTION SERVICES .................................................................................... 24

2. EXPORT OF BUILDING MATERIALS .......................................................................................... 25

3. THE SHARE OF EXPORTS OF BUILDING MATERIALS PRODUCED IN POLAND .............................. 29

4. EXPORT DESTINATIONS .......................................................................................................... 31

4. SUMMARY ............................................................................................................................. 34

INDEX OF GRAPHS ...................................................................................................................... 36

INDEX OF TABLES ....................................................................................................................... 36


Introduction

The presented report titled Information on the Polish construction industry, is one of the activities

undertaken within the framework of the Sector Programme for Promotion of Construction Industry

co-financed by the European Union.

Sector Programme for Promotion of Polish Construction Industry is the project of the Ministry of

Economy implemented by the Polish Construction Consortium (Konsorcjum Polskie Budownictwo)

composed of four designated entities: Polish Chamber of Commerce (Krajowa Izba Gospodarcza),

Chamber of Construction Industry and Commerce (Izba Przemysłowo-Handlowa Budownictwa),

Interservis Sp. z o. o. and ASM - Market Research and Analysis Centre Sp. z o.o. (ASM – Centrum

Badań i Analiz Rynku Sp. z o. o. ).

The aim of the Sector Programme for Promotion of Construction Industry is to familiarize domestic

and foreign companies with the high quality services of the Polish construction sector, both in the

construction services and production of building materials.

The objectives of the project have been gathered in two components. The first one, called

Component A, includes all the activities in which the accessing entities can participate. These include

domestic and international trade fairs and exhibition events as well as economic missions. BPP

Participants are required to attend a minimum of 50% of the proposed measures, cover their costs

and receive a 75% reimbursement of eligible costs.

Component B includes all events aiming at promoting Polish construction sector. These include,

among other things, study visits of journalists, conferences or seminars. This report is also a part of

Component B.

The importance of the construction industry in the creation of economic growth was discussed in the

first part of this document. We present the analysis of the most important macroeconomic indicators

and the forecasting model, which shows the dependence of gross added value in the construction

sector from the level of economic growth GDP by 2013. The second part presents the determinants

of construction industry development in the period 2008 - 2012 and provides forecast for

construction and assembly output by 2013. Another module of the report deals with the

development of the construction industry in Poland, detailing the residential and non-residential

construction sectors. The last, fourth part of the study presents the results of the survey conducted

by ASM - Centre for Research and Analysis. ASM - Market Research and Analysis Centre Sp. z o.o.


During the collection of data necessary for the preparation of the report three techniques of data

collection have been used: desk research, focused group survey and computer-assisted telephone

survey.

We trust that the Information on the Polish construction industry will be an interesting reading for

you. We believe that its content will provide you with comprehensive information on the Polish

construction industry.


I. The importance of the construction industry in the creation of

economic growth

1. GDP and its components

The period between 2010-2011 was a period of gradual recovery of the Polish economic potential

after the slowdown in 2009. During this period, the results of the Polish economy were very good

compared to other EU countries, placing Poland among European leaders. In 2011 the gross domestic

product grew by 4.3% and was the result of growth in investments by 8.7% and personal

consumption by 3.1%. The main driver of growth was domestic demand. The continued strong revival

of foreign trade must also be noticed: the contribution of net exports amounted to + 0.7 percentage

point. According to the preliminary estimates of the Central Statistical Office in Poland, the GDP

growth in the first quarter of 2012 amounted to 3.5%, being one of the highest in Europe.

Fig. 1

Estimating the Poland’s export potential we should also analyze the condition of individual

economies in the subsequent years. According to the GDP forecasts prepared by the European

Commission, Poland is supposed to record the best economic growth (2.5% y/y) throughout 2012

compared to all 28 EU states. Comparing the forecasts of the end of 2011 with this year's predictions

it can be seen that only three countries have not recorded the GDP downward. The European

Commission decided to keep the Poland’s projected economic growth in 2012 at the same level of


2.5% and 0.6% in the UK, while raised Slovakia’s GDP forecast to 1.2% from 1.1% last year estimates.

In other cases, it was decided to lower the current forecast. Moderate recession, as predicted by the

analysts and a slight increase in the second half of the year indicate that the GDP in the European

Union in 2012 should be the same as in the preceding year.

Fig. 2

2. Export

Export is definitely one of the most important factors that may have a significant impact on the

future of the Polish economy. Considering the time horizon since 2003, it can be seen that apart from

a period of economic crisis, which in 2009 negatively influenced the export data, the value of goods

exported by the Polish entities is characterized by a clear upward trend. In 2011, exports amounted

to EUR 135.8 billion, reflecting an increase by 12.8% (i.e. by approximately EUR 15.4 billion)

comparing to previous year. The relatively high growth of exports in 2011 was primarily the result of

high growth in exports to developing countries and less developed countries. While the growth rate

of exports to the euro zone was only 9.3%, i.e. 3.5 percentage point lower than average, the increase

in exports to the emerging markets and less developed countries reached 18.3%.


Fig. 3

Analyzing the structure of Polish foreign trade you can see evident dominance of the European Union

countries. In 2011, the value of exports to the Community amounted to EUR 105.6 billion, that is

approximately 80% of its total value. It should be noted, however, that in the last few years, the

share of EU in Polish exports has been decreasing steadily from 91.1% in 2008 to 90.2% in 2009 and

89.9% in 2010. This means that the share of exports to countries outside EU is increasing.

Analyzing individual countries, it turns out that the main Poland’s trading partner is Germany. As part

of the whole export stream, this country absorbs 26% of its value. Next in line are: Great Britain,

Czech Republic and France, the share of which is significantly smaller - each representing

approximately 6%.


Fig. 4

The level of Polish exports is significantly affected by product groups related to construction and

industry. In the years 2003-2011 there were significant changes in the structure of the Polish exports

mainly consisting in increased share of relatively high-processed goods. While in 2001 electrical

machinery products accounted for approximately 37% of total exports, their share increased to

nearly 43% in the year 2011. Similar tendency was observed in the case of chemical industry

products, the share of which in total Polish exports increased from 9.6% in 2001 to 13.1% in 2011.


Fig. 5

3. Construction as the fastest growing industry in Poland

The results of the Polish economy in recent years indicate that the construction is the fastest

growing industry in the country. The growth dynamics of the sector in 2011 was close to 12%, with

4.3% GDP growth level.

Growth dynamics by sectors of the economy

2004 2005 2006 2007 2008 2009 2010 2011

Gross domestic product including:

105.3 103.6 106.2 106.8 105.1 101.6 103.9 104.3

Manufacturing 110.9 103.5 109.9 110.0 106.0 101.3 109.4 106.3

Construction industry 101.1 106.6 112.5 109.4 105.8 111.6 106.4 111.8

Trade; Repair of motor vehicles

103.9 104.1 104.7 104.7 106.4 104.3 102.6 104.6

Transportation and storage 103.0 108.6 109.9 104.2 98.5 95.6 106.5 105.1

Source: ASM based on GUS (Central Statistical Office of Poland)

Table 1


4. The growing importance of construction industry in creation of GDP

Despite the fact that the development of the construction industry has been the fastest since several

years, its share in the GDP does not exceed 10%. However, its global share is characterized by

an upward trend. In 2005, it amounted to 5.5%, while in 2009 it was already 7.2%. According to the

optimal prognostic variant, the share of the construction sector in the national economy shall

stabilize at a level of 6.5% in the subsequent years.

A relatively small share of construction in GDP generation, however, is not synonymous with the

industry’s low coefficient of materiality. In construction we are dealing with so-called multiplier

effect. This phenomenon of a feedback character means that 100 people employed directly in the

construction industry create at least 200 additional jobs (and also initiate the production) in other

sectors.

Fig. 6


II. Determinants of growth of construction sector

1. Construction and assembly production

One way of measuring the size of the construction sector is the analysis of the rate of construction

and assembly production. Comparing the data from the last few years you can see a clear upward

trend regarding the value of domestic construction and assembly production. In the period from

2005 to 2011, the value of construction work increased by 113%. It is worth noting that the

construction industry is a very important area of the economy, linked with many of its branches,

therefore the sensitivity of the sector to economic fluctuations is also large.

Fig. 7

The previous year was characterized by record dynamics of construction and assembly production.

During 2011 enterprises employing more than 9 persons, recorded the growth of 16.3% comparing to

12.0% in the total population respectively. In the first quarter of 2012, the domestic construction and

assembly production1 was 14.9% higher comparing to the same period last year. This high growth

was mainly due to the intensification of work carried out in preparation for EURO 2012 and

1 In fixed prices, in construction companies employing more than 9 persons.


continuation of the previous years’ investments. Over the first three months of 2012 compared to

the same period of the previous year there was an increase in all construction industry sectors: the

construction of buildings grew up by 4.8%, the construction of civil engineering facilities by 36.8%,

and specialized construction activities by 10.1 %.

Fig. 8

Civil engineering has the largest share in the structure of the construction and assembly production.

This is a result of extremely high increase in production of this type of work in recent years, especially

in road projects. According to the GDDKiA (General Directorate for National Roads and Motorways)

data, in 2011 in Poland record expenditures were incurred on investments related to the

construction and modernization of the road network (PLN 26.4 billion).


Fig. 9

Against the background of the European Union, Polish construction sector looks very attractive,

recording the year-average increase of 8.2% in construction output over the last 4 years, while there

was a decline of 5.1% across the EU. Economic crisis was the reason for such low results in individual

EU countries and consequently - significant downturn in the markets. It turns out that the Polish

economy, unlike in other countries, rather quickly rebuilt the potential of the whole building sector

and in 2011 achieved the growth dynamics of 16.3% (y/y).


Fig. 10

2. Apartments / flats delivered

Analysis of data on residential building in the first half of 2012 indicates that 68,129 flats were

delivered, which is an increase of 24.9% compared to the same period in 2011. The increase was also

observed in comparison to the year 2010 - by 6.8%. Such situation after the first half of the year is

encouraging. We expect that the year 2012 may end with even 20% increase compared to 2011.

Property developers, who in the first half of the year delivered up to 50% more units than in the

previous year, had by far the greatest impact on this growth. Market of flats for sale and rental

strongly revived after the two lean years (2010, 2011) and is likely to stabilize in subsequent periods.

When it comes to private investments, they were growing very steadily for several years and such

continuation can be expected in the nearest future.


Number of apartments / flats delivered in the period 2007 - first half of 2012

Type of construction 2007 2008 2009 2010 2011 I-VI 2012

Condominiums 8 240 8 647 7 373 5 052 3 834 2 161

Private 71 643 83 338 72 211 70 441 73 034 37 695

Sale or rental 45 653 66 703 72 353 53 505 50 187 26 822

Other2 8 162 6 501 8 142 6 837 4 666 1 451

POLAND 133 698 165 189 160 079 135 835 131 721 68 129


Table 2

Analyzing the housing market in Poland in recent years, we can observe a noticeable seasonality.

Investors deliver most apartments / flats in the fourth quarter and the least in the second quarter,

which trend applies to all types of housing.

Private investors represent the biggest share in delivered apartments / flats. They built 37 695 flats in

the period January-June 2012, which shows an increase of 10.7% compared to the same period of

2011. Co-operatives are most active in the housing market - in the period from January to June this

year they delivered twice as many flats as in the first half of 2011 (first half of 2011 - 1 054 flats, the

first half of 2012 - 2 161 flats).

2 Company, council, rental social apartments.


Fig. 11

3. Apartments / flats - construction commenced

Considering the period from January to June 2012, the increase can be observed not only in the

number of delivered flats. Compared to the same period of 2011, the number of dwellings the

construction of which commenced in 2012 increased by 0.8%. During this period, the construction of

nearly 81 thousand flats was commenced. A very large increase in the number of new construction

projects was reported by housing associations (year-to-year growth of 76.7%). Private investors

began less construction projects than a year ago - a decrease by 10.7%. Taking into account the time

of construction of a single family house, which is about 5 years, we do not have to expect the

downward trend in the number of delivered houses. Property developers build apartments much

faster, who showed relatively high activity in the first half of 2012. And so, the number of dwellings

for rent or sale has increased by 21.9% compared to the same period of 2011. As the property

developers build apartments much faster, the positive effects of their commenced investments can

be expected over the next two years.


Number of flats the construction of which started in the period 2007 - first half of 2012


Condominiums 8 671 5 702 4 196 4 644 2 263 1 642

Private 91 649 96 346 89 783 86 477 90 500 43 321

Sale or rental 78 698 67 018 44 323 63 015 64 706 34 767

Other 6 099 5 620 4 599 3 928 4 731 951

TOTAL 185 117 174 686 142 901 159 064 162 200 80 681


Table 3

The number of apartments / flats per quarter, the construction of which started a few years ago, we

can see that the majority of construction projects was commenced in the second quarter. In most

cases it is due to the weather conditions in Poland, the period of spring is optimal to begin

construction work. In particular, the individual investors pay attention to the date of commencement

of work at the construction site.

Fig. 12


4. Building permits

Building permits are the least important indicator in the process of predicting the future in the

housing market. Due to the fact that such permit shall be valid for up to 3 years, investors may delay

the start of construction, and even give it up without any consequences. However, if the number of

licenses is growing rapidly, it is certain that it will result in an increased number of delivered

apartments. We experienced such situation in 2007, when the year-to-year increase in building

permits amounted to 150% and resulted in the increase in dwellings delivered by an average of 25%

in the subsequent period (2008-2009).

Total number of permits for the construction of dwellings issued in the first half of 2012 maintained

its level of the first half of 2011 and amounts to 88 076. However, taking into account the different

types of construction - fluctuations can be observed. Positive dynamics relates to the objects for sale

or rent (compared to the same period in 2011 +13,5%). Significant decrease in building permits

issued was observed in housing associations sector (by 41.7% y/y). Private investors and other

investors also experience a negative dynamics value (y / y 8.1% and 5.7%, respectively). The relatively

small year-to-year changes in growth rates do not allow for prediction of significant changes in the

number of delivered dwellings.

Number of flats for which permits were issued in the years 2007 - 2012


Condominiums 10 604 5 464 3 715 3 530 3 184 933

Private 110 452 113 226 102 947 98 934 96 398 45 715

Sale or rental 117 505 101 139 63 411 68 581 81 763 40 031

Other 9 110 10 317 8 728 3 884 2 756 1 397

TOTAL 247 671 230 146 178 801 174 929 184 101 88 076


Table 4

The analysis in respect of the number of permits issued by the quarter over the last few years shows

that the majority of permits was issued to investors in the third quarters. This indicates that investors

apply for permits in advance, before the winter months so that they can during this period prepare

for the construction, which is likely to begin in the spring. This trend applies to both individual

investors and property developers, however, this trend is more clearly visible in the case of

an average "Kowalski" family planning to build a house.


Fig. 13

5. Non-residential buildings

In 2011, 20 968 non-residential buildings were delivered, with a total area of 12 494.3 thousand sq.

m. Cubic capacity of these buildings was 80 013.4 thousand cubic meters. Comparing the year 2011

and 2010 it should be noted that:

Total number of buildings has increased by 2.6%,

The total cubature has increased by 7.6%,

The average size of non-residential building has increased by 4.9% compared to 2010 and

amounted to 3 815.9 cubic meters.


Fig. 14

The structure of the various types of non-residential construction in the period of 2005-2011

Analyzing the structure of various types of construction we can see that the garages have largest

share in non-residential buildings (32.2%). Every fourth (25.1%) non-residential building delivered can

be classified under "other" types of buildings. The commercial-service facilities and warehouses have

a significant share in the structure of non-residential buildings delivered (16.4% and 10.2%,

respectively). These types of buildings constitute more than 80% of all non-residential buildings

delivered in 2011. Comparing the 2011 and 2010, we can see almost no changes in the share of this

type of objects in the structure of all non-residential buildings in Poland.


Fig. 15

The structure of non-residential buildings in respect of cubature is quite different: garages represent

only 1.9% of the total cubature of non-residential buildings, although they were built in the greatest

number in 2011. The largest buildings in respect of cubature are storage facilities, industrial buildings

and commercial-services facilities, which together account for nearly two-thirds of the total

cubature.

Fig. 16


Non-residential buildings in 2011 by individual categories

Looking at the number of different types of non-residential buildings delivered in 2011, a significant

increase - compared to 2010 - can be observed in the case of hotels and tourist accommodation

buildings (18.9%). Undoubtedly, this has to do with the European Championships in football, which

took place in Poland in June 2012. Organizers of this big sports event had to provide accommodation

for the demanding national teams, training stuff and thousands of fans.

In the case of buildings of transport and communications increase in the number of the delivered

buildings was less marked (5.7%). It should be noted that when comparing similar data for 2010 and

2009, the increase in the number of delivered buildings amounted to 12.5%. The rate of increase in

the number of these buildings slowed down considerably.

The increase in the number of delivered non-residential buildings was also observed in the case of

office buildings (3.8%) and other non-residential buildings (2.5%).

In other types of facilities the number of buildings delivered has decreased. The most significant

decrease can be observed in public buildings. Compared to 2010, in 2011 there was a decrease of

4.7% in the group of delivered buildings such as schools, hospitals, cinemas, theatres and libraries.

A less pronounced decline in non-residential buildings delivered in 2011 (compared to 2010)

occurred in the commercial and service facilities (1.1%), and industrial buildings and warehouses

(0.2%). Comparing the years 2011 and 2010, one can observe a certain stability. It is noteworthy,

however that both types of buildings have been recording gradual decrease in the number of objects

delivered since 2008.

Although the number of delivered buildings has not grown significantly and that there was a decline

in several categories, the cubature of non-residential buildings has greatly increased. Analyzing

cubature of different types of buildings we can see a decline only in the case of office buildings. Its

value amounts to - 6.8% (in 2010 the cubature of such buildings was 3 853.9 m3, and in 2011 it

dropped to 3 591.4 m3).

In all other types of non-residential buildings the cubature has increased. The greatest growth was

observed in other non-residential buildings (19.2%), followed by commercial and service facilities

(12.4%), transport and communications buildings (10.3%), public facilities (5.2%), industrial buildings

and warehouses (3.6%), and hotels and group accommodation buildings (3.1%).


Average cubature of non-residential buildings delivered in 2011 is as follows:

Public objects – 10 682.1 m3

Industrial buildings and warehouses – 10 367.3 m3

Office buildings – 6 278.7 m3

Commercial and service facilities – 5 062.1 m3

Hotels and tourist accommodation buildings – 3 007.7 m3

Other non-residential buildings – 2 110.9 m3

Transport and Communications Buildings - 274.2 m3

Non-residential buildings delivered in 2007-2011

TYPES OF BUILDINGS

2007 2008 2009 2010 2011

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Hotels and tourist accommodation buildings

879 2 131,4 756 1 944,2 622 2 149,1 587 2 036,4 698 2 099,3

Office buildings 571 4 345,6 623 5 647,5 586 4 382,6 551 3 853,9 572 3 591,4

Commercial and service facilities

3 741 18 653,2 4 118 19 190,1 3822 18 853,1 3 476 15 488,5 3 439 17 408,5

Transport and Communications Buildings

6 479 1 770,1 7 136 2 664,2 5742 1 854,6 6 426 1 689,6 6 795 1 863,4

Industrial buildings and warehouses

4 127 49 765,4 3 684 52 604,3 3175 45 171 3 057 30 271,4 3 051 31 360,8

Public objects 655 5 105,3 657 5 761,2 863 5 815,6 1 210 11 703,2 1 153 12 316,2

Other non-residential buildings

10 263 12 342,2 6 526 12 028,1 5139 9 907,2 5 134 9 312,7 5 260 11 103,3

Total number of non-residential buildings

26 715 94 113,2 23 500 99 839,6 19 949 88 133,2 20 441 74 355,7 20 968 80 013,4


Table 5

Non-residential buildings market is highly dependent on the Polish economy, and analyzing that area

we can see that it easily adapts to the needs and changes. In the years 2010-2012, when preparing

for EURO 2012, Poland delivered more than twice as many public buildings as in previous years. We

can also observe the increase in average cubature of buildings, which means that we adapt to global

trends. The buildings are bigger and higher, they also include large underground car parks. Poland


has built a lot of new roads and highways recently, therefore we can expect that logistics centres at

the traffic junctions will be built in the coming period.


III. Export of building materials and services

Analyzing the Polish construction industry one should not forget about the exports of materials and

services of this industry. Construction design solutions, materials and workmanship applied in Polish

construction industry do not differ from the European standards, and in some cases are ahead of

international competition, therefore the potential of Polish construction industry should be

developed in this direction.

1. Export of construction services

The factor that has a significant impact on the construction sector is probably the internationalization

process of construction output (i.e. the activities of foreign companies in Poland and of Polish

companies abroad). This process has a direct impact on the increasing competitiveness in the

construction industry. In 2011, the Polish construction companies employing more than 9 persons,

earned PLN 4.6 billion working abroad. That was not, however, a record-breaking year for the higher

value of construction and assembly output was reached already in 2006 (PLN 4.8 billion).

Fig. 17


Analyzing the potential of Polish contractors it must be said that the results currently achieved

abroad are not the maximum of their capabilities. Additional potential is also determined by the

dynamically growing number of emerging new players in the industry. In 2011, there were about 240

thousand of them, while in 2005 there were only 160 thousand. For the potential to be used to the

fullest extent, there is a need of activation of Polish construction companies on foreign markets.

A great example of Polish companies' activity is their initiative to cooperate in the preparations of the

World Cup in 2018 in Russia. Polish contractors want to meet Russia's needs by offering their

experience in the organization of such an event (Euro 2012).

Taking into account the place of works conducted by Polish construction units, one can see that

Germany is definitely the most popular destination. Construction and assembly works carried out in

Germany in 2011 reached about PLN 1.9 billion, which represents 42.2% of the total of works

performed outside Polish borders. The average employment in the implementation of construction

and assembly production in Germany is kept at the level of 8.6 thousand people.

Fig. 18

2. Export of building materials

Apart from export of construction services, the export of building materials is also the flywheel for

the construction industry. A symbol of export success in the construction industry is the company


Fakro from Nowy Sącz. Within 21 years the company had become one of the largest manufacturers

of roof windows in the world.

Analyzing the strategies of manufacturers of building materials within the past few years, one can

observe the trend of moving away from locating the production to the east of Poland due to lower

labour costs. It turns out that in the case of construction products the higher quality that the

manufacturers are able to achieve in Polish conditions is more important. According to this trends,

the western manufacturers are still willing to locate their factories in Poland, even if the Polish

market does not belong to the most ready markets in Europe. A Danish consortium Rockwool is

a good example of construction materials manufacturers' investment in the Polish conditions, which

has invested about PLN 950 million in Poland, so far. In recent years it amounted to PLN 200 million.

This amount was spent on the manufacture of suspended ceilings and the greenhouse horticultural

substrates. Nowadays, 80 - 90% ceilings and horticultural substrates from Poland are exported,

mainly to Western Europe. In this case, the decision on the location of production was supported by

the competitiveness of Poland in terms of costs and quality.

Research analysis confirm the enormous export potential of building materials manufactured in

Poland as well as plans related to further development in this direction. The most export-oriented

groups of products in the Polish construction industry are:

1) construction chemicals,

2) ceramics and fittings,

3) wood in construction (floors and stairs),

4) heating equipment,

5) roofing.

Construction chemicals

Construction chemicals market consists of many product groups. This category can include, inter alia,

paints and varnishes, but also adhesives, tile joints, insulation systems, products for thermal and

acoustic insulation, bitumen, foils, etc. The trend for construction chemicals market development is

dependent on the situation in the construction industry, and the situation in the housing sector is

particularly important for the potential demand.

Polish construction chemicals market is highly fragmented, for example, in the case of manufacturers

of paints and varnishes, there are about 150 entities in the country. Many of these entities operate

also on foreign markets, for example Śnieżka, which is one of the leading Polish producers of paints is


also a leader on the Ukrainian market. Taking into account the overall construction chemicals market,

one can say that Atlas Group is a leader on the Polish market. The company's portfolio contains

about 20 product groups regarded as construction chemicals. The aim of the Atlas Group is to

maintain and strengthen its position in the Polish construction chemicals market, but also to become

a major player in East-Central Europe. Speaking of construction chemicals one should also mention

another Polish company - Selena, ranked among the leaders in the market, both in Poland and

abroad. Selena is currently the fourth largest producer of polyurethane installation foams in the

world. The company provides its products to the customers in more than 50 countries, and has its

own trading companies located in 17 countries. Products manufactured by Selena are regarded as

a technological innovation on the foreign markets.

Ceramics and fittings

Ceramics and sanitary fittings should be included in the group of basic materials used in the finishing

market. It is a group of products, the large proportion of which is exported, and therefore the

production of ceramics and sanitary fittings depends on the absorbency of the national and

international markets. The demand for these products is mainly based on the renovation market,

while the new investments make up much less percentage.

One of the problems of the Polish producers, in particular the producers of ceramic tiles is unused

production capacity. Domestic sanitary fittings market is divided between Sanitec and Cersanit,

which together have about 70% of shares. Poland is currently fourth manufacturer of ceramic tiles in

Europe, following Italy, Spain and Turkey. Ceramic tiles production in Poland is based on several key

players: Grupa Cersanit, Grupa Paradyż, Ceramika Tubądzin and Ceramika Nowa Gala. In the case of

sanitary fittings the leader on the Polish market is a Grupa Armatura. Analyzing both ceramics and

sanitary fittings industry on the Polish market one should pay attention to import, because the

Western European competition is very active on the Polish market.

Wood in Construction

Forests and wood in Poland is one of the strategic natural resources. Polish wood sector has one of

the biggest potentials in trade with foreign countries. In recent years, Polish wood products go

mainly to the markets of the European Union states (79%).

Poland is a leader in the production of wooden floors in Europe - in 2011 our country's participation

in the market amounted to 17.5%. The next place was taken by Germany, with the share of nearly

15%, and Sweden (almost 14%). The most popular wood in Europe is oak (62.8% share of this kind of

wood in production of wooden floors). In Poland, it is also the kind which is mostly used in wood


flooring production (50%), although, according to data from the Polish Parquet Professionals

Association (Stowarzyszenie Parkieciarzy Polskich), the exotic wood has also attracted considerable

interest in Poland (27%).

The definite leader on the Polish market of wooden floors is Grupa Barlinek, which is well known not

only to Polish consumers. Grupa Barlinek is a leading manufacturer of laminated wood flooring in the

world, with production capacity of over 9 million m2 per year. The most important product offered is

Barlinek board (deska barlinecka) – laminar floor made of domestic and exotic hardwood. Wooden

floors are sold to 50 countries on 4 continents.

Heating equipment

The Polish heating equipment market is worth more than PLN 3 billion. At present, coal boilers

constitute the largest part of it, however, the heat pumps and solar panels market has been growing

quite fast for the last few years, taking up about 10% of the market. Thanks to the advanced

technologies, good quality and affordable prices those goods are largely exported abroad, mainly to

the countries of the European Union.

The market of modern heating systems in 2012 is very fragmented. It is hard to point out the market

leaders as the situation is changing very rapidly. Double-digit sales growth dynamics of heat pumps

and solar collectors attracts new investors and allows for the development of existing companies

producing modern systems. Every year, the consumers enhance their knowledge on energy efficiency

and therefore the demand for such products grows significantly. The grants and subsidies for energy-

efficient construction investments is also an incentive - more and more countries decide to support

it.

Roofing

Considering the export potential of products in the scope of roofing materials in Poland, one should

distinguish tar papers, used mostly on the flat roofs. Currently, flat roofs are covered with materials

from the following groups:

• traditional bituminous roofing paper - usually,

• modern bituminous roofing paper (on modified bitumen, with special inserts)

• foil systems,

• polyurethane foams and roof emulsion coatings.

Modern bituminous roofing paper are worth noticing here - they almost entirely displaced the

traditional bituminous roofing paper in Western Europe. Such solutions are successfully used, for


example in Germany, where due to excellent technical parameters, resistance to the conditions of

use and competitive pricing have become the dominant material and constitute 70% of the roofing

materials market currently. The world's largest producer of bituminous roofing is Icopal consortium,

the company originating from Scandinavia. Icopal has been present on the Polish market since 1992.

3. The share of exports of building materials produced in Poland

Export of construction industry has great traditions in Poland, and it has been practiced on a large

scale in many foreign markets since the 80's. Polish building materials producers wish to highlight

their position on the international arena, and this is confirmed by the research results.

Taking into account the share of exports in the revenues from sales one can notice that for half of the

surveyed companies (50.9% companies), the share of exports in revenues stands at the level of less

than 20%. Most of the companies showed their export at the level of around 10%. A significant

percentage of companies (25.5%) declared, that the contribution of their export to their revenues is

within the range of 20% to 40%. It is worth noting that the survey also covered companies with the

revenues from sales of building materials abroad of more than 80%, however their number is much

smaller.

Comparing the current results with anticipated export values in various companies in the coming

years, we can be considerably optimistic. In the opinion of 73% companies exporting their products

and surveyed by ASM, the share of exports in total sales revenue shall grow in the coming years, and

it shall have a fairly significant impact on the change in the structure of the surveyed companies. As it

is expected, the share of companies the export of which can generate over 60% of sales revenues

may increase from the current 24.5% to 40.9% by 2015. This means that the Polish producers of

building materials look out for an opportunity to develop their businesses on exports in the near

future. It should be noted that while estimating the volume of exports until 2015, the uncertainty

concerning the foreign markets was also repeatedly emphasized, as well as the risk factors associated

with foreign exchange, on which the surveyed companies based their anticipation as to the situation

in exports.


Fig. 19

Analyzing the export results of the individual companies and estimates relating to the general Polish

exports in different sectors, it can be concluded that the already large part of the selected building

materials is exported. In the case of heating systems and wooden floors and stairs, the

manufacturers estimate that export may constitute about 27.0%. Slightly smaller share of export falls

on the products included in the fittings and sanitary fixtures (26.9%). It is estimated that currently

among the five selected product groups, the smallest percentage of products that go to the foreign

markets falls for the construction chemicals, i.e. 16.3%. Among other things, this is due to the fact

that this group covers a very diverse range of products. These include paints and varnishes, but also

adhesives and the tile joints, insulation systems, thermal and acoustic insulation products, bitumen,

foils, etc.


Fig. 20

4. Export destinations

Analyzing the trends of exports of Polish construction materials and services, one can notice that

Germany is the definite leader - this country was indicated by as many as 60% of the analyzed group

of exporters. In addition, the countries such as Ukraine, the Czech Republic, Russia, Slovakia and

Lithuania proved to be crucial trading partners within the scope of products for construction

industry. These are the countries located in the immediate vicinity of Poland. We should remember

that export is heavily dependent on transport costs - similarly to the whole distribution system in

construction sector. Kazakhstan shall be distinguished from among other countries, because - despite

of distance and communication problems - it is also one of the destination countries of our products.


Fig. 21

As you can see in the chart below, the vast majority of companies is optimistic about the prospects of

export in their companies within the next 4 years. There are less than 30% committed pessimists

among the surveyed enterprises. Interestingly, 65.2% out of 72.8% of the entities planning to expand

their exports intend to seek out and conquer new foreign markets.


Fig. 22

The European Union countries dominate among the directions of the planned development of export

activities - nearly three quarters of the surveyed companies plan to increase exports to these

markets. The second direction in terms of popularity, are the countries of the Eastern Europe - half of

the respondents that plan to win the new markets indicated that region. It should be noted that

3 out of the Eastern countries (Russia, Ukraine, Kazakhstan) came at the forefront of the mentioned

potential destinations. According to the respondents, Russia has the greatest export potential for

construction materials and services. 1/3 of companies that intend to expand their export mentioned

this very country. Polish companies are excited about the export of construction services in

connection with the organization of a large sports event which is to take place in Russia in 2018 - the

World Cup, because it is a great opportunity to share the experience of the Polish companies. Polish

companies are looking forward to the possibility of cooperation in the organization of this event.


Fig. 23

4. Summary

The purpose of this report is to present the current economic situation in Poland and to identify

strengths and weaknesses as well as the opportunities and threats related to export of construction

materials and services. Since the current economic situation in Poland is stable, creating favourable

conditions for trade, let us at the end identify the factors that affect the construction sector in

a positive or negative way, and which also affect the size and quality of export of Polish construction

materials and services. The strengths and weaknesses, as well as opportunities and threats are

identified below:


SWOT analysis of the export potential of products for the construction industry

STRENGTHS WEAKNESSES

The growing importance of the

construction industry in the creation of

the Polish GDP;

Construction industry was the fastest

growing industry in 2011, on a domestic

scale;

A high percentage of workers in the

construction industry;

High quality of building materials

produced in Poland;

Competitive prices is comparison with

foreign companies;

Innovative production solutions;

Bureaucracy associated with running

business activities;

High tax burden;

Construction law provisions;

Difficulties in obtaining loans for start-

ups;

EU funding program coming to an end.

OPPORTUNITIES THREATS

Economic growth,

Increased production will allow for

lowering the unit production costs

Significant independence from

fluctuations in the domestic market

The presence on foreign markets makes it

easier to find new market niches

Export opens up new possibilities for

financing of business activities

Global economic crisis,

Joining the international competition at

the stage when the market is already

formed is more difficult

Exchange rates and tendency to their

fluctuations


INDEX OF GRAPHS

1. Influence of individual categories on real growth of GDP in Poland in the years 2003- 2011 (%)

4

2. European Commission forecasts for the EU in 2012 - GDP (%, y / y) 5

3. The value of Polish exports in the years 2003 - 2011 [in billion EUR and %] 6

4. Dominant directions of Polish exports in 2011 [in million EUR] 7

5. The shares of construction related product groups in total exports 8

6. The share of the construction sector in the Polish economy (gross added value in the construction sector as a % of GDP)

9

7. Construction and assembly production realized on Polish territory (in billion PLN) 10

8. Dynamics (in fixed prices) of construction and assembly production * broken down by type of work performed (in %)

11

9. Structure of construction and assembly production in Poland, by type of facility [%]

12

10. The average growth of construction output (y / y) in the EU in the last four years 13

11. Number of flats delivered in individual quarters of 2009-2012 15

12. Number of flats the construction of which started in individual quarters of 2009 - 2012

16

13. Number of flats for which permits were issued in individual quarters in the years 2007 - 2012

18

14. Total number of non-residential buildings delivered in Poland in 2005-2011 19

15. The structure of non-residential buildings delivered in 2011 (in %) 20

16. Structure of cubature of non-residential buildings delivered in 2011 (in %) 21

17. Construction and assembly carried out by Polish contractors outside the country and the average employment [in billion PLN and thousand employees]

24

18. Structure of construction and assembly work carried out by Polish contractors outside the country by the place of work [in %]

25

19. The structure of Polish producers of building materials by the share of exports in total sales revenues [2011/2015]

30

20. Directions of sales of selected product groups with high export potential from Poland

31

21. Dominant directions in exports of building materials by country (in %) 32

22. Plans to develop the export of building materials 33

23. Dominant directions of further export expansion [in%] 34

INDEX OF TABLES

1. Growth dynamics by sectors of the economy 8


2. Number of apartments / flats delivered in the period 2007 - first half of 2012 14

3. Number of flats the construction of which started in the period

2007 - first half of 2012 16

4. Number of flats for which permits were issued in the years 2007 - 2012 17

5. Non-residential buildings delivered in 2007-2011 23

table of contents · 2015-01-21 · information on the polish construction industry for the years...

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