Polish Toledo

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Thursday, July 28, 2011

Yacht building rides crest of wave in Poland

Shipyard cranes idle for decade
The birthplace of the ‘New Poland’ is rusting away in Gdańsk harbor. 
Once upon a time the Lenin shipyard gained international fame when Solidarność was founded there 30 years ago. Both Lenin and Stocznia Północna (Northern Shipyard) were huge functioning industrial complexes employing more than 17,000 workers before becoming the birthplace for civil resistance that eventually collapsed communism across Eastern Europe and contributed to the demise of the old Soviet Empire.

When Poland joined the European Union one of the conditions of membership was that the government could no longer subsidize the yards, as was the practice for years during the communist era. Because of wealth redistribution and the necessary government financial support of inefficient industries, the old socialist regime could never afford to invest in new technologies. A newly liberated Poland not having vast amounts of free market capital couldn’t catch up to more advanced ship makers, so countries like South Korea and China gained a competitive advantage building commercial vessels.

Polish built catamaran heading to the Baltic in Gadańsk

Today, under the shadow of gargantuan rusting cranes is a bright spot on a few leased acres of the old shipyard. Sleek state-of-the-art luxury Polish built yachts are reinventing the country's all-but-defunct shipbuilding industry with a sporty capitalist edge.

It might be one of the best kept secrets in the recreational boating world, but Sunreef Yachts in Gdańsk and other upstart luxury boat manufacturers on the Baltic Coast and Mazury Lake Region are accounting for more than a third of the yachts on display at boat shows all over Europe.

Clients are comparing the new breed of Polish luxury craft to the best-known Italian brand in terms of craftsmanship and buyers are proud to own vessels made in the hallowed shipyard where the pro-democracy Solidarity trade union rose up under Lech Walesa.

Sunreef went into business ten years ago. An expatriate French father-and-son team tapped into generations of shipbuilding savvy in the Gdańsk workforce to turn out products for choosy clients from Monaco to Qatar and Hong Kong to Hawaii.

Their vessels are mainly double hulled catamarans measuring up to 200 feet in length. The quality is at the same or higher level than other yards in Europe, but prices average 15 percent lower than the non-Polish competition.

A renowned yacht magazine recently carried a feature article affirming the competitiveness of Sunreef and three other homespun Polish super yacht makers. These four firms and another 100 yacht yards christened more than 20,000 boats last year.

The Polish share of the European market is significant and most are sold under global brands like France's renowned Jeanneau-Beneteau and U.S. giant Brunswick Marine. These branded lines account for around half of Poland's production.

Andrej Janowski, the first to open a shipyard to build luxury yachts after the fall of communism, attributes the drive to make more sophisticated and speedy boats to what he calls the freedom-loving Polish spirit.

"Sailing is something that is characteristic of people with a mentality of freedom “, he insisted.

Indeed, domestic yacht building exploded when communism collapsed in 1989 and the essential marine-grade resins, fiberglass, plywood and lacquers suddenly became available on the emerging free market. The craftsmanship was always there, it was Poland’s newfound access to suppliers in capitalist western countries that laid the foundation to produce world-class motor and sail boats.

While the production of commercial steamships has virtually dried up, Poland holds first place in Europe in the production of sailing yachts 20 to 30 feet long and the entire sector including mega-sized pleasure craft is growing rapidly. Next year’s production is expected to jump 30% and will potentially make Poland the center of European yacht construction.

Those dilapidated communist era cranes rusting away in Gdańsk harbor are less of an eyesore and more of a testament to the unwavering freedom-loving Polish spirit and the ever growing strength of the Polish economy in a world floundering in a sea of red ink.

Birthplace of Solidarność

Thursday, July 21, 2011

Is Poland’s luck about to run out?

Lately, I’ve been writing about Poland’s shining economy. Poles skating through the global financial meltdown with healthy growth is amazing. However, I hinted at the close of last month’s column that Poland’s lucky streak might be near the end.

Well, what could go wrong you might ask.

Poland assumed the EU presidency on July 1, 2011. The timing is unfortunate because the tires are about to fall off the economic wagon of several countries. There is plenty boiling right near the surface regarding the finances of PIIGS (Portugal, Ireland, Italy, Greece and Spain). Stress in Europe is mounting, especially now that England is distancing itself from the Euro Zone and German citizens don’t want more of their tax dollars propping up failing member States.

Publicity wise, it would look pretty bad if countries started defaulting and the economic contagion started spreading like an epidemic while Poland held the six-month term presidency. Many economists say it is not a matter of if, but when countries go bust. If the Polish term as head of the EU can get through the end of December, then it will be Denmark’s headache when they succeed Poland at the helm.

But, what would really be devastating is forced radical changes in Poland’s own economy caused by misguided and mistimed EU rules and policies.

I think we would agree that during the midst of economic turmoil and massive sovereign debt across the western world now is not the time to implement programs and regulations that will hinder recovery and growth, or in Poland’s case cripple it’s strong economic footing.

Poland is a young democracy and making great strides fostering free markets and industries that were short on productivity during the Communist era. While the EU environmental activists call for the abatement of coal in Poland - the continuation of plentiful coal powering the heavy industries making up the largest part of Poland’s industrial output is not a situation any country can turn around on a dime. There is no other energy source close to the cheapness of coal. The major cause of Spain’s 21% unemployment and debt crisis for instance stems from their reckless speed at adopting exorbitantly expensive green energy.

Last month the Polish Ministry of Economy received some bad news. Major companies said if energy costs go up, heavy industry would cut production or pick up and leave for Asia and Africa. A large exodus in sectors like chemical, metallurgy, mining and cement are considered certain and will affect thousands of good paying jobs. That would plunge Poland into an economic calamity of its own.

Coal may not be the villain it is made out to be. It wasn’t too long ago when Time and Newsweek rang the alarm about the coming ice age, devoting nearly a dozen covers to the topic in the mid-1970s. This past decade has been the opposite – hysteria about global warming presumably caused by CO2 emissions. But, lately there has been increasing interest in our sun’s affect on global temperatures being way more potent than so-called greenhouse gases. Read this article - NASA Data Blow Gaping Hole In Global Warming Alarmism

Sunspots emit solar winds that heat the earth and last month the American Astronomical Society said the solar cycle is going into a hiatus meaning a lack of warmth producing sunspots. It might take as little as two years to determine if we’re headed toward another mini ice age like the Maulder Minimum experienced from 1645-1715 coming after the Medieval warm period which produced an abundance of food. Anecdotally, it snowed in Colorado on the first day of summer this year.

So, for Poland’s sake you’d think there is pretty good reason to hold off on expensive carbon dioxide permits that would debilitate one of the healthiest economies in the western world.

On the topic of fracking shale to capture billions of cubic meters of natural gas, Poland has another horde of enemies to fend off. While the prospect of becoming an exporting energy giant and removing itself and EU partners from the evil grip of Russia’s Gazprom, the environmental organizations are turning up the heat to impose a moratorium on this type of gas extraction like they were successful in doing across France.

Although there are worries about potential contamination of ground water, gas shale deposits are located several thousand feet below most water tables. If care is taken boring through the water table to get at the gas there is less danger of tainting well water.

Overall, one would think Poland was dealt a pretty good hand with coal and now the abundance of natural gas. But, changing the rules in the middle of the game might make Poland have to ‘Go fish’. Those increasingly colder winters in Poland have taking their toll on poorer folks freezing to death over the last couple years. Hot soup ain’t gonna be a substitute for much needed cheap energy.

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Gold in them thar hill

Poland was the only EU country to escape the present recession and economic crisis. Industrial output jumped by double digits, while employment and wages are up and out pacing inflation. The discovery of natural gas shale fields that equal more than 300 years of the country’s consumption have major oil companies beating a path to Poland’s door. Then there’s a luxury goods market that is growing faster than any other European country and a debt to GDP ratio that is one of the lowest in the world. The Warsaw Stock Exchange had more IPOs (initial stock offers) than any other European exchange in the past 12 months including foreign companies clamoring to be listed. These are all admirable attributes envied by other countries.

What else could Poles ask for in economic terms?

How about hitting a motherload of gold and silver that was just confirmed in dolny Śląsk!

A few million years ago, way before brothers Lech, Cech and Rus came from the east to establish the Slavic nations, the Kaczawskie Mountains located in southwestern Poland were erupting with volcanic ash and lava flows that glowed in the darkness of night. The apocalyptic looking event heaved tons of wealth to and near the surface of the earth’s crust. Today, in the land of extinct volcanoes modern testing methods indicate substantial mineral riches not previously exploited since mining started there in the 12th century are ripe for the picking.

Mining has always been an essential part of the Polish economy and is one of the most time-honored professions in Poland. Through the centuries going deep under the earth was dangerous and often deadly. Although there is no caste system, Poland’s miners traditionally have been elevated to a special social station of their own. Not only for the Feast of St. Barbara (patron Saint of miners), but also for weddings, funerals and other important political or social ceremonies, miners wear an especially smart looking black uniform adorned with red feathers and act much the same as honor guards.

Perhaps the most wondrous and largest mine in the world is in Wieliczka. Salt is a very important mineral, which seemed absent in Poland until the 13th century when Saint Kinga a Hungarian princess on her way to marry King Bolesław threw her engagement ring into a Hungarian salt mine near her home only to have it found where she indicated Polish miners dig upon her arrival. For over 700 years salt had been scooped out of the depths where Kinga’s ring miraculously appeared.

At the Wieliczka works the vast subterranean chambers are adorned with statues, chapels, grand staircases, dining halls and even chandeliers carved entirely of salt. There is even a clinic for people with lung ailments since the salt laden air is antiseptic.

Although another underground city like the Wieliczka mine is not in the making 150 miles to the west, the little village of Radzimowice in the Kaczawskie Mountains just might add a ton of wealth to the Polish economy.

Stara Gora (the Old Mountain) is the name used mainly by geologists for the location, since it was formerly the place where gold, silver, iron and copper once were mined and remolded. Many mine shafts beneath the peak of Zelezniak bear testimony to the heyday of a once blooming town. Lately, the few inhabitants left take their chances and run farm tourism businesses in a region famous for its panoramic views, wine production and rare plants including orchids and gentian.

Last month four high tech borings nearly a half-mile in depth confirmed the presence of high-grade gold, silver and copper veins, which appear to be untouched in the extensions of the historic site. New veins were also discovered and include significant amounts of gold with about one ounce of gold per ton of earth.

The area has a long history of mining covering 1,000 years and anecdotal evidence suggests and that up to 18,000 ounces of gold were recovered from nearby rivers and shallow digs over the years.

Extensive underground shafts were developed in Radzimowice until the mine closed around 1930 due to low metal prices and the onset of the Great Depression. The underground workings were well documented during earlier mining operations and indicate that most of the ore was mined from six veins. During the 1950s some refurbishment of the mine was undertaken by the Communist government but ceased when the Kupfershiefer copper deposit was discovered at a different location.

With private companies free to explore with the profit motive incentives of capitalism, what was overlooked by the previous socialist regime’s central planning seems to be panning out rather nicely in a market where gold and silver have had a huge run up in value.

The energy and precious metal resources just recently discovered under Polish soil is bound to bring increased economic wealth to the nation just as the discovery of salt did 700 years ago. However, there is a sinister plot being hatched by EU environmentalists that might cripple the heavy industry and coal mining sectors of the Polish economy. The what else Poles could ask for question might just be requesting some sanity regarding EU carbon emissions policies. Stay tuned to this column for a look into the absurdia the environmental whackos may thrust upon the only shining economy of the western world.

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