In 2017, Polish exports exceeded €200 billion, whilst this year, judging by the results after the first half, it is set to increase by a few percent. Despite its structure of being dominated by cars and automotive parts, the products of industry machinery also play an important role, especially mining machinery, machine tools, lifting devices and agricultural equipment. The situation is similar with imports – it also reached record results and has been growing faster than exports.
The business environment in Germany, the euro area and international markets, as well as the high pace of development of the Polish economy, create positive macroeconomic conditions for the growth of international trade in Poland. Today, it is easier for Polish exporters to operate on the EU market and outside the European Union. One factor that increases the export potential is a wide participation of Polish firms in the corporate chains supplying global companies. The advantage of Poland’s export offer is its price to quality positive ratio. It is also influenced by correct decisions made by many Polish companies with regards to specialisation and selection of market niches to focus on.
On the domestic market, machinery industry goods are in great demand thanks to investments in production capacities. The demand for machinery and devices by Polish companies is, to a large extent, met through imports. One factor that strongly stimulates imports is the high import intensity of production, which is visible especially in high-tech sectors.
Uneasy numerical data
The Polish export of machinery and equipment together with many automotive products amounted to approximately €27 billion in 2017, 6% higher than in 2016. In the same period, imports increased by as much as 10.2%, which reduced the positive trade balance to around €1 billion.
The data for the first half of 2018 point to further growth of the machinery industry (4.5%). This, with the slightly faster growth of the machinery and equipment industry (7.1%), led to a surplus in trade with products of the machinery industry (€0.7 billion). It is symptomatic that the share of high-tech goods in Polish exports remains relatively low and did not exceed 9% in 2017.
The ranking of the 50 most important items in Polish exports is dominated by cars and automotive parts, while there is no mining, construction, agricultural machinery nor machine tools. Meanwhile, these products (some of them) have been showcase products of the Polish machinery industry and are known on many markets. The significant role of machinery and devices in the Polish exports offer remains unquestionable even though their sales are currently lower in terms of quantity compared to products such as aviation engines, washing machines, cooling devices, air pumps and gas turbines.
Machine tools stay behind
Machine tools are some of the traditional products of the Polish machine industry. However, export of such machines, considering the fast turnover growth of Polish foreign trade, comes out rather weak. Poland is far on the list of biggest suppliers of machine tools, with the share of global export constituting 0.7% in 2017, and 1.5% in the EU export list. It plays a slightly more important role in the import of processing machinery which is indicated by almost a 2% share on the global market and a 6% share on the EU market. According to the data from the German Association of Producers of Machinery and Devices (VDMA), in 2017, Polish companies exported machine tools valuing a €250 million. This is a significant growth compared to the year before (7.2%). The quantity of export, although growing, remained very low.
Advantages may be greater
The growth of export is a very positive phenomenon. However, it seems that the scale of the so-called export added value is more important - this is the part of growth’s added value of good sales with the ‘made in Poland’ label. It turns out that Polish exports is, to a large extent, based on imported materials, components and technologies, and often not more than a small part of the exported good’s added value was actually produced in Poland. Furthermore, semi-products exported from Poland often return in the form of a product that has been further processed.
Export successes confirm the strength of the Polish economy. Yet, it is still far behind that of developed EU countries. For the time being, the domestic offer remains relatively humble compared to France or Germany – few highly processed products are sold, especially final products, the production of which require a high level of supply import. The good news is that Polish entrepreneurs have started investing in modernisation and development of machinery stock. Without such actions, maintaining a high level and competitiveness of export would prove to be more difficult.
This article first appeared on www.maschinenmarkt.international.