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The Warsaw Voice » Other » November 18, 2009
Privatisation in Poland
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Reinventing Ko這
November 18, 2009    wersja polska »
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The 1993 sale of bathroom fittings manufacturer ZWS Ko這 to Finnish corporation Sanitec is an example of how privatisation can facilitate a company's development. Thanks to financial support from the core investor and an influx of advanced technology and new management methods, ZWS Ko這 has become Poland's leading producer of bathroom fittings.

The beginnings were not easy, but the management's determination eventually led to success, experts say. This privatisation, which took place more than 16 years ago, is still held up as a model to follow.

When the going gets tough

Zak豉dy Wyrob闚 Sanitarnych Ko這, established in the central city of Ko這 (the name means "wheel" in Polish) in 1962, made ceramic bathroom fittings and by the early 1990s was in need of thorough modernization. The staff supported the management's decision to search intensively for a strong strategic investor. The company set its land ownership issues in order and in 1991 was transformed into a single-owner State Treasury company.

ZWS Ko這's assets included a strong position on the domestic market, a central location in Poland and an experienced and highly qualified crew. Prospective investors were expected to offer advanced technology, experience in manufacturing bathroom ceramics and, of course, the funding necessary to modernize the company.

Market conditions at the time were not easy. In 1993, the Polish market for bathroom fittings did not look particularly promising and there were many doubts as to its development prospects. Even so, the company did find a foreign investor.

Sanitec, a Finnish holding company and a European leader in the ceramic bathroom fittings sector, acquired 80 percent of ZWS Ko這's shares in 1993 and promised investment guaranteeing the factory's comprehensive modernization. Employees were given a guarantee of employment and a preemptive right to acquire 20 percent of shares from the State Treasury. On the day of its sale, the company employed 321 people and its annual output was 295,000 items.

The modernization programme began in the fall of 1993. After the first stage was completed, the factory's capacity grew to more than 500,000 items a year. Demand for Ko這 products grew at breakneck pace. This explains why further expansion was planned in 1995, aimed at reaching a production capacity of 1 million ceramic items per year, or triple the output at the start of modernization. This required changes to be made in all of the factory's divisions as well as environmental investments. The modernization turned out to be beneficial for the town of Ko這 as well, speeding up its connection to the natural-gas supply network.

New approach

The market success of the Ko這 brand encouraged the Sanitec Group to expand the factory in Ko這 and to invest further in Poland. New factories were set up in W這c豉wek, Mi雟k Mazowiecki and Ozork闚. In Ozork闚, a factory making acrylic goods and shower stalls was built from scratch. New technology and a new approach to company management were implemented at all the plants. New products offering high esthetic value and modern design were launched. Today leading world designers are often involved in developing them, such as Antonio Citterio and Porsche Design Studio. This has resulted in a marked improvement in the quality and quantity of bathroom goods the company makes. Ko這's range today includes 16 series of ceramic fittings and bathroom furniture, 24 models of acrylic bathtubs, 20 models of acrylic and ceramic shower trays, seven series of shower stalls, concealed frame hanging kits, hydromassage equipment and accessories for outfitting bathrooms for the disabled. These goods can satisfy the tastes of even the most discerning clients. It was with clients and their changing needs in mind that fine fire clay (FFC) lines were started up at the W這c豉wek factory in the fall of 2008. This is Poland's first ceramics factory with such an advanced and partly automated production line. Thanks to the fine fire clay technology, the factory can make large-sized ceramic goods, for example washbasins more than 100 cm wide, ceramic shower trays and kitchen sinks.

Since 1993 when ZWS Ko這 became part of the Sanitec Group, the parent company has invested more than 100 million euros in Poland, increasing production capacity to almost 3.5 million ceramic items per year and significantly improving sales. In 1993, the company reported sales of about PLN 6.11 million. This year, Sanitec Ko這's total sales are close to PLN 500 million, and are expected to exceed this figure in 2010.

Professional staff

The investor showed appreciation for the experience of Ko這's employees. Medium-level managers were hired for the new factory in Ozork闚 on the basis of in-house recruitment. Employees were given the opportunity to take part in training courses and exchange experiences with other companies from the Sanitec Group. Thanks to this, many of them have upgraded their qualifications and been promoted, gaining new opportunities for career development.

The Sanitec Ko這 factory has also hired new employees, with new skills. Compared with 1993, when the factory was privatised, employment has grown almost five-fold, from 321 to 1,567 in 2008. New jobs were also created at companies supplying the factory.

Company today

At present, Sanitec Ko這 is one of the biggest companies in the bathroom fittings sector in Poland and the Central and Eastern European (CEE) region as a whole. The Sanitec Group's strength combined with the experience that Ko這 gathered during its almost 50 years on the local market made it possible to take full advantage of the opportunity offered by privatisation. In the Sanitec Group, Sanitec Ko這 is responsible for the entire CEE region, handling sales and marketing in all the countries of the region. The Ko這 brand is well known and popular in countries such as Ukraine, the Czech Republic and Slovakia, where the company runs its business.

"Ko這 products are well known in the Czech Republic, Slovakia and Ukraine," says Przemys豉w Powalacz, chairman of Sanitec Ko這. "We are now striving for a greater share in markets such as the Balkans, Central-Southern Europe and the Middle East. Ko這's factories are working at full tilt, also for our Western partners within the group. The zloty's poorer performance has been a factor in this, since the costs of production in Poland-which are counted in euros-have dropped substantially."

The company's strong market position and committed work force have helped the company deal with the latest problems on the market caused by a slowdown in housing construction and other sectors. Ko這 has not only maintained its previous year's sales level, but has significantly increased its share in the sale of low-cost goods. New products from this segment, new product groups like concealed frame hanging kits and a search for new export markets are the main ways in which the company is working to increase its sales. Furthermore, the company is taking an innovative approach to promoting its brand, according to Ko這 executives. Mid-2009 saw the opening of the company's first showroom outside Warsaw-in Cracow.

This is a place where customers can not only buy all the fittings for their bathrooms but also visit design and architecture exhibitions. "The key task of this showroom, like the one in Warsaw, is to organize training courses and presentations for our partners: distributors, architects and plumbers," Powalacz says.

Next year the company plans to substantially modify its product range and take a number of measures to strengthen its brand in Poland and other countries in the CEE region, according to Powalacz.

Social responsibility

Sanitec Ko這 takes part in campaigns benefiting the public. As part of its corporate social responsibility, the company is involved in projects that include helping the disabled under the "Bathrooms Without Barriers" programme and improving the condition of public bathrooms. The company has helped outfit public bathrooms and bathrooms at educational institutions in Cracow.

The company boasts a high level of environmental awareness, paying attention to environmental protection and running its operations in such a way so as to have as little negative impact on local communities and natural resources as possible.

Wojciech Choina, Media relations officer at Sanitec Ko這
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