Let’s not be economically ignorant.

Let’s not be economically ignorant.

Interview with Mr. Arkadiusz Mus, Chairman of the Board of Press-Glas Group.

– It seems that your first career steps were taken in a prosecutor’s office?

Yes. I am a lawyer by profession. Following this, I worked for 2 years as an apprentice to the prosecutor, but I resigned 2 months before the exams. I came to the conclusion that there was no sense in taking the exams, as I did not see my future in the legal sector.

– Is it possible that your work in the prosecutor’s office discouraged you from this profession?

I came across a very difficult but proper time of change known as the clear-out. After years of mistakes and corruption, prosecutors who had been involved in various types of political scandals were made redundant. In my case, as a legal apprentice the whole aspect of an apolitical institution did not match up. Instead of catching criminals, we had to fight each other. This was not however, the only reason for leaving the prosecutor’s office. The most important reason referred to the extremely low salary. At this time a coalminer earned between 20-25 dollars per month, whereas my first payment amounted to between 8-10 dollars. 1 dollar was worth 9500 zlotys in this period. After some time I was promoted, but I received a maximum payment of 15 dollars.

– You almost became a prosecutor and later you became involved in trading… In what way did you become involved in the glass business?

I had some capital of my own set aside. I also knew that the trade I was involved in would soon die out and I needed another idea on how to make a livelihood. At this point I found out that the Press-Glas partnership firm was up for sale. It was a firm which had recently gone bankrupt and had no financial resources. The co-owners of this firm encouraged me to buy this firm for a sum of money which later turned out to be over-excessive. It was only worth a fifth of the sum of money I paid for it.

– So you moved from trading to production.

Perhaps ladies, you will not believe me, but I found out about the firm on Monday and I bought it on the following Thursday. The word production was something so magical and beautiful to me that I did not hesitate. Trading itself was something I treated with disdain. I did not feel good buying something cheaply and selling it on at a higher price. I had always dreamed of having my own production plant. At the same time I did not have a clue about the production of double glazing glass, especially when it was brand new technology. This may sound funny – but I bought a plant that I did not know anything about.

– Thirteen years have passed since you established the company. During this period a lot happened with reference to yourself and to the economy itself. Last year was particularly exceptional in the glass sector, which most people refer to as a clearing out process…

This was the second such process, as the first one is supposed to have happened in 2001. I disagree with this. I feel that every year involves a process of clearing out. This process has always existed and will continue to do so, but in some years it is more visible than in others. There are many firms in our country which have problems and which I feel will soon go bankrupt. This is without question. Polish enterprises, regardless of whether they produce windows, glass panes or even toilet paper are still too weak and do not have their own capital. It can happen, as it has done recently during a two-month stagnation period on the market, that firms have problems with fulfilling their financial obligations. They can not survive if they do not have cash flow. These firms will go bankrupt in the near future.

– Your clients too?

I would say potential clients. We try to cooperate with good firms. The period of making mistakes is now behind us.

– What mistakes were these?

In 2001 we concentrated very hard on sales and neglected the financial aspects. We served every client that wanted to cooperate with us without the necessary financial verification. This led to the fact that a year later 7 million zlotys of losses were incurred, of which only a partial sum was recovered. Having learnt from experience, we now have a group of reliable clients. We also have a number of clients which we meet not only with relation to social events. Business takes place when you produce and sell while the money is paid onto your account. When you only produce and sell, this has not got anything to do with business.

– Many firms feel that the beginning of this year was difficult. How was the first quarter for you?

Quite normal. I think that it will be a successful year for our branch. Good firms praise this period and are able to assess the market objectively. Weak firms will always be complaining that the winter is too severe, that the dollar is too high and that the euro is too low. Weak producers will always find some obstacle which stands in the way of their operations.

– Exactly – the fluctuation of currency rates and the unstable economy. These are surely not good conditions for running a business?

We definitely do not have ideal conditions for running a business. This is unquestionable, but we have to function on this market. They are not good conditions, but they are not extremely bad. We have better market conditions than in Ukraine or Belarus. You could say that I am talking about eastern European markets… Fine, but I will also say that I prefer to run business in Poland than in Germany or Denmark. Let us not complain too much. All western European countries are envious of our low tax rates, low production costs and low wages. These are not bad market conditions. If that was the case foreign firms would not invest here.

– But you have to admit that the recent low currency rates caused panic…

When the euro cost 4.9 zlotys, was that good? Business requires us to think. Entrepreneurs who think should be able to predict both good and bad scenarios. When the rate of euro is high, it is necessary to set aside enough financial resources to be able to function when the rate is much lower. All of this is possible to predict in normal market conditions. A high currency rate is good for one businessman and a low rate is good for another. You have to be able to secure your business.

– Should the state help to secure the future for firms?

In my opinion it is necessary to keep away from state support. Personally speaking, I have not needed such support. As long as the state does not provide support for me, my company will continue to function. If it starts to do so, I will resign from business.

– So as a manager the varying conditions do not bother you so much?

I do not make a big deal out of it, but of course it is without question that business requires a calm environment. The fewer changes and hesitation on the market, the better. It is also important to remember that bigger businesses should not be run from month to month, but on a more long-term basis. The Polish market is the most important for us. The export market is in its own way a type of back-up plan. If the rate of euro is high we are very willing to export. If it is too low we withdraw from exports, but the company must continue its operations. While travelling to other firms, I can observe how they operate and it is a miracle how some firms still exist. The people who run them have no basic knowledge of economics or marketing, not to mention management of human resources and minimizing costs.

– In Poland there are many windows which have to be changed. It is estimated that over the next 10-15 years producers of windows will be very busy. And what then?

I hope that we can avoid the situation which has happened in Germany. The producers there made a terrible mistake. They changed windows very dynamically, just like in Poland at the moment, and made windows better and better while also granting longer guarantees. If somebody produces a window for 400 zlotys and gives 15 years of guarantee on that, then he is cutting his own throat.

– Are you a supporter of bad quality windows?

No. I am only saying that it is necessary to think in a logical fashion and predict what will happen in 10 or 15 years’ time. In business you have to not only look at the short-term period but at the long-term one too. I must think about what will happen to my firm in over 10 years’ time.

– The price of raw materials is rising while the prices of windows are decreasing…

Yes, and this is sick. I remember in 1999 when everybody complained about the long periods of payment which were up to 120 and 150 days. Everyone says, that it is crazy to give such periods of payment, but who did so? We did! Our firm and our counterparts in the business did so… If window producers are offering lower and lower prices, they can only blame themselves. Today it is unthinkably idiotic for someone to sell windows for 400 zlotys. In my opinion such a case should be reported to the respective authorities in Poland. A person who produces or sell goods at below profit level destroys the whole market because he neither pays tax nor pays his employees. Such people who sell at below profit level are economically ignorant in my opinion.

– Will the price of glass rise this year?

Producers of double glazing glass have never made a decision about price increases without good reason. The price of raw materials and first and foremost glass itself, influences the level of price. I predict that there will be price rises this year, but this will depend on the base raw material and finally, on the steps which our competitors will take. At present there is an unhealthy situation with regard to price reductions. Some firms want to rearrange the order of the market in this way, but they are not able to, because the market has already been divided up. Nobody is going to suddenly give up what belongs to him. The attempt to change the order of the market by reducing prices is the worst possible situation. And if someone accuses us of having lower prices in western Europe it is without question that it is beneficial to us as we can earn quite a lot. The result of our activities have never been a secret.

– Is there room for another firm in Poland which produces glass units?

Definitely, provided that the person in question is very patient and is concentrated on slow development even over a period of more than 10 years. At the moment a lot of capital is necessary to launch yourself in an aggressive way, while success itself is far from certain.

– What would you wish for your competitors?

Lots of success, but I would also appeal to them to try and civilize our market. If a firm goes bankrupt and causes other firms to lose millions it is common sense to avoid such a client. Unfortunately, it happens that the same people, but under another name receive goods from the same supplier. This is criminal. The people who cheat others out of money should go to prison and should not be cooperated with. It is important to know what you are doing and know how not to lose face in business. In accordance with that, I would like to wish my competitors lots of common sense and to view what is happening in Poland from a long-term point of view.

– Your company is now the market leader. If a company emerged which was better, would you stand up and admit it?

Of course. Over a number of years we were not the biggest, but through our good service of clients we have reached the point where we are now the market leader. If it happens that we lose this position, it would mean that we made some mistake. It would not be the state, poor currency rates, a long or short winter period, but us ourselves. Sometime ago, Jack Welch, who is a master of management in my opinion, told me that if you are not number one or two in a given market you should stop your business activities. I follow this rule. As a matter of fact, however, being a leader is not easy.

Thank you for the interview.

Interview by Marta Klos and Renata Bialowas.

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