Analysis of Polish tool industry regarding polymer processing

Moulding industry is a highly specialised and exceptionally innovative industry sector which is critical to the development of many other sectors. Given how complex the tools for plastic processing can be, as is the case with other industry sectors such as construction or automotive industries, many workplaces involve tool design and development activities. In order for it to become a final product, it requires an entire chain of relationships – suppliers of steel, standardised parts, software, various machinery, systems and many others, as well as the knowledge of properties of plastics, their flow characteristics within mould injection channels and much more other data, all requiring extensive experience.

Among economies such as Germany or Portugal, Poland is a domineering European producer of tools for processing of plastics used in many sectors, automotive, construction, packaging, home appliances, electronics, medical and many others. None of these sectors could function without high quality tools.

The only national organisation bringing together and representing the moulding industry is Bydgoszcz Industrial Cluster (BIC) which undertook this particularly challenging task of assessing the condition of Polish tool industry.

Since 2006, the Cluster is an organisation that supports companies in the sector by providing assistance in promotion, international cooperation, education, research & development, as well as conducts a series of integration activities. In 2016, BIC was given the status of the Key National Cluster awarded by the current Ministry of Economic Development, Labour and Technology. The Cluster is also involved in a series of European initiatives regarding international industry networks, carrying out business projects and R&D activities (such as H2020, COSME, Eureka).

Methodology

Survey research “Analysis of the Polish tool industry regarding plastics processing” is the first such research conducted by Bydgoszcz Industry Cluster.
Survey study was conducted between 13th January and 12th February 2021 and involved using CAWI method. 34 out of 113 service toolshops in Poland which means the response rate was at about 30%.

The questions referred to the situation of toolshops in 2020, comparing it with 2019. For the purpose of the study the tool industry was defined as manufacturers of comprehensive tools for plastics processing conducting service activities.

General information

Taking into account the regional structure, the voivodeship with the highest number of companies is Kuyavian-Pomeranian voivodeship, 30, which constitutes about 22% of all. Other domineering voivodeships are Masovian (16 companies), Silesian (15 companies) and Greater Poland (13 companies). The leading position of the Kuyavian-Pomeranian voivodeship is most definitely the result of the rich industrial traditions of the region, including the key historical significance of FORMET Metal Mould Plant S.A.
The vast majority of the entities operating in the sector have been on the marked for at least 10 years. There are few new companies – the ones within the 3–5 year range comprise only 6% of the survey population. Information above shows that the sector is in a long-term relationship with Polish economy and its companies possess long experience and often are important participants on the competitive European market.

The survey also involved the examining of the capital ownership structure (regarding the companies) – as many as 82% of participants in the survey are entities with exclusively Polish capital and only in 9% of the cases the owner- ship is entirely foreign. This information is very important because it shows that the sector is firmly set in Polish industry.

As for the number of employees, in 56% of the surveyed entities the number of employees does not exceed 50. At the same time 15% of the entities employ at least 200 workers. As indicated by the data, the sector is dominated by small and medium companies. The positive outcome of this is the high degree of flexibility of companies of this in respect of reacting to market changes and crisis situations. On the other hand such company structure may be somewhat limiting and impeding to R&D activities or building own laboratory infrastructure which are mostly done in larger companies.

Also analysed in the study were the changes in employment in 2020 compared to 2019. Notably, in 53% of cases the employment has increased which may be surprising given the fact that in nearly two-thirds of companies the 2020 proceeds were lower or at the least equal to those in 2019.

Total employment calculated as full-time jobs over 2019 and 2020 (as of 31st December) was virtually unchanged and amounted to 4330 employees. Assuming the surveyed companies constituted 30% of the population in service toolshops in Poland, we can assume that the sector employs about 13,000 people.

The population of companies is highly diverse in terms of revenues. Large entities with 20 million PLN revenues comprise about 30% of the surveyed, whereas 12% are entities conducting small-scale activity with revenues below 1 million PLN. This confirms the above mentioned information regarding the structure of companies indicating that the majority of them are small and medium companies.

Nearly 100% of the moulds manufactured by the companies participating in the survey are injection moulds. Apart from these, the companies also manufacture blow moulds. This shows that Poland specialised in manufacturing of injection moulds as one of the typical tools for polymer material processing. In 2019, they produced 992 injection moulds and 35 blow moulds, whereas in 2020 the production was at 827 and 61, respectively.

The above data indicates that the 2020 crisis led to a visible change in order quantities. Once again, this is a surprising information given the increased employment in over 50% of the companies.

Taking into the account that the surveyed companies constituted 30% of service toolshops in Poland we can estimate that the entirety of the sector’s annual production is at approx. 3000 tool forms (in service activities).

Export activity

In respect of the functioning of the sector, an important element is the share of export in sales. It should be noted that as many as 27 companies out of the 34 participants of the survey manufacture tools for foreign clients, which is close to 80% of the companies.

There are many European countries among the recipients, most commonly mentioned are: Germany, France, Denmark, Netherlands and Russia. Less commonly mentioned markets were Romania, Switzerland, the United Kingdom, Slovenia, Slovakia, Ukraine, Sweden, Portugal, Lithuania, Finland, Hungary and Italy. Also worth noting, are more distant markets for tools manufactured by Polish companies. Among them are, for example: Mexico, RSA, USA, China and India.

As for ICS revenues, 60% of companies earn revenue below 5 million PLN while the remaining 40% earn revenue greater than that amount. When comparing years 2019 and 2020, the share in the respective revenue ranges is virtually unchanged.

Investments and innovations

In spite of the 2020 crisis, over 90% of companies attempted investment efforts which were greatly focused on innovation. The scale of expenditures was varied and largely depended on the of the entity.

Taking into account the significant, approx. 10% decline in investment in total economy, it appears to be a good result.

Also analysed in the survey were the sources of investment and innovation financing which provided unexpected results in certain areas as well. While the relatively large share of own funds is not surprising, which have to be present in most investments, including partially financed by credit or EU funds, the relatively low share of EU funds in investment financing does seem unusual.

Whereas the EU funds are generally used in case of 38% of the companies in the investment, in relation to investing in innovations the EU funds are used by only 26% of the entities. It seems the proportions should have rather been reversed. The relatively small share of bank funds in innovation funding, in turn, is not surprising. From the banks’ perspective these investments are usually characterised by a greater degree of risk.

By analysing the value of expenditures on investments it can be stated that a large share of them (85%) were amounts up to 5 million PLN. Within that range there was a fairly uniform distribution of expenditures in ranges up to 0.5 million, 0.5 - 1 million and 1 - 5 million.

In case of expenditures on innovations the situation was different. Most expenditures did not exceed 0.5 million (53%). Expenditures on innovations in the 0.5 - 1 million range were incurred by 21% of surveyed companies, and 1 million by 15% or respondents.

About 30% of the entities declared to possess its own research and development facilities. The fact of having such facilities corresponds with the data on registered patents and trademarks. Depending on the analysed category, about 20 - 30% of the entities possess registered utility models or patents (national, international, industrial designs, utility models).

The analysis of introduced innovations indicates mostly process and product innovations, followed by organisational and marketing innovations.

Summary

The conducted research allows us to draw conclusions regarding the tool industry. It is mostly represented by companies with Polish capital, most of them being small or medium companies, active on the market for many years which shows that it has strong ties to the Polish economy. In regional division the largest tool industry hub is Kuyavian-Pomeranian voivodeship, followed by Masovian, Silesian and Greater Poland. The dominant specialisation manufacturing of injection moulds as one of the typical tools for polymer processing.

Among the recipients of the products are various sectors of the economy - the most popular are packaging, automotive, home appliances, E&E, construction and furniture industries.

Another important information is the fact that in spite of the pandemic which proved to be a difficult time for businesses, companies are still investing in innovations and implementing them. It is worth pointing out that despite a decrease in revenues, the employment in 2020 was increased in over a half of them. The dominant position of small and medium companies is both an advantage and a flaw of the sector. On one hand, smaller companies can dynamically adjust to the events on the market and its needs which could partially explain why the sector is handling the pandemic fairly well. A disadvantage cold lie in the smaller potential and capacity to implement innovations, carry out research and development activities, conduct educational projects or introducing Industry 4.0 solutions.

Perhaps one of solutions popularly used in Europe would be involve joint operation in form of various organisations within that business sector (e.g. clusters) in order to overcome limitations together and implement projects from above mentioned areas or carry out joint orders.

Piotr Wojciechowski

Managing Director

Bydgoszcz Industrial Cluster Tool Valley