Business cycles

   April can be the cruellest month. Just when the treasury thought it had inflation under control and the Monetary Policy Council (RPP) was able to contemplate shaving more percentage points off interest rates, the consumer price index increased 0.4% to 6.8% on the back of food price hikes. The result is that year-on-year inflation has now risen for the first time in eight months.

   Meanwhile, many banks have posted poor first-quarter results blaming falling demand for credit and companies struggling on their loans because of high interest rates. Even oil giant Polski Koncern Naftowy Orlen (PKN Orlen) surprised the market by showing a net loss of $3.9 million, blaming a slump in demand and sluggish economic growth.

   It's certainly bad news, but analysts generally agree that the first quarter's poor showing is only a temporary glitch.

   Across the board, from heavy industry to light manufacturers, success is built on a canny nose for business – how to read the markets and when to act decisively. And good managers know when not to make a drama out of a crisis.

   Take Romet, the country's biggest bicycle manufacturer until it went bust in 1998. The death of the company tore the heart out of the industry and many other small producers teetered on the brink. Many foreign manufacturers, particularly in Taiwan and China, looked eagerly at exporting to the Polish market having written off the domestic bike producers. Foreign imports soared and Poles bemoaned another traditional industry that had gone to the wall as a result of market forces.

   But local industry regrouped and consolidated. A new company, Arkus & Romet, started manufacturing bicycles and parts and last year produced more than 450,000 bikes, exporting 35% of its products, mainly to the European Union (EU). In 2000, bicycle manufacturers produced 1.3 million models and parts, and for the first time in years the value of bikes sold abroad outstripped the value of imports, with exports reaching $37.8 million compared to $20.7 million in imports.

   Success indeed. In the past couple of years, managers of bicycle makers have turned around a moribund industry into a valuable exporter.

   To date, many other Polish businesses are recording their highest ever export growth, according to the Central Statistical Office (GUS), with sales abroad up 40%. Companies manufacturing products as diverse as cosmetics, pharmaceuticals, food processing and textiles are all increasing their sales, to the EU and the former Soviet bloc.

   Despite continuing problems with a strong zloty, small and large businesses are helping to fuel the economy. Amid gloom-laden quarterly reports, let's not forget the businesses that have created healthy markets for Polish goods abroad – many have traveled a tortuous route to get there.