Down the pipes
As steel prices remain high, the group of creditors and investors in Polish pipe manufacturer Walcownia Rur Jedność (WRJ), including the State Treasury, Towarzystwo Finansowa Silesia, PIW Enpol and PGNiG, are anxious to unload the investment as soon as possible. Why? Because the factory, originally built in 1977, hasn't produced anything-and it may take another zł.200 million to get it up and running. Remarkably, there appears to be at least one potential buyer.
But first, a more pertinent question: Exactly how hard is it to produce a pipe?
Pipe dreams
The common pipe is basically a long cylinder, that shape many may remember from elementary school geometry class. And it is indeed the cylinder-in the form of the pipe-that mankind has used to transport water, gas and waste for centuries. But, of course, the pipes of today have come a long way from the pipes of centuries ago. Or so it would seem...
The story begins in 1977, smack dab in the golden years of communist Poland, when the powers-that-be decided to build a pipe factory. Thus the project was born, employing loads of workers and the best pipe experts of the time. But, for whatever reason, they just couldn't manage to master the countless intricacies of modern pipe-making, and had to fold the operation.
Cut to 1995. Brave investors from the Jedność foundry, Stalexport, Bank Śłąski (now ING) and PIW Enpol, decided to scrape together the old Soviet machines and equipment and resurrect the project, keeping its original name-Walcownia Rur Jedność (Tube Rolling Mill "Unity"). Construction began in 1997 and a contract was signed with German pipe guru Mannesmann-Demag-Meer to supply state-of-the-art control and automation equipment.
So that, perhaps, one day...
Over the subsequent nine years, zł.700 million was thrown at the project, the factory was built up to some degree and modernized to some degree... And it's almost ready. Almost. All it needs is another zł.200 million to finally reach production capability.
"It's a story of poor investments or investments with not enough supervision," says Andrzej Szymański, an analyst for CA IB. And, to be fair, WRJ was one among many communist era five-year national development projects that just never got off the ground. Why the developments since 1995 still haven't produced a pipe, however, is even more bewildering.
According to a spokesperson for WRJ's president, Władysław Presak, the main reason for their inability to produce after nine years was "some breaks in the situation from 1997 to 2002-we had problems with financial resources."
Szymański says other companies made a lot out of the deal, but at WRJ's expense.
Sale price
Today the price tag for the company is expected to sit at around zł.400-500 million. "This company was supposed to cost zł.474 million," one of the shareholders told the press last month. "The investor company, if we are lucky, will only pay the creditors zł.474 million minus the amount that will have to be invested to finish the project."
"They may try to sell it to Donbas as part of a package with Czestochowa [steel mill]," says Szymański. He thinks that will be the only way to get them to bite. Meanwhile, talks of international concern LNM having some interest are probably over-optimistic.
"We're still looking for strategic investors," says Presak's spokesperson. "At this moment, it is a very delicate moment to say who."
To WRJ's credit, they've wasted no time in the search process. Their website (www.steeltube.pl) has versions in Polish, English and German, with Spanish and French on the way. It describes the history and goals of the plant, right down to the technical specifics, complete with a warm and fuzzy slogan on the English home page: "Always 4 You."
So can they succeed? "It depends on who will be the buyer," says Szymański. "If the buyer makes the needed investments, it could be profitable."
And maybe one day, an over 25-year span of investments will culminate in that one first pipe. Probably the most hard-won pipe in European history.
But first, a more pertinent question: Exactly how hard is it to produce a pipe?
Pipe dreams
The common pipe is basically a long cylinder, that shape many may remember from elementary school geometry class. And it is indeed the cylinder-in the form of the pipe-that mankind has used to transport water, gas and waste for centuries. But, of course, the pipes of today have come a long way from the pipes of centuries ago. Or so it would seem...
The story begins in 1977, smack dab in the golden years of communist Poland, when the powers-that-be decided to build a pipe factory. Thus the project was born, employing loads of workers and the best pipe experts of the time. But, for whatever reason, they just couldn't manage to master the countless intricacies of modern pipe-making, and had to fold the operation.
Cut to 1995. Brave investors from the Jedność foundry, Stalexport, Bank Śłąski (now ING) and PIW Enpol, decided to scrape together the old Soviet machines and equipment and resurrect the project, keeping its original name-Walcownia Rur Jedność (Tube Rolling Mill "Unity"). Construction began in 1997 and a contract was signed with German pipe guru Mannesmann-Demag-Meer to supply state-of-the-art control and automation equipment.
So that, perhaps, one day...
Over the subsequent nine years, zł.700 million was thrown at the project, the factory was built up to some degree and modernized to some degree... And it's almost ready. Almost. All it needs is another zł.200 million to finally reach production capability.
"It's a story of poor investments or investments with not enough supervision," says Andrzej Szymański, an analyst for CA IB. And, to be fair, WRJ was one among many communist era five-year national development projects that just never got off the ground. Why the developments since 1995 still haven't produced a pipe, however, is even more bewildering.
According to a spokesperson for WRJ's president, Władysław Presak, the main reason for their inability to produce after nine years was "some breaks in the situation from 1997 to 2002-we had problems with financial resources."
Szymański says other companies made a lot out of the deal, but at WRJ's expense.
Sale price
Today the price tag for the company is expected to sit at around zł.400-500 million. "This company was supposed to cost zł.474 million," one of the shareholders told the press last month. "The investor company, if we are lucky, will only pay the creditors zł.474 million minus the amount that will have to be invested to finish the project."
"They may try to sell it to Donbas as part of a package with Czestochowa [steel mill]," says Szymański. He thinks that will be the only way to get them to bite. Meanwhile, talks of international concern LNM having some interest are probably over-optimistic.
"We're still looking for strategic investors," says Presak's spokesperson. "At this moment, it is a very delicate moment to say who."
To WRJ's credit, they've wasted no time in the search process. Their website (www.steeltube.pl) has versions in Polish, English and German, with Spanish and French on the way. It describes the history and goals of the plant, right down to the technical specifics, complete with a warm and fuzzy slogan on the English home page: "Always 4 You."
So can they succeed? "It depends on who will be the buyer," says Szymański. "If the buyer makes the needed investments, it could be profitable."
And maybe one day, an over 25-year span of investments will culminate in that one first pipe. Probably the most hard-won pipe in European history.
