Mister Metal wants to double revenues
Headquartered in Latrobe, Pennsylvania, the company has 13,500 employees throughout the world and supplies tools to virtually every manufacturing process that involves metal. Kennemetal's Poland headquarters is in Poznań, and they currently have a factory in Rybnik which produces drums for the mining and construction industries. The WBJ's Michael Lars White sat down with Mr. Tambakeras to question him about doing business in Poland.
What does Kennemetal do?
No metal processing can happen without us. We are behind the scenes. Every time you drill, shape or bend metal, whether it is to make a car, airplane, submarine, or to drill, you need our kind of tools.
What do you look for when deciding to make a major investment?
We look at four things. The first is the growth potential and the financial attractiveness of the market. The second thing we look for is an adequate supply of skilled and productive labor.
The third thing is transparency and stable business regulations, so that you know what the rules of the game are. Finally, we look for a flexible working environment that allows us to be competitive and respond, as opposed to being a restrictive environment that inhibits productivity.
How have your results in Poland fared so far?
They have done very well in the last couple of years. The growth rate here has been north of 20 percent, which is one of our fastest growing countries, and in fact the Central European region [Poland, Slovakia, Czech Republic and Hungary] has also been very good.
We have $2 billion in sales annually, with 40 percent in Europe. Only about 1.5 to 2 percent of our global sales are here in the Central European region though, and our goal in the next three years is to more than double that-to make it between 4 and 5 percent of global sales.
How do you view Poland in terms of the costs of doing business?
We want to add manufacturing capacity in the central region.
It appears that in Poland there is a larger pool of productive labor, which we need in manufacturing. In addition to that, there is a strong base of the industries that are our customers-vehicles, automotive, aerospace, heavy engineering, mining, die molds and so on-all of these markets that appeal to us are present in Poland.
Are you considering any acquisitions in Poland?
We did acquire our distributor, so we are now a wholly-owned operation, so in terms of our fields there are not that many options here. Our growth will be primarily from investment and through greenfield operations.
The World Bank recently ranked Poland 60th in growth competitiveness, among countries like Zimbabwe and Panama. Would this scare you from further investment in Poland?
No, I don't worry about that. There are enough other indicators to drive business decisions. If you start looking at surveys to make your business decisions then you're not running the business properly.
Are you concerned about infrastructure weaknesses in Poland?
Yes. The things I'm concerned about would be the things that came up today: Transportation infrastructure, bureaucracy, red tape. Also transparency, in the sense of making clear what the relevant laws are-so there's no confusion, and then would be the question of the liberalization of the banking sector and the movement of capital. So this is going to improve-and it has to move faster.
Do you think it will?
I hope it will. I don't know. But I think it's in their interest.
What does Kennemetal do?
No metal processing can happen without us. We are behind the scenes. Every time you drill, shape or bend metal, whether it is to make a car, airplane, submarine, or to drill, you need our kind of tools.
What do you look for when deciding to make a major investment?
We look at four things. The first is the growth potential and the financial attractiveness of the market. The second thing we look for is an adequate supply of skilled and productive labor.
The third thing is transparency and stable business regulations, so that you know what the rules of the game are. Finally, we look for a flexible working environment that allows us to be competitive and respond, as opposed to being a restrictive environment that inhibits productivity.
How have your results in Poland fared so far?
They have done very well in the last couple of years. The growth rate here has been north of 20 percent, which is one of our fastest growing countries, and in fact the Central European region [Poland, Slovakia, Czech Republic and Hungary] has also been very good.
We have $2 billion in sales annually, with 40 percent in Europe. Only about 1.5 to 2 percent of our global sales are here in the Central European region though, and our goal in the next three years is to more than double that-to make it between 4 and 5 percent of global sales.
How do you view Poland in terms of the costs of doing business?
We want to add manufacturing capacity in the central region.
It appears that in Poland there is a larger pool of productive labor, which we need in manufacturing. In addition to that, there is a strong base of the industries that are our customers-vehicles, automotive, aerospace, heavy engineering, mining, die molds and so on-all of these markets that appeal to us are present in Poland.
Are you considering any acquisitions in Poland?
We did acquire our distributor, so we are now a wholly-owned operation, so in terms of our fields there are not that many options here. Our growth will be primarily from investment and through greenfield operations.
The World Bank recently ranked Poland 60th in growth competitiveness, among countries like Zimbabwe and Panama. Would this scare you from further investment in Poland?
No, I don't worry about that. There are enough other indicators to drive business decisions. If you start looking at surveys to make your business decisions then you're not running the business properly.
Are you concerned about infrastructure weaknesses in Poland?
Yes. The things I'm concerned about would be the things that came up today: Transportation infrastructure, bureaucracy, red tape. Also transparency, in the sense of making clear what the relevant laws are-so there's no confusion, and then would be the question of the liberalization of the banking sector and the movement of capital. So this is going to improve-and it has to move faster.
Do you think it will?
I hope it will. I don't know. But I think it's in their interest.
