The real nitty-gritty

Declan Maguire, president of Holding Cement Polska, part of the CRH Group, an international building materials producer and distributor, is a man of faith. He has faith in his company, faith in the economic cycle and faith in the future of the country.

If you want to asses the position of any economy in the economic cycle, forget about interviewing the flamboyant personalities of IT and telecoms; ignore the antiseptic assessments of the financial sector; shun the creativity of service companies of every description, and go for the jugular - those companies that constitute the basic foundations of any economy, such as construction-related firms and the individuals who run them.

CRH has its origins in Ireland and its headquarters in Belgard Castle near Dublin. It was formed in 1970 through a merger of two leading Irish public companies, Cement Limited, established in 1936, and Roadstone Limited, set up in 1949. Thus, the original name of CRH was born. Over the years, it has expanded to become an international leader in the production of cement, aggregates, concrete products and asphalt and now has a presence in more than 22 countries. International diversification has helped it to weather the storms as the timing of the economic cycles of respective countries has varied.

Maguire takes me over to a map of the country hanging on his office wall. He starts at Gdańsk and works his way down towards the Tatry Mountains, pointing out Olsztyn, Bydgoszcz, Warsaw, Łódź, Lublin, Kraków, Katowice and Kielce, the locations of the company's various production plants and extraction facilities.

In 1995, the first investment in cement manufacturing outside Ireland was made in Cementownia Ozarów, located between Lublin and Kielce, considered to be the "jewel in the crown," Maguire says. Then came the brand new asphalt manufacturing company at Elbląg and the largest lime quarry in Poland in Kielce. Now there are quarries, ready-mixed concrete plants, paving stone producers, brick manufacturers and even railway sidings.

"We are predominantly heavy material suppliers," Maguire says, once he has seated himself behind his uncluttered desk. "We start off with cement and then encompass the supply chain from aggregates to asphalt. We supply building materials from housing and retail projects right up to large civil engineering developments, including road-building and airport construction."

In early March, the CRH Group reported its financial results for 2002, showing an improvement over the previous year, despite soft markets and unhelpful currencies. Earnings per share before goodwill amortisation increased by 4.5%, and pre-tax profit was up 7% to €856 million, despite a 3% hit from negative currency movements and restructuring costs incurred in this country. So what, then, is the attraction of our market?

"(This) is a developing market which brings new insights and challenges for the integration of companies into our group, which you rarely get in a developed market such as Ireland," Maguire says. "Here we share our management experience and hopefully lend some help developing and expanding existing structures."

But CRH is an international company, I say. And here international companies are seen as parasites extracting the lifeblood of the country and leaving destruction in their wake.

"Our policy is to leave existing management in place in general," Maguire says. "Local managers know the markets; they know their competitors; they know the industry much better than we, as outsiders, would know, and we want to learn from them. That is our strategy." He ends on a firm note.

So here, in the most basic of basic industries, we have a symbiotic relationship in which each party benefits from the other, and neither can exist without the other, and CRH must have invested quite a few shekels in these ventures, so that its shareholders will be anxious for a return.

"We take a long-term perspective, and that is longer than five years," Maguire says, "despite the fact that things may be a bit difficult today. Our initial investments were very good early on, but the economy, as everybody knows, has suffered a little blip. We think that given the fact of accession into Europe, there will be more foreign investments into the country. And infrastructure improvement is vital to the economy.

"If we can learn anything from the Irish experience, on entry to the European Union the strength of the economy to a large extent is based on its ability to deliver infrastructure projects. These generate cash in the community, and everybody benefits as confidence lifts. All boats rise with the tide." Maguire smiles.

Yes, 'tis true. All boats rise with the tide if it is coming in, and if the boats are not moored. However, the tide of money depends upon the authorities releasing it, and they have had considerable problems to date.

"We are at a particularly exciting time," Maguire says. "Poland had a period of growth, but it was short-lived. Those days are coming back. When you consider the size of the country, it is inevitable that building a proper infrastructure to facilitate other forms of investment is essential, and I am quite confident in the ability of the authorities to deliver."

But what of the oft repeated handicap of an overtly unyielding and complicated bureaucracy which drains the patience and profit from even the most skilled businessmen?

"Patience is a virtue," Maguire says. "In every democracy there are things that can be improved upon, but all in all the job gets done." His composure is serene. "It's a matter of understanding it. If you can understand it, you can cope with it."

I am dumbstruck. Either this man has an indefatigable spirit or he has swallowed the Blarney Stone. I try another tack in order to elicit some constructive criticism. I ask him about his experiences in running a business in Ireland as opposed to running a business here.

"Very similar really," he answers. "Particularly the people. It's easy to call them your brothers."

Now I am ready for the gory disclosure of similarities as I think of the illicit stills (putcheen there, vodka here) and endemic corruption. (In June 2002, a 10,000-page investigative report implicated Charles Haughey, a former prime minister, and many of the Irish political and business elite of large scale and systematic tax evasion running for more than 20 years).

"You see in temperament and in other ways Poles are similar to Irish people," Maguire says. "They are very respectful people, they are a dignified people, and they are very easy to work with. I know that my predecessor was very reluctant to return to Ireland having spent six years over here."

I start to search for the orchestra hidden somewhere in the spacious office and am prepared to hear Julie Andrews burst forth singing "The Sound of Music." I need to bring this man back to reality, so I ask him how many workers he employs.

"I can tell you exactly," Maguire says, reaching for the file on his uncluttered desk. "As of the end of February, we had 3,200 employees."

The figure is impressive. Here is a man who has faith and enthusiasm and pays attention to detail. But this is an international company. It has invested large amounts in modern equipment and is going to price the smaller local suppliers out of the market."Oh, I don't think so," Maguire says with a smile. "There is enough room for everyone. In fact, in the type of growth that we anticipate, I see demand outstripping supply."

OK, so everybody will be rich in the future. But what about the present?

"These are difficult times," Maguire says. "No doubt about it. This year will be difficult, but we have great hopes for 2004, or even the last quarter of this year if we have a short winter."

With energy in his voice he continues: "But it's a matter of battening down the hatches and lowering your expectations and coping and getting ready for the upturn." I marvel at this rousing exhortation.

"This is a new experience for Poles," he says. "Their first experience was rapid growth, and they were not prepared for the inevitable downturn. We have gone through many troughs in Ireland and know that they can last for a long time and can be very painful. But there is no doubt, no doubt at all, that day will follow night, and I am confident in that.

"Whatever difficulties are (here) today, it's not a situation that will last forever. It is too easy to be moaning about the system, moaning about this and that and the other. We have what we have. What we must do is to maximise our capacity to effect change and be ready for the growth to come."

Then Maguire whispers: "Do you know in Ireland we experienced the longest uptrend ever? Seven years, seven glorious years."

My normal pessimistic disposition has vanished. I am now enthusiastic about the bright future to come. If this man, forged in the most basic, the most essential and the most competitive of industries, an industry that leads the economic cycle, can see light ahead, then we must all be prepared to embrace the future.

As Maguire has rightly pointed out, it is too easy to moan, and "when the going gets tough then the tough get going."

As I leave, I wish to say Nár laga Dia do lámh (May God not weaken your hand), but I was never that good at speaking Gaelic.

It is a bright spring day. I feel uplifted, optimistic and reborn. I recall the last time that I felt so comfortable and remember the smell of freshly baked bread from my mother's kitchen. I hasten to Sezam on ul. Marszał-kowska as it has a bread oven. I ask the lady for warm fresh bread as I have done every day for more than six weeks now. But the oven is not working. I shall persist until the last quarter of this year, as I am sure that it will be working by 2004.