AmCham Monthly Meeting and Briefing with U.S. Ambassador team
US Embassy Chargé d’Affaires B. Bix Aliu met with AmCham members in June via a video-conference to discuss impacts of the Covid-19 pandemic on the American business in Poland in regulatory areas, workforce, investment environment, and how the situation boosted companies’s innovative drive to adjust to the new reality. The guest speakers were Mark Loughran, General Manager at Microsoft; Sławomir Sikora, President & CEO of Citi Handlowy; Alain Simonnet, Managing Director, East Europe Region at 3M; and Adam Pieńkowski, Managing Director of McDonald’s in Poland. The discussion was moderated by AmCham Chairman Tony Housh.
In his opening remarks B. Bix Aliu said that US Ambassador Georgette Mosbacher regretted that she could not be online as she had flown to Washington D.C. to attend the Duda-Trump meeting.
He noted that the meeting of the two presidents come at a critical time when both Poland and the US were reopening countries after moths of battling with the Covid-19 pandemic and both were advancing their cooperation on trade, energy and telecommunications security.
Aliu said that the US business community in Poland rose to the challenge of combating the pandemic with over 80 US firms (including AmCham member companies) donating support for battling Covid-19 with the value exceeding PLN 16 million. With this the US business community demonstrated its values and the strength of the US-Poland bilateral relationship. But the pandemic rose awareness that many jobs can be accomplished remotely saving a significant amount of overhead cost. It also increased the need for a better remote access necessary to support tele-work as well as work that is not based in the traditional office. Now the goal for US companies in Poland is to assess the long-term impacts of the crisis that US companies may experience in Poland, and build back-to-growth strategies in the Polish market.
Talking about the impact of the crisis upon the economy, Citi’s Sikora said that the lockdown in Poland started relatively early with only 68 Covid cases across the country. It was good for slowing down the spread of the virus, yet many companies lost their cash-flow overnight.
The two major questions being asked by banking sector professionals and their clients was how long the lockdown would continue and how to ensure liquidity for the period when the economy was frozen.
The banking sector reacted swiftly to meet the new needs of its clients. Some essential payments were postponed or extended over six months, starting late March. Over 1 million institutional and individual clients benefited from that program. Then came the government with its liquidity program, the so-called Economic Shield, which amounted to the equivalent of 12 percent of the country’s GDP. The money was sourced from government funds and was distributed through a number of banks. With this, the banking sector distributed some PLN 50 billion within nine weeks to companies which employ the total of 2.6 million people.
Today, the main question now is how fast the economy will recover and whether or not there will be a second wave of Covid-19 pandemic.
The good news is that after the crisis started market analysts were very pessimistic forecasting a contraction of more than 10 percent in 2020. However, as economic data for March and April showed there were grounds for optimism. Economic forecasts in June saw the contraction of the Polish economy for 2020 at about 5 percent (and about 9.5 percent in Q2, 2020).
There were some interesting trends in business which took off during the pandemic and helped take the economy out of the hole. They are expected to stay for a long time. The first one is work-from-home, and another is the digital transformation. While the former is obvious to all corporations it is interesting to know that nearly all sectors of the economy make good use of online interaction tools, including consumers who increased their spending in digital channels.
In turn, McDonald’s Pieńkowski said that before the pandemic the chain was visited by 1 million customers daily. In the first three months of the crisis the company found itself in an unprecedented situation as sales dropped by 60 percent and the number of visits by 80 percent. The company had to close nearly 100 stores, mainly located at shopping malls. It was a major problem for a company which has 444 restaurants in Poland and employs some 25,000 people in the country.
Being an international company McDonald’s could use its experience from other markets and applied the best solutions in such areas as security and safety of the workers and suppliers. The company also upped its hygienic standards.
While the first phase of battling the pandemic focused on securing work safety and jobs, the second phase focused on adapting such solutions which would help the company function in the new reality. Luckily enough, some 70 percent of McDonald’s restaurants in Poland have Drive Through lanes. The company also opened McDelivery. Pieńkowski said that in order to adapt to the new normal the company will have to use innovative solutions for business processes as well as for client service. The innovations will also include interior redesign so it supports tough security standards for clients.
The need to innovate was also expressed by 3M’s Simonnet who said that innovative solutions are crucial in order to move forward to retain profitability.
3M, which makes over 55,000 different products and solutions that are used in nearly all sectors in Europe and globally, is in a good position to see the impacts of the pandemic on the economy.
As the pandemic spread over Europe the company saw a steep decline in demand for its products from the aerospace and automotive and transportation markets.
The demand from dentistry nearly entirely dropped, as did from the healthcare sector which was not directly involved in battling the pandemic.
However, other sectors increased the demand for 3M products. It came from the healthcare sectors but also from other sectors that support remote work and help people do things without getting close to each other. Food and beverage safety solutions were in this number including filtration and food purification technology providers.
Looking ahead, 3M expects a U-shaped recovery, which will bring desirable levels of profit in Q1 2021. However, a lot depends on how fast the economy in the European Union will recover.
The last speaker, Microsoft’s Loughran, said that a crisis like that drives come companies to their collapse while others thrive as they manage to refocus their business, use creative solutions and grow their business. Loughran noted that the crisis is caused by a special type of human behavior which prompts human to human proximity. Following this line of thinking there are specific changes in business models that have the power to alter such behavior. The IT industry has tools to create such models. This unparalleled opportunity to use different digital tools is used now to learn, do business, and even socialize, Loughran said. With this many IT companies have taken an opportunity to enter the education sector offering different online platforms for group interaction similar to that one can have in a classroom. They offered their solutions to support schools, teachers, and students. They will continue to use them in the months to come as a “mixed economic model” is bound to continue.
Closing the discussion, Chargé d’Affaires, B. Bix Aliu encouraged US firms in Poland to contact the embassy when they want to discuss issues that face in the market, and thanked AmCham Poland for its long-term work on behalf of the American business community in the country.