Poland

Originally established as a kingdom in 966 when it adopted Christianity, it had been independent until 1569 when Russia, Prussia and Austria divided the country between them. After the First World War in 1918 Poland became independent again. However, Nazi Germany invaded in 1939 starting the Second World War and Poland remained occupied until 1945. Poland fared badly in the war losing 4 million dead and enduring much devastation. Warsaw was destroyed. In 1945, the Red Army ‘liberated’ Poland and remained as a communist government was installed.

The Poles were and are Catholics not communists. The communist state decided to destroy the Catholic Church, persecute its priests and members and convert its churches into museums. A 40 year battle was joined which the communists lost. In 1978 the Catholic Church elected Karol Wojtyla onetime Archbishop of Krakow and later Cardinal as Pope John Paul II, the Polish Pope. Poland was to lead the break-up and destruction of the communist empire in Eastern Europe.

There were sporadic attempts in Poland in 1956 and 1970 to liberalise the communist regime but Moscow quickly squashed them. In 1980 the Trade Union Movement Solidarity was formed in Gdansk and through adversity it managed to survive and became a beacon of hope for other anti-communists in Eastern Europe. Solidarity was a constant thorn in the side of the communist regime throughout the 1980s with the active support of the Pope. With the collapse of the Soviet Bloc in 1989, free elections were held in Poland in 1990 and Lech Walesa was elected President. As the leader of Solidarity he could lay claim to considerable personal responsibility for the collapse of European communism. One of his first acts as President was to permit Free Speech in 1991.

Redifon had become involved in Poland in 1974 through a predecessor company to Redifon Computers. The involvement was through a manufacturing licence. The Soviets had devised a grand plan to catch up with the West in the development, production and usage of computers through a Five Year Plan. The basic idea was to clone IBM computer hardware and acquire [by whatever means was never made clear] the IBM software to run on the hardware. A plan was devised called the RYAD Plan. Individual satellite countries with electronics capabilities were given different IBM models to clone. Computer peripherals were also to be cloned and individual countries would specialise in specific types of devices. Poland, Hungary and Czecho-Slovakia were not keen on the plan for various reasons although non-participation was not an option. East Germany was the only country to produce a recognisable clone. The sheer scale of the RYAD Plan was mind-boggling. Even the Ford motor company with all its management expertise, investment capital, design, development and manufacturing technology and its high quality skilled workforces around the world would not have even considered such an industrial venture. Moscow handed out the assignments like packed lunches on a charter flight.

Poland already had a small, competent computer industry producing ODRA computers and an ICL model under licence. Unfortunately none of these computers were IBM- compatible. Poland was given responsibility for data entry systems and told to get a licence from the West. This was the era of détente so such licences were possible if somewhat expensive. At that time, in the early 1970s a number of companies manufactured data entry systems. Why the Poles approached only Redifon has never been explained. Maybe someone wanted a trip to the UK.

Sometime in 1973, Metronex, a Polish Foreign Trade Organization with responsibilities for the production of electronic products, approached Redifon and asked for a license to manufacture Redifon’s Seecheck data entry system in the Meramat Factory in Warsaw. Discussions commenced and an outline deal evolved. Meramat would make systems in Warsaw and sell them throughout Eastern Europe. Meramat would pay a large licence fee and buy all the start-up materials from Redifon. Redifon would design and build pre-production models of a mini-computer that Meramat would use in their version of the Seecheck. The mini-computer would be designed to keep within the technology embargo limits for a licensed product. In addition Redifon would help to design and build the manufacturing lines and processes, set-up the manufacturing systems and train the staff.

Initially Meramat would assemble knocked-down systems made in Crawley. Then they would start to substitute local content until the system was totally local content. The plan was to achieve this over 5 years but it was more a wish than a plan. Disk drives, magnetic tapes, printers and terminals would be out-sourced to other Eastern European suppliers. Meramat would build the computer and controllers, integrate the other devices, system test and ship. For Redifon, it was a relatively straightforward deal. Metronex would arrange the funding. Redifon would be paid up-front for the licence and prior to shipment for all material and services shipped to Warsaw. There was no talk of counter-trade [or compensation trading or barter as it was sometimes called.] After much delay with the funding and licences, implementation started slowly in 1974. There were enormous practical difficulties in finding a suitable manufacturing space with heating, lighting, appropriate power supplies, work-benches, tools and finding, recruiting and training staff. The bureaucracy was stifling. No thought was given to marketing. The systems were primarily for export and they were going to be sold by the Foreign Trade Organization to its counter-parts in the other Soviet Bloc countries –and for hard currency!

Hard currency was better than gold. Those who had it tended to hoard it or spend it in the special hard currency shops that actually had merchandise. It was used for special and important purposes by organizations. It soon became known in Poland and the other Soviet satellites that Meramat would be selling Redifon’s Seecheck for hard currency. The news was not joyfully received. And that was the start of our Eastern European business. It all began in Poland.

Polish organizations who had hard currency pondered the logic of paying Meramat hard currency for Redifon clones when they could buy the genuine Western article direct from the UK. Very quickly, large organizations went direct and we put a marketing team in Warsaw. The licence did not limit us from selling in Eastern Europe. It was a manufacturing licence not a marketing licence. Naradowy Bank Polski bought 14 systems; GUS, the central statistical office bought 13 systems and so on. We soon had a large Polish business. In the meantime, news had travelled to Hungary where there had been a similar reaction. The first Hungarian client was Hungarian Railways. We handled Hungary from Warsaw. The next domino to fall was Czecho-Slovakia and we set-up a team in Prague. We had overtures from East Germany but we thought we would pass on that.

All these Soviet Bloc countries had national 5 Year Plans that went into the minutest detail on all aspects of production and distribution. It was called the Planned Economy. It was a nightmare. State Television religiously reported tractor production figures against Plan! And the shops were still empty. Lines were everywhere. And the only things that were reasonably reliable were public transport and the secret police. Few people had cars. Everyone was terrified of the secret police.

Meramat had the hugely difficult task of trying to increase local content. The problems of operating within the straight-jacket of the Plan cannot be overstated. If one out-sourced system component didn’t arrive production stopped. A just-in-time system was operated that was totally uncontrolled and uncontrollable. Productivity was initially appalling and eventually became just poor. There were no alternatives. Everything was single-sourced. If it didn’t arrive or didn’t work everything stopped.

The problem then arose that the Factory had to achieve its planned output and there was only one place that alternatives could be found – Crawley, UK. The problem was that Meramat had no hard currency. And so began the Counter-Trade Polka. Meramat would arrive in Crawley towards the end of the year needing systems and/or components to fulfil their annual planned output. We would give them a price. They would argue. We knew they had no money. They knew we knew they had no money. We knew that they knew that we knew they had no money. So eventually they offered counter-trade or barter. I can still hear the speeches, the entreaties and the pleadings. We felt sorry for them. They were trying to work an unworkable system and within reason we would have liked to help them. But crazy we weren’t. We didn’t do barter, period. The dance went on and just at the witching moment some money would be found, a deal would be done, the Factory would be saved and we lived to fight another day. Toast, anyone?

One year, in the most emotional circumstances when the world in Warsaw seemed in peril of imploding and faces needed to be saved, I agreed to go to Poland and talk to them about counter-trade. This was considered a coup and saved a few careers. I went on a one-week accompanied tour of every major electronics factory in Poland. I toured factories, inspected products and talked to senior management. It is hard to describe the experience. It was extremely tiring and very sad. So many people were working so hard but were starved of investment, incentives, crushed by politics and bureaucracy and lived in a world where innovation and creativity were seen as threats to the established order. I didn’t see one product that could survive in a Western market. It was one of the saddest experiences of my life.

One of the surreal moments was after I had been talking about innovation I was taken to lunch at the bottom of a recently closed coal mine. A dining room had been created by spraying the walls with some kind of varnish to seal them. The food was a little dusty. We were the only diners. I don’t think it ever made Michelin.

As a result of the trip, one day 40 Polish folding bicycles arrived in Crawley, UK. With them was a message on the lines of ‘These will sell well! Try them! Counter-Trade can work for you’. There was no charge. We gave them to someone to sell with the agreement that he could keep the proceeds provided he gave us a written report as to the marketability of the bicycles. After much effort, he managed to sell them to second-hand stores for £15 each noting that they did have a tendency to fold while being ridden. We sent the report to Poland and were never troubled again by Counter-Trade.

Poland was a sad, drab, worn-out place in the 1970s. Communism was crushing the spirit of the people. Alcoholism was rife. It seemed to me that much of it was a coping strategy. It was a depressing place. At the time, Chicago, Illinois, was one of the largest Polish cities in the world. Many young people wanted to get out and go there. Often there were relatives but once out there was no going back. Young people were also finding it difficult to deal with some of Poland’s dark history – anti-semitism, the Nazi concentration camps, the welcoming of the Red Army as ‘liberators’ and the subsequent Red Army atrocities and the blind subservience to Moscow. Plus they worried about all the regular things – jobs, money, housing, education. But there was still a strong Polish spirit that lived on and it was nurtured in the shipyards of Gdansk where Solidarity formed in 1980.

A few years later Solidarity took over the Meramat Factory. Staff representatives went to the Director’s office, announced that the union would be running the plant through a supervisory committee and asked for his car keys. He handed them over and then caught a bus to downtown Warsaw. He eventually returned as factory supervisor and Meramat continued to produce systems quite successfully but the old communist system was crumbling away.

Over the years Meramat reputedly produced over 1000 systems most of which were exported. We believe that the majority of these systems were sold on counter-trade or mainly soft currency terms. The number of computers in use in Poland during the 1970s actually fell according to Polish government statistics. Our direct marketing activities in Warsaw wound down towards the end of the 1970s as we shifted staff to Moscow.

Poland was not to reclaim its soul until the 1990s. It had had one of the poorest standards of living in Eastern Europe. It had been occupied by two brutal dictatorships for 50 years. Everything needed re-building. But it had kept its religion, its national identity and its national solidarity. It had been a privilege to work there.