By Jan Cienski in Lodz
Andrzej Walczak, one of Atlas’s founders
One of the capitalist foundation myths is that of a business created in a garage – and that is exactly how three friends started one of Poland’s most successful companies, the Atlas building materials group.
“We are an example of a new company that managed to clamber out of the ruins of the old system,” says Andrzej Walczak, one of Atlas’s founders and now one of Poland’s richest men, with an estimated wealth of 400m zlotys ($139m, ?86m). “We started just like a classic American company.”
And just like many American millionaires, Mr Walczak, now 52, is handing day-to-day running of the company he helped create to a professional manager as he pursues a philanthropic interest outside the business. In his case, he is supporting an ambitious scheme to rebuild the heart of Lodz, 130km west of Warsaw and one of Poland’s most famous industrial cities.
But before money can be given away, it must be earned, and Mr Walczak and his partners, Grzegorz Grzelak and Stanislaw Ciupinski, were part of a remarkable flowering of entrepreneurship that transformed Poland two decades ago after the collapse of communism.
“No one helped us as a country, and I am very proud of my generation, through whom we now belong to Europe,” says Mr Walczak, sprawled on a sofa in his cluttered office in a palace built by one of the 19th-century industrialists who turned Lodz into the manufacturing hub of the then Russian empire. “In 1991, there was nothing – Poland was an unploughed field. You simply had to be there and want to do something with yourself,” says Mr Walczak.
As communism stumbled to an end, he and his two friends started a small company tiling bathrooms. However, the only material available to apply the tiles was ordinary cement. “After a week, the tiles would start to fall off,” he says. “It all looked awful.”
Aware of the much better adhesives in Germany, they tried to create a similar product for Poland. In 1991, with a cement-mixer in a garage and the help of a another friend who was a materials expert at the local university, they began to mix various concoctions. When they hit on a formula that worked, they closed the tiling company to open Atlas as a building materials supplier.
“We had people pouring the product into bags by hand. It was 17th-century production techniques,” says Mr Walczak. The bags of adhesive, labelled “Hergestellt in Polen” – German for “Made in Poland”, to look like the reputable German product that dominated the market – were then driven to building shops in a single truck.
How to construct a Polish business
Andrzej Walczak on starting and expanding his company:
? On starting out: “The first five years were beautiful – we were very hungry and our main task was to simply keep up with production .?.?.?The only risk was to get the money to pay the Germans for their chemicals.”
? On staying independent: “After five years, western companies became interested in buying us, but I said: ‘What would I do with the rest of my life?’ “When you’re 40, why would you sell? ... Even now, we have big companies coming by every year to see if we want to sell.”
? On international expansion: “We first have to take care of Poland, it is such an enormous market. If we don’t protect it, it could slip out of our hands. We are thinking eventually about markets like Vietnam and India, but we aren’t in a rush.”
? On potentially listing on the Warsaw Stock Exchange: “We’ve been thinking about it for 10 years, but we haven’t done it because we would have to reveal a lot of information about ourselves – and we are fighting the competition by keeping them in the dark.”
Within a short period of time, the wife of the garage’s owner had had enough of the mess and forced out the budding capitalists, who rented part of a warehouse owned by a bankrupt state company that had made the dismal grey apartment blocks that still disfigure the outskirts of most Polish cities. That original cement-mixer still stands in the company’s headquarters, says Mr Walczak.
The product hit a sweet spot in the market, as Poles were finally able to decorate and beautify their flats after decades of communist dreariness.
What set Atlas apart from competitors was a great knack for marketing. At a time when many Poles were ashamed of how their country looked, Atlas dropped the pretence that it was German and branded itself openly as Polish. Its packaging sported an “I love Poland” slogan and the company’s founders, with a couple of new partners from the Baltic port of Gdansk, came up with a stork standing in its nest as the company’s logo.
Although the white eagle is Poland’s official symbol, the stork, whose nests are found on the top of trees and telephone poles across the countryside, is a token of village life. Atlas storks now grace thousands of building supply shops across the country.
Finally, an irreverent advertising campaign in 2000 played on the old animosity between Poland and its medieval enemies, the Teutonic knights, who happened to be German. It was not a disadvantage that it caused fits at one of Atlas’s main rivals, the German Henkel Bautechnik company.
The company has also been a prominent charitable donor. As a result, Atlas has become one of Poland’s most recognised and popular brands. According to a recent survey of brands, says Mr Walczak, Poles would recommend Atlas to foreigners over several well-known vodkas as an example of Polish excellence.
The company expanded quickly and now controls about 50 per cent of the Polish building materials market, with its own factories, gypsum mines and sand quarries, as well as more than 2,000 employees and annual revenues of more than 1.1bn zlotys.
There have been missteps. One was an expansion into the fast-growing Russian market in 2003. It closed after two years, unable to fight off rival counterfeit products that quickly destroyed the brand in Russia.
After that retreat, Atlas more recently again moved east in 2009, by buying Tajfun, a building company in neighbouring Belarus. Although Belarus is governed by the authoritarian Alexander Lukashenko, widely condemned in the west for stealing December’s presidential election and crushing the opposition, the private sector of the economy is fairly free.
“We felt good in Belarus because the economy reminded us in some ways of Poland 15 years ago,” says Mr Walczak.
But this time the acquisition was led not by Mr Walczak and his partners but by Henryk Siodmok, the chief executive hired in 2007 by the founders to run the business while they retreated from the limelight.
“It’s like in sports, you have to know when to hand over,” says Mr Walczak. “Companies only survive when a little fresh air comes in.”
Although Mr Walczak, an architect by training, is hugely proud of building Atlas, it is when the talk turns to his latest project that he leaps up in order to point to a big mock-up of central Lodz leaning against his office wall. He indicates various buildings that will make up the new core of the city, including a transformed railway station – which currently vies for top place in the crowded field of Poland’s ugliest – a striking glass tunnel and an art museum in an old power station.
The aim, which he is pushing in alliance with US film-maker David Lynch, is to recapture some of Lodz’s multicultural flavour, lost when the city’s Jews were murdered in the second world war and when the ethnic Germans were expelled afterwards.
One Polish commentator has noted that Mr Walczak has sniffed too much of his own glue and was delusional but the scheme has found government support and is starting to look plausible.
One of the leaders of the first generation of successful Polish businessmen, Mr Walczak is now turning his focus to the arts.
“My greatest advantage is that I am not hungry. I am paying back what I owe to Lodz and its people,” he says.