Poland’s Sinking Dockyard

When visiting the famous shipbuilding facility here where the Solidarity labor movement was born in 1980, the most telling sign of the 1990s is not the towering monument to rebellious workers or even the historic main gate where V. I. Lenin’s name once loomed overhead.

Just inside the metal fence, and not far from the Solidarity souvenir and ice-cream stand, dozens of neglected steel girders scratch the sky from an unkempt roadside lot. It is the bare-bones skeleton of a grandiose production site begun more than two decades ago, when Communist authorities planned to expand the vast shipyard, already the biggest in Poland.

Construction stopped because of money problems, but shipyard officials for years held out hope that the structure might be completed. Now they don’t even pretend it can happen.

“I see it as a hotel,” Director Ryszard Goluch said. “I just have to find a buyer.”

Times have never been so desperate at the run-down dockyard where communism first met its match in Eastern Europe, setting off a revolution that brought freedom to this southern Baltic seaport and much of the former Soviet bloc.

Defiant shipyard workers stunned the world 16 years ago by organizing a renegade trade union and staging a series of stormy strikes. The unlikely rebellion thrust the country into political chaos but ultimately drew a following of 10 million people and made Poland the first Soviet satellite to break with communism.

But in a dramatic testament to the changed times, the same work force voted last month to suspend its right to strike, thin its ranks by 2,000 and sell off huge chunks of the 450-acre shipyard--all in the distant hope of saving the world’s most legendary shipbuilder from financial ruin.

“It is a whole different situation here now,” said electrician Jerzy Jasinski, 42, who for years shared a workshop with the yard’s most renowned employee, former Polish President Lech Walesa. “Life turned out differently than any of us expected. It has been a shock. People didn’t know what adopting Western methods really meant.”

Jasinski and other despondent ship workers blame Poland’s dog-eat-dog market economy for the misery at the erstwhile Lenin Shipyard. It is a textbook example, they say, of how the cradle of Polish reforms became a victim of its own hard-fought success.

“What we’ve got is 18th century capitalism,” Jasinski complained. “The changes have been too hard and drastic.”

But while pressures of the competitive market have sunk struggling smokestack industries across Poland, experts say--and more and more workers are beginning to agree--it is the lack of market reforms, not their harsh excesses, that has done in the Gdansk shipyard.

It seems Jasinski and his co-workers have not been let down by capitalism but by the ghost of socialism, which was allowed to haunt the sprawling docks and red-brick administration buildings long after Lenin’s name was stripped from the front gate in April 1990.

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“After the change of regimes in Poland, the mentality at the shipyard remained the same,” said Jerzy W. Doerffer, chairman of the Shipping Forum, an association of Polish shipbuilders and suppliers. “Before, anyone who was a member of the [Communist] party was incapable of doing any work. After the change, anyone who was a member of Solidarity was incapable of doing any work.”

Doerffer and others say that years of coddling the bloated shipbuilder because of its temperamental work force, high-level political connections and revered role in Polish history did more harm than good. Workers became complacent, management cared more about keeping jobs than productivity, and the bottom line be damned.

When a former Solidarity leader began a four-year stint as shipyard director in 1990, for example, he granted across-the-board pay raises and signed money-losing contracts to keep work coming in. While other shipyards renegotiated huge debts with creditors, Gdansk refused for fear the required belt-tightening would jeopardize jobs.

His predecessor “exhibited the behavior of a trade union guy,” said Goluch, a Communist-era manager who was called back from retirement two years ago. “I am not saying human relations are not important, but some of these workers have to go.”

The shipyard lost $35 million last year and has signed 19 construction contracts that would set it back double that amount by next year, according to the shipyard’s own financial analyst.

An unexpectedly strong zloty, the Polish currency, has hurt export industries throughout Poland, but at the already sinking Gdansk shipyard, the added burden this year was too much to keep it afloat.

Two other large Baltic shipyards--in Gydnia and Szczecin--have received far less official attention and are much better off for it.

Both shipyards have undergone extensive restructuring and have made deals with the government on past debts.

The results speak for themselves: It takes six months to build a bulk cargo ship in Gdansk but less than two months for a slightly smaller version in Szczecin.

“We have been living in a bubble,” said Edward Szwajkiewicz, secretary of the Gdansk region of the Solidarity trade union. “There was this feeling of security, that nothing bad could happen to us. All the while, the other shipyards moved ahead. Then the bubble suddenly broke.”

The bubble neared the bursting point several times, but it finally gave out in November when Walesa, the Gdansk yard’s greatest political patron, lost his bid for reelection.

The Solidarity leader-turned-president is no longer able to twist arms in the Polish Parliament for financial favors at the shipyard, the most recent of which came 18 months ago in the form of badly needed credit guarantees worth about $90 million.

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“They were directly telephoning President Walesa from the shipyard, and in some cases, President Walesa was calling me directly for intervention,” said Janusz Lewandowski, a former minister of privatization. “One cannot blame external transition reasons for the shipyard’s problems. There were internal reasons, and part of it was politics getting in the way of reform.”

Walesa’s absence has been all the more traumatic for the shipyard because the powerful lower house of Parliament has not had a representative from the Solidarity trade union in more than two years and the influential governor of the Gdansk region, a Solidarity appointee, is likely to be ousted by the ruling coalition of former Communists.

“I helped them because I love the shipyard,” Walesa said in an interview. “But they really didn’t take advantage of the time. The shipyard is too big and there are too many people working there.”

More than $135 million in debt, suddenly short on friends in high places and unable to get Polish bankers to even talk about extending a loan, the shipyard was abruptly put up for sale this month. Prospective buyers have until April 30 to make a bid; no price has been set on the 60% government-owned interest.

If no buyer is found, government officials say bankruptcy is inevitable, a complex procedure that would keep the shipyard running but would slash jobs and require drastic renegotiating of ongoing contracts; only two of five construction slips at Gdansk, it is expected, would remain operational.

“Gone are the days when ministries ran Polish companies,” Prime Minister Wlodzimierz Cimoszewicz said on Polish television, ruling out a bailout by the government.

But even the Polish minister of privatization, who is charged with courting potential buyers, says the prospects are not good for finding a foreign savior. In a candid acknowledgment of Gdansk’s troubles, the minister said even he wouldn’t buy it if he had the money.

“I can only say if I would invest my own money into this enterprise,” Wieslaw Kaczmarek said when asked about the soundness of such a purchase. “With sadness, I must say today that I wouldn’t.”

Polish newspapers have reported interest from South Korean and Norwegian shipbuilders, but the government denies talks are underway, and some shipyard officials fear such bidders may be interested only in shutting down a competitor.

For all its problems, the shipyard captures a large chunk of orders, with production topping $270 million last year.

A similar search for a buyer in 1989, when the Communists were still in power, brought interest from Barbara Piasecka Johnson, the Polish-born heiress to the Johnson & Johnson pharmaceutical fortune.

Johnson at one point signed a letter of intent to invest $100 million but backed out after the shipyard refused to make many of the same reforms again considered essential to its survival.

“The biggest unknown today is the way of thinking of the shipyard workers,” Kaczmarek said. “Is it going to be, ‘We are the workers of the Gdansk shipyard and we are going to dictate the terms’? Or are they going to accept certain rules of the game resulting from the market economy?”

Workers say they are ready to make the overdue changes, regardless of how painful.

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Szwajkiewicz, the Solidarity official, said Walesa’s election loss shook the shipyard to its foundation; without it, the unprecedented vote last month to endorse the draconian cutbacks would never have been possible.

For the first time in years, it is also possible that politics may take a back seat to economics, at least among the rank-and-file employees. Workers, who once spent more time debating geopolitical issues than sweating on the job, now profess apathy about things political.

“Politics becomes a very distant issue when you are thinking about how to pay the rent and feed the kids,” said Jasinski, who has worked 18 years at the shipyard. “After all of these years, you should have some savings. But it seems all that I do is borrow money.”

The shipyard faced its last monumental crisis in 1988 when then-Prime Minister Mieczyslaw Rakowski ordered its liquidation. The yard was losing money because of financially unsound contracts with the Soviet Union, but Poland’s ailing Communist regime was eager to make an example of it anyway--while also exacting revenge against Solidarity.

The Communists lost power before they could pull off the scheme. This time, there is also talk of political revenge--now by the former Communists, who control both the Parliament and the presidential palace and are the ones refusing to come to the shipyard’s rescue.

“The problems at the shipyard are economic, but there is also some political coloring to it,” said Walesa. “Imagine the satisfaction: The Communists finally finish off the shipyard.”

But Kaczmarek and other government officials denied that they are settling any old scores with Solidarity.

Onetime Communists may be back, but Poland is a different place now, where electoral fortunes hinge heavily on economic performance.

The collapse of the shipyard, which employs 7,200 and supports thousands of other jobs indirectly, would be devastating for the Gdansk economy--and, by association, for the ruling coalition of former Communists.

Szwajkiewicz, the Solidarity official, said the greatest irony of the shipyard crisis is that once again the stakes are highest for the former Communists.

“They are more afraid than we are,” he said. “This is a wonderful chance to get rid of the cradle of Solidarity, but it could turn out to be the apple that Eve gave to Adam.”