Founded in 1893, Polish agricultural machinery manufacturer Ursus has seen its fair share of ups and downs. After starting out making fire hydrants and equipment for the sugar and spirits industry, the company moved on to military equipment and tractors. Named after the Latin word for ‘bear’, Ursus had a presence in more than 100 countries at one stage, and even had a town (now a district of Warsaw) named after it.
But by the time Karol Zarajczyk arrived there in 2011 as a young manager, the company was faltering. “It had 218 employees, half of which worked in administration, and the other half kept themselves busy by playing football in the production halls,” says Mr Zarajczyk, now Ursus's chief executive. In its heyday, the company would produce 40,000 tractors annually. However, by 2011 the situation had dramatically deteriorated, as Mr Zarajczyk opines: “One tractor. It would take more than 200 people to make only one tractor. Can you believe it?”
Power in the bear
Given that there was not much of a company left to take over, a decision to acquire Ursus might look sentimental at best, and crazy at worst. Mr Zarajczyk, however, says the decision by Pol-Mot, a Polish holding for which Mr Zarajczyk served as chairman at the time, was neither, given that it was looking for a tractor company to add to its portfolio.
“Ursus as a brand was much stronger than anything we could create and promote from scratch. We believed there was still power in that bear,” says Mr Zarajczyk.
To give Ursus a new lease of life, Pol-Mot moved production from Warsaw to three locations: Lublin in eastern Poland, Opalenica in the west and Dobre Miasto in the north-east. Pol-Mot also invested heavily in the company. This resulted in Ursus closing 2013 with an estimated $6.7m loss. Yet Ursus managed to expand its product offering to 20 different tractor types and increased its production from one tractor in 2011 to 2000 in 2014.
The company also landed its first big contract under Pol-Mot ownership. In September 2013, Metals and Engineering Corporation, a division of Adama Agricultural Machinery Industry, an Ethiopian firm, announced plans to buy 3000 Ursus tractors for an estimated $90m.
This may seem an unlikely match, as investors from emerging markets such as Poland are often reluctant to do business in regions as far geographically and culturally as Africa, but Mr Zarajczyk says this is where business is to be made. “This is not the case all over the continent, but the governments of many African countries have begun reinvesting revenues made from newly found mineral resources,” he says, adding that Ursus is in the final stages of contract negotiations in a number of African countries.
When homework is done properly, there is little to be feared, says Mr Zarajczyk. “We make sure our employees know about the historic and cultural nuances of places, such as Ethiopia. Sometimes it takes just a few seconds to burn a good business opportunity with a wrong reference or [inappropriate] behaviour.”