Manufacturers from all over the globe have invested heavily in Poland since the country joined the EU in 2004. Yet their perception of the local market has mostly changed over the years.

Initially famed as a base for low-cost productions, Poland has since evolved into a fully fledged industrial centre for advanced manufacturing and innovation at the heart of Europe. With a fast-growing domestic market of 38.4 million, an increasingly skilled labour force and an improving infrastructure network, Warsaw is thinking big, although several major challenges on the horizon will define its fortunes moving forward.

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“Poland can become a new Germany, the new locomotive of the EU for the next 10 years,” says Fabio Pommella, chairman of the Polish subsidiary of US white goods powerhouse Whirlpool. “This is the time for Warsaw to decide what it wants to be. The potential is there, but important strategic decisions have to be taken.”

A fast developer

Mr Pommella led the integration of Whirlpool’s Polish assets following the acquisition of Italian competitor Indesit, his former employer, in 2014. He has witnessed firsthand the rapid development of the Polish industrial landscape since first moving to the country in 2010 to develop the industrial footprint of the Italian company.

“Even if the country’s workforce remains competitive cost-wise [the average hourly labour cost is €10.1, against an EU average of €27.4], we don’t look at Poland as a low-cost country any more. Our goods travel by road, which is why we keep a close eye on travel costs. In this respect, having production and distribution operations at the heart of Europe generates competitive advantages and Poland has made great strides in improving its transport infrastructure from 10 years ago.

“Besides, the country is ready for the challenges of Industry 4.0. Here we can find IT skills that are difficult to find elsewhere. The country’s education system is engineered to meet the needs of employers.”

The reorganisation process at Whirlpool led by Mr Pommella required investment of €293m between 2015 and 2018 and culminated with the opening of a new facility in Łódź, where the company developed a new dryer manufacturing platform for the EMEA region in December 2018.

Stellar decade

No other EU member in central and eastern Europe has attracted more greenfield foreign investment in manufacturing than Poland over the past 10 years, according to greenfield investment monitor fDi Markets. Cities such as Wrocław and Łódź have emerged as manufacturing hubs for the automotive and white goods industries, among others, while Kraków and Warsaw became major destinations for shared services centre operations.

When Poland joined the EU in 2004, its GDP per capita stood at 44% the EU average; today it stands at about 71%, according to Eurostat figures. If the country keeps up with the pace of growth it posted between 1990 and 2018, it will catch up with Germany in 21 years, according to estimates from the Warsaw School of Economics.

However, major challenges lie ahead for the investment-powered economy. 

“Decisions on the country’s future energy policy will be critical,” says Mr Pommella. “In the past 10 years, utility bills have gone up by 10% to 15% every year, but the quality of the services has not increased accordingly. Besides, a clear immigration policy is needed. Today, Poland can’t meet the demand in the job market with internal resources. This is something that goes well beyond blue-collar [work]; we struggle to find engineers, architects and researchers. The education system is good, but it is not able to meet the current demand of the market. Some migration inflows are tolerated, such as those from Ukraine, but the country lacks a clear immigration policy.”

Poland has a general election on October 13, in which the ruling Law and Justice party (PiS) is widely expected to secure another term. If the opinion polls are right, the PiS will find these issues back on the table once the elections season is over. Then it will be time to find answers.

Manufacturers from all over the globe have invested heavily in Poland since the country joined the EU in 2004. Yet their perception of the local market has mostly changed over the years.

Initially famed as a base for low-cost productions, Poland has since evolved into a fully fledged industrial centre for advanced manufacturing and innovation at the heart of Europe. With a fast-growing domestic market of 38.4 million, an increasingly skilled labour force and an improving infrastructure network, Warsaw is thinking big, although several major challenges on the horizon will define its fortunes moving forward.

“Poland can become a new Germany, the new locomotive of the EU for the next 10 years,” says Fabio Pommella, chairman of the Polish subsidiary of US white goods powerhouse Whirlpool. “This is the time for Warsaw to decide what it wants to be. The potential is there, but important strategic decisions have to be taken.”

A fast developer

Mr Pommella led the integration of Whirlpool’s Polish assets following the acquisition of Italian competitor Indesit, his former employer, in 2014. He has witnessed firsthand the rapid development of the Polish industrial landscape since first moving to the country in 2010 to develop the industrial footprint of the Italian company.

“Even if the country’s workforce remains competitive cost-wise [the average hourly labour cost is €10.1, against an EU average of €27.4], we don’t look at Poland as a low-cost country any more. Our goods travel by road, which is why we keep a close eye on travel costs. In this respect, having production and distribution operations at the heart of Europe generates competitive advantages and Poland has made great strides in improving its transport infrastructure from 10 years ago.

“Besides, the country is ready for the challenges of Industry 4.0. Here we can find IT skills that are difficult to find elsewhere. The country’s education system is engineered to meet the needs of employers.”

The reorganisation process at Whirlpool led by Mr Pommella required investment of €293m between 2015 and 2018 and culminated with the opening of a new facility in Łódź, where the company developed a new dryer manufacturing platform for the EMEA region in December 2018.

Stellar decade

No other EU member in central and eastern Europe has attracted more greenfield foreign investment in manufacturing than Poland over the past 10 years, according to greenfield investment monitor fDi Markets. Cities such as Wrocław and Łódź have emerged as manufacturing hubs for the automotive and white goods industries, among others, while Kraków and Warsaw became major destinations for shared services centre operations.

When Poland joined the EU in 2004, its GDP per capita stood at 44% the EU average; today it stands at about 71%, according to Eurostat figures. If the country keeps up with the pace of growth it posted between 1990 and 2018, it will catch up with Germany in 21 years, according to estimates from the Warsaw School of Economics.

However, major challenges lie ahead for the investment-powered economy. 

“Decisions on the country’s future energy policy will be critical,” says Mr Pommella. “In the past 10 years, utility bills have gone up by 10% to 15% every year, but the quality of the services has not increased accordingly. Besides, a clear immigration policy is needed. Today, Poland can’t meet the demand in the job market with internal resources. This is something that goes well beyond blue-collar [work]; we struggle to find engineers, architects and researchers. The education system is good, but it is not able to meet the current demand of the market. Some migration inflows are tolerated, such as those from Ukraine, but the country lacks a clear immigration policy.”

Poland has a general election on October 13, in which the ruling Law and Justice party (PiS) is widely expected to secure another term. If the opinion polls are right, the PiS will find these issues back on the table once the elections season is over. Then it will be time to find answers.