EASTERN EUROPE -- Site Selection magazine, January 2007

Poland Paces Field

Germany's MAN AG is growing its Polish work force from 2,900 to 4,400 in 2008 with the investment of US$200 million in its truck factory in Niepolomice, near Krakow, and in its bus component factory in Starachowice, which supplies its bus assembly plants in

Pozdam, Poland, and Salzgitter, Germany.
   At least part of the Niepolomice expansion is being executed by German firm Bilfinger Berger, whose $66- million contract includes four buildings totaling 700,000 sq. ft. (65,000 sq. m.) plus adjoining facilities. In October, computer maker Dell Inc. announced it would be constructing a $266- million plant in Lodz, Poland, that will initially employ 1,000 people. The law firm of Baker & McKenzie Gruszczynski & Partners advised Dell on all aspects of the transaction including Government negotiations, EU law, state aid, tax relief, real estate due diligence and land purchase, planning issues and construction agreements. The plant will be located in a new Special Economic Zone and is being built with support from the Polish Information and Foreign Investment Agency (PAIZ). Expected to open in the second half of 2007, it will eventually employ close to 3,000 people in the manufacture of laptops and servers.
   Dell said the plant "will be located within a 500 kilometer [311- mile] radius of a Central and European IT market that is expected to grow by 13.9 per cent annually during the next five years. Once the new facility is operational, Dell's Central, Nordic and Eastern European customers can expect a reduction of at least two days over the current system delivery times."
   Acknowledging the assistance of the national and local governments, Paul Bell, Senior Vice President, Dell EMEA said, "Proximity to a large base of Dell customers, the significant opportunity for growth promised by the Central and Eastern European economies, and the availability of a well-educated Polish workforce were key factors in our decision."
   The fact that the facility will work closely with the firm's successful plant in Limerick, Ireland, points up one key issue in Polish economic development, as many workers in that Irish plant are Poles, and were queried as to their desire to return to their home country.
   While much has been made of the spread of Polish migrants across the EU (800,000 since 2004), Graham Hay, business economist for Cambridge Econometrics, notes in an e-mail interview

that the country's unemployment rate remains at around 15 percent. And he says EU states are seeing slower growth in Polish migrants, as many choose to return home.
"This should help to alleviate the skills shortages the economy is experiencing," he says, noting accelerating growth in the country's gross value added economy. "This is being supported by stronger wages growth in some Polish industries," he continues. "Our forecast predicts stronger GVA and employment growth in Poland over 2004-10 and this improved performance, along with stronger growth in wages, should help the country to retain workers and also attract migrant workers back sooner."
It's a good thing, as the GVA growth in its neighboring countries isn't likely to spare any skilled workers from those territories. Hay says Bulgaria and the Czech Republic are experiencing spot skills shortages as well. While many Eastern European countries are criticized for taking the low road to business recruitment (low- cost labor, giveaways/incentives, more relaxed permitting), Hay says Slovenia and Lithuania are good examples in the region of countries with a more holistic economic development approach. Hay also marks Hungary, Lithuania and Estonia as nations whose national economic development plans have made a prime goal of human resource development.