I had the opportunity to visit Poland in September on a trip sponsored by The European Union and Polish Investment & Trade Agency. And, not only was I was blown away by their manufacturing capabilities, but the country as a whole. Poland is probably the best-kept manufacturing secret in Europe right now. So, now the secrets out, Poland for manufacturing is where you need to be.
Poland - the EU’s biggest success story
Poland is currently the most attractive country in the EU to establish companies and operations. It is first in the number of investment projects in the CEE. Boasting 256 new business projects with a 21% year over year increase. In case you didn't know, the CEE, Central and Eastern European Countries, is a group of countries including Albania, Bulgaria, Croatia, the Czech Republic, Hungar, Romania, the Slovak Republic, Slovenia, Estonia, Latvia, Lithuania, and of course Poland.
Poland also takes second place for job creation, thanks to a staggering 22,074 jobs, due to FDI emphasis. Only the UK creates more jobs than Poland. FDI is the Foreign Direct Investment. What differentiates an FDI from a portfolio investment is that FDIs are an investment made with the intentions of actual business interests.
Poland wants to dress the world
I am going to hit you with some impressive facts and figures now.
Poland can pump products out, they take second place in the entire EU for a total number of manufacturers. There are a staggering 26,600 clothing companies located in the country.
And, Made in Poland is serious about ramping up its export game. Between 2012-2016 international sales of Polish clothing increased by 70%, from EUR 2.6 billion to EUR 4.4 billion. Estimates predict that by 2022 the Polish fashion market will be worth more than EUR 10.3 billion. So, to break that down for you, that’s 50% growth in just one decade.
But, Made in Poland isn’t trying to compete with everyone. Taking a page from their German neighbors their manufacturing expertise is strategic.
What is amber?
Amber is a symbol of Made in Poland and has been a cornerstone of Polish design for thousands of years, basically since the stone age.
The amber found in Poland comes from the Baltic Sea. Because of this, it is called Baltic Amber. And, it is famous for its beautiful variety of colors and magical healing and health properties. Polish cosmetic companies make special elixirs and beauty products with amber derived ingredients.
Thousands of years ago during the days of the silk road, Amber was one of the most important goods transported on the route from Asia to Europe. Thus, earning the name, Baltic Gold.
Amber - a symbol of Made in Poland
Today, the amber industry in Poland combines new designs and manufacturing techniques with traditional craftsmanship and techniques.
Amber is a symbol of Polish design and culture. There are over 1000 Polish companies producing silver and gold jewelry with amber adornments. And, most of these companies are located in Gdańsk. There is such a large market for amber design that Poland is now the third producer of silver and gold jewelry in all of Europe, and obviously first in production of amber.
Poland has about 70% of the worlds amber market. The town of Gdańsk which sits on the Baltic Sea is the world center for amber trade. Each year EUR 200 million worth of amber jewelry is prepared for export to 80 different countries worldwide. Interestingly, the biggest amber customers are Asia, the United States, and Western Europe.
The leather industry is another hot export industry in made in Poland. In 2013 the leather industry in Poland was worth 2013 EUR 690 million, by 2016 it was worth EUR 1 billion. This rapid growth is in thanks to the countries growing number of leather companies. Today, there are 5,800 leather companies operating in Poland.
Made in Poland leather is primed to compete with Italy and France for fine leather goods. Polish product offers a high quality of raw materials. And, their designs are on trend and are offered at a competitive price point. Lastly, Poland deliveries are on time and reliable.
Ethical leather in Poland
Currently, in Poland, there is little push for ethical leather options. Generally, there is little emphasis (that is not to say none) on sustainable and ethical fashion. Poland associates sustainable fashion as not being fast fashion.
Poland is the 4th largest manufacturer of furs in Europe with an 11% market share in the European market, And, they are the 6th largest seller of furs in the world. The sector employs over 60,000 people.
Ethical Furs In Europe
In January 2018 Norway put an end to fur farming after a history of being one of the world's largest producers of fox pelts. They were following the trend sent by the Czech Republic in August of 2017 banning fur farming.
Today, more and more countries are following suit by banning fur farming including Luxembourg, and Belgium, which aims to end fur farming by 2023.
Other countries that have banned or are phasing out fur farming are the Republic of Macedonia (2014), Serbia (2019) and Bosnia and Herzegovina (2029). And, Poland is currently reviewing legislation that would ban fur farming as well.
The polish lingerie export industry is currently worth EUR 141 million. There are 500 underwear and stocking manufacturers making in Poland who export primarily to Germany, Netherlands, Austria, and Scandinavia. And, in the future, Poland is pushing to expand into Brazil, Canada, the USA, Hong Kong, and Australia markets.
Poland produces 42 million pairs of shoes each year, from the 3000 shoemaking companies that call the country their home. Because of this Poland is the 4th biggest shoe producer in Europe.
So, why make in Poland?
Poland has a strategic geographic location at the center of Europe. The country borders Germany Czech Republic, Slovakia, Kraine, Belarus, and Lithuania. The capital of Poland is Warsaw and transportation is convenient by plane, train, and even car to other major European cities like Berlin, Moscow, and Vienna.
One of the most important geographic advantages of Poland is the countries access to the Baltic Sea and that the country boasts four major ports of import/export - Gdansk, Gdynia, Świnoujście, and Szczecin, and, dozens of smaller local ports.
Poland is one of the most important countries in the Trans-European Transport Network (TEN-T), and four major international trade routes. The EU has been proactive in sponsoring infrastructure developments to help increase access, with an emphasis on road development.
And, according to the European Aviation Safety Agency (EASA) Poland is one of the fastest growing aviation markets on the continent. This is in part thanks to low-cost flights, and Polish airports acting as hubs for European travel. As Poland's popularity as a trade and travel destination continues to grow the Polish government is making plans for the expansion and creation of additional airports.
Poland’s central location and description as the gateway to Europe has influenced foreign companies to invest, specifically in logistical centers responsible for moving goods throughout the EU. Because of this foreign demand, Poland has over 11.2 million square meters of warehouse space available for rent, with 75% of that space centrally positioned around the capital of Warsaw.
Young, highly educated population
Poland considers its people one of their greatest assets. Because of this, foreign investors appreciate their labor force too. Poles have excellent qualifications, strong communication skills, and are proficient in many languages. They are innovative, creative, and well-educated. Because of this finding well-qualified employees is easy. And, they work for reasonable rates.
There are 38.5 million Polish citizens, and in comparison to other European countries, they are young. About 42% of the countries population is under the age of 35.
Poland has 370 academic centers that teach 1.5 million students. In Poland, there are 95,000 specialists who teach at the university level, with over 45,000 of them holding Ph. D.’s. Poland is so focused on education that 1/10 of all students in the EU are Polish.
In all of Central and Eastern Europe, Poles account for only 24% of the population but account for 40% of the regions GDP. These people are high level, hard workers.
Poland's high importance on education has lead to groundbreaking scientific discoveries including the discovery of the first extrasolar planetary system, technology to produce a blue laser, a new production process to create the world's smallest synthetic diamonds, a way to isolate queen cells from bone marrow, an unmanned helicopter, a modern prosthetic hand, and in 2018 the launch of the first Polish commercial satellite.
Polish scientists were asked to be part of the Rosetta mission - the first procession landing on a comet.
Polish students even figured out a way for cars to drive 607 kilometers on only a single liter of fuel - inventing the Kropelka at Warsaw University of Technology.
Technology drives innovation and contributes to a healthy economy, and Poland is on the cutting edge.
Poland is stable and extremely self-reliant with a healthy domestic market. In 2016 the relation of exports to GDP was only 52.1%. To put that into perspective comparison, nearby countries like the Czech Republic, Hungary, and Slovakia were at 79.3%, 92.2%, and 93.6%, indicating that Poland’s self-sufficient economy is protected by foreign markets. This is partially done to the fact that the zloty is still relatively weak in comparison to the Euro, making exports cheaper and more profitable for foreign investors, and keeping domestic goods expensive.
Poland also keeps a low debt, at 53.2% of GDP, with other countries in the union ballooning to offer 83.5%
Poland offers special incentives for foreign investors - areas of support include, special economic zones, real estate tax, financial support form European Union funds (specifically for research and development), and employment opportunities.
Special economic zones
Special economic zones (SEZ), are special areas of Poland that have extra benefits to investors. The purpose of these zones is to encourage foreign business and accelerate growth in strategic geographic areas.
Currently, there are 14 Special Economic Zones. They were established in 1996 and will continue to operate until 2026.
The Special economic zones are located in Slupsk, Sopot, Suwalki, Olsztyn, Kostrzyn, Legnica, Kamienna Gora, Walbrzych, Katowice, Krakow, Mielec, Tarnobrzeg, Starachowice, and Lodz.
income tax exemption
One of the key advantages of doing business in these zones is an income tax exemption for entrepreneurs. And, the minimum investment to take advantage of these zones is EUR 100,000.
Real estate tax exemption
Real estate tax exemption is also offered in these special economic zones.
R&D Tax Relief Scheme
This type of aid for foreign investment is relatively new, only being introduced in January of 2018. This new legislation allows companies that are conducting their research and development phase in Poland to deduct 100% of their costs.
And, as an added bonus these deductions can be taken with other deductions for a total of up to 150%.
Not just fashion
Made in Poland is not only taking over the market for fashion manufacturing but other industries as well.
Poland is second for automotive manufacturing output. There are a total of 40 automotive plants in Central Eastern Europe, and 16 of those factories are in Poland. Fiat, Volkswagen, General Motors, and Mercedes-Benz all use Poland as a central manufacturing hub.
Poland is also one of the EU’s top manufacturers of trucks, buses, and trams.
Poland has over 200 aerospace companies, that employ over 30,000 people and is a member of the European Space Agency.
Although rapidly growing, biotechnology is a new industry to Poland.
Move over China, Poland is one of the biggest suppliers of electronics, specifically TV’s to EU markets.
Poland specializes in meat, dairy, alcohol, fruit, vegetables, and sugar and is home to international corporations like Heinz, Unilever, and Nestle.
Companies like Microsoft, HP, Google, Oracle, and IBM all take advantage of Poland's highly educated workforce and low labor costs.
Poland aims to tap into their favorable wind conditions and increase their renewable energy to 15.5% by 2020.
In all of these sectors, Poland’s success lies in its ability to manufacture with expertise that we would associate with Made in America, yet, maintain a relatively low labor cost comparatively.
A fun place to explore
Well, here is something only a true industry insider would get excited about. Poland is a fun place to be. When you pick a place to make your goods, you end up spending a lot of time there - visiting factories, meeting with partners, putting out fires.
Most of the time those places are in the middle of nowhere. Literally. Multiple times I have not been able to find the industrial area or village I was in on a map.
If you have to travel for work, Poland is a great place to spend time. It’s closer than Asia and easily accessible to other areas of Europe for quick trips. The people are friendly, the cost of living is relatively cheap, the food is delicious, and the towns are super cute. If I have to spend time overseeing my goods in a factory line, Poland is a fun place to do it.
Polish Manufacturing Directory
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