Production returns to Europe. Poland will benefit from the change in global trends

Luc Williams

As Monika Grzelak, deputy director of the investment department at the Polish Investment and Trade Agency (PAIH), noted, the pandemic and the resulting interruptions in the supply chain exposed the weaknesses of the current investment model – factory locationsalso from key sectors, in Southeast Asian countries.

Poland will benefit from global changes

“As a result of these events, many enterprises have revalued themselves, resulting in the so-called reshoring or nearshoring, i.e. supply chain diversification involving opening new production centers closer target markets” – Monika Grzelak explained to PAP.

According to her, Poland is benefiting from this trend, both as a country where new investments are located, as well as a place for reinvestments involving increasing production capacity already existing plants, transferring some processes considered the most crucial to Polish factories, or opening them research and development centers.

“Obviously Poland's advantage is the geographical proximity to Western European and partly American companies, but a high level of education and the availability of highly qualified employees are also very important. Additionally, Poland offers investors stability and energy security, which is a very important factor in the current international situation,” Grzelak emphasized.

The number of new investments increased during the pandemic

According to PAIH data, in the years 2020-2023, with the support of the Agency, a decision was made to locate 355 investment projects in Poland with a total value of over EUR 17 billion. Most came from the USA, Germany, China and South Korea. At the end of January 2024, the agency's portfolio included: 151 active investment projects with a declared total value of over EUR 10 billion.

“However, it is still too early to say which of them will be implemented. It is also difficult to predict what new projects will appear in the near future,” Grzelak noted.

She added that Fr Poland's attractiveness as an investment site, it provides, among others, a slight decrease in the number of investment projects caused by the pandemic – in 2020 it amounted to 1.6%. (data from fDi Report 2021), which was one of the best results in Europe. “If we look at the projects supported by PAIH, in the years 2021-2023 there was a rebound in investment values, which increased every year, up to a record EUR 7.3 billion in 2023.” – informed the representative of the Agency.

Intel et al

According to PAIH, this is a good example of nearshoring Intel investment announced in June last year. The company announced that it will be built near Wrocław Semiconductor Integration and Testing Department worth USD 4.6 billion. “Together with the other investments of the American technology giant in Germany, Ireland and France, it is part of the process diversification of supplies in the key semiconductor sector, at the same time constituting the largest foreign direct investment in terms of value in the history of Poland,” Grzelak noted. She added that PAIH expects an inflow of new investments from the semiconductor and new technologies sector, as well as continuation of nearshoring in the coming years electromobility industry.

From global research by the consulting company EY shows that in the years 2020-2023, the percentage of companies declaring that they are considering or starting operations in Europe increased from 27%. up to 67 percent In turn, according to Maersk report from 2023, Poland enjoys the greatest interest among European companies considering reshoring. Our country was chosen as the preferred location by one quarter of respondents.

Poland attracts investments

“These data are reflected in reality. We are observing an acceleration of industry development in our region. The number of orders is increasing, and companies are increasing their capacity and investing in technologies,” Wojciech Obst from PSI Polska, a supplier of IT systems used by both Polish and foreign companies, told PAP.

As he pointed out, the disorganization of supply chains caused lockdowns during the pandemic, it was visible primarily in the area of ​​electronics, which strongly influenced many branches of production, from consumer electronics to the automotive industry. In 2021 chip supply crisis caused a significant decline in car production, which resulted in an increase in their prices. And although the situation has improved since then, availability of semiconductors it has not returned to the pre-pandemic norm.

Move chip production out of Asia

Semiconductor production is concentrated in Asia, and 90 percent chips smaller than 10 nanometers are produced in Taiwan. For geopolitical reasons, such concentration is a potential ticking bomb. In the event of a sudden reduction in supplies, the Western world may find itself in a serious crisis,” Obst noted.

According to Obst, because of these threats, Europe has become a magnet for new investments in the electronics and electrical engineering sector in recent years, and Poland is among the countries that will benefit the most from this trend. “Our country attracts the attention not only of Intel, but also of companies such as SamsungWhether Daikin“- he pointed out.

Advanced technologies will accelerate the Polish economy

Obst pointed out that technologically advanced production plantsincluding those intended for chip productionconstitute powerful driving forces economic growth country. Their role goes beyond just creating new jobs, as they offer employment in specialized positions, becoming incubators of innovation and technological breakthroughs, thanks to significant investments in research and development.

“Maximum use by Poland of the opportunities it offers reshoring requires robotization, automation and use of modern software. This will reduce production costs and increase efficiency, which is crucial in the conditions of global competition. The higher the level will be digitization of our economythe better position we will achieve on the market,” concluded Obst.

The Polish Investment and Trade Agency (PAIH) is a state-owned company that is responsible for increasing the inflow of foreign direct investments into the country and the internationalization of Polish enterprises. It operates both in Poland and around the world through foreign sales offices.

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