Reorganized supply chains, an increasingly demanding labour market, expectations for business to take responsibility for environmental issues, and rising prices for energy, materials and components are among the key challenges shaping the future of Europe's manufacturing sector. Poland continues to be attractive for significant foreign industrial investment because of its location, business environment, infrastructure and the incentives available under government business support programs. In 2023, a record EUR 7.4 billion in foreign investment flowed into the country, made with PAIH support, mainly in the electronics, electromobility, automotive, machinery, RES components and food processing sectors. JLL Poland, the Polish Investment and Trade Agency, Hays and ALTO present the next edition of the "Made in Poland" report, a compendium of knowledge for companies in the manufacturing sector that are considering establishing or expanding their presence in Poland.
The report focuses on the industrial manufacturing sector, covering issues in the business environment, labour market, legal and tax structures, and subsidies and public support programs. It also presents real estate market trends and diverse acquisition and rental options.
The authors of the study point out the business benefits of Poland's convenient location on the map of Europe. Transport infrastructure in Poland, which is an important part of the European road and rail transport network, is constantly developing. It currently allows connections with most European capitals. The intersection of sections of two key corridors, i.e. the A1 (Baltic-Adriatic) and A2 (North Sea-Baltic) motorways has increased Poland's attractiveness in terms of European logistics in the region. Poland's road network will be further expanded with new routes, and existing roads are being upgraded. In addition, Poland offers access to two major seaports in Gdańsk and Szczecin. It is worth noting that the total throughput of the 15 largest European container ports amounted to 79.7 million TEU in 2023 (from Q1 to Q3), of which Gdańsk accounted for 3% of this result. Poland also has a chance to benefit from the “new silk road” which connects Europe to China by rail. This is an opportunity to strenghen its position as a key European distribution HUB for manufacturers from China and other countries in far Asia.
Poland is the sixth largest industrial real estate market in Europe
The industrial real estate market in Poland and across Europe is experiencing continued growth. After the challenges of 2021 and 2022, the sector has proven its resilience, and market participants expect relative stability in the coming years. Poland is the sixth largest industrial real estate market in Europe, with a diversified and modern portfolio of assets. Warehouse rental rates are among the lowest in Europe and vary by region. There is an increasing emphasis on compliance with ESG requirements, which influences the strategies of the largest players, and sustainable construction solutions are gaining in value.
“The industry in Poland is developing in various sectors. The automotive industry (including electromobility), manufacturing centres for FMCG, medical, electronics, white goods and packaging industries remain at the forefront. Cutting-edge investments are emerging to produce heat pumps and batteries for electric cars, highlighting the following of global trends. Manufacturing projects across the country use advanced solutions in new technologies, automation and ecology. More and more Polish manufacturing facilities are striving to operate in a sustainable manner and in compliance with ESG standards” - says Maciej Kotowski, Director, Research & Consultancy, JLL.
Another important aspect of Poland's manufacturing sector is the growing number of technology and R&D centres that provide services to foreign subsidiaries of companies. They often combine roles with an international or even global reach. These centres are staffed with highly specialized and interdisciplinary professionals who use engineering, manufacturing and information technology skills.
"In recent years, we have seen an intensive influx of investment projects from sectors characterized by high automation and using hi-tech solutions. As a result, we are not only becoming a leader in the region, but we are also competing with the world's largest economies for new projects. The most important advantages that determine the choice of Poland as a location for new projects include well-qualified employees, developed infrastructure and an attractive system of investment incentives." - says Monika Grzelak, Deputy Director of the Investment Support Department , the Polish Investment and Trade Agency.
Educated staff in Poland responds to the needs of industry transformation
The ongoing transformation to Industry 4.0 emphasizes digital technologies and smart solutions in manufacturing. They will require employees with engineering knowledge to operate advanced machines, as well as with the skills needed to work in an environment using artificial intelligence and robotics.
Poland already offers a highly skilled workforce, with more than 2.8 million people employed in the manufacturing sector by 2023. Student interest in education in manufacturing and engineering-related fields remains stable, with more than 711,000 students in secondary technical schools and more than 206,000 students in vocational schools in the 2022/23 academic year.
The market is seeing a relatively large number of mid-level technical and operational employees, as well as automation specialists. However, with the low unemployment rate (reaching an average of 5.1% in 2023 and the third lowest in the European Union), the quality of the employer's offer is crucial for successful recruitment. Poland is no longer seen as a low-cost market, but as a mature location offering high-quality expertise, technological advances and ESG-compliant processes.
In addition, Poland has seen a steady increase in the number of foreign workers hired, both from EU and non-EU countries. In 2022, more than one million foreigners were registered for social security. Hiring workers who came from other countries has become an integral part of the strategies implemented by manufacturing organizations in Poland. Over the past five years, the number of registered foreign workers has increased almost 2.5 times.
"Investors are attracted to Poland by its highly qualified operational staff and engineers with practical knowledge, competence and extensive experience in high-tech manufacturing processes. Although the Polish market is no longer seen as a source of relatively cheap labour, it still offers excellent value for money. Investors are aware that implementing a project in Poland involves a low risk of difficulties in assembling a crew with appropriate qualifications. However, due to low unemployment, recruitment success depends largely on the quality of the offer of the employer entering our market” - comments Łukasz Grzeszczyk, CEE Executive Director - Investors Consulting & Talent Location Strategy at Hays.
Support for investors in Poland
In 2023 Poland recorded a record volume of foreign investment, with as much as EUR 7.4 billion worth of investments that benefited from the expert support of the Polish Investment and Trade Agency during the investment process.
Manufacturers investing in Poland can take advantage of many opportunities for financial support from both domestic and European Union sources. Attractive forms of subsidies are offered in the form of government subsidies and financial support for low-carbon initiatives, EU co-financed support programs, tax exemptions and tax relief for specific sectors.
The regulations on running a business in Poland, the so-called "Constitution for business" creates a friendly environment for entrepreneurs. Recently, there has been an emphasis on compliance with EU law, digitization of legal acts and court proceedings. Significant progress has been made in e-government, which is proving to be more flexible and convenient for both citizens and businesses. The tax system in Poland is being developed in accordance with international standards, including OECD guidelines. It is also characterized by dynamic digitization and standardization of reporting, including e-invoicing, SAF-T reporting, etc. Finally, local tax laws provide various incentives for innovators, and Poland has become one of the world leaders in terms of the effectiveness of R&D tax credits.
“In recent years, the government has placed a strong emphasis on digitization and automation of tax returns. This, of course, comes with some challenges for companies, but in the long run it also provides greater efficiency and value for the business”, says Tobiasz Dolny, Partner & Tax Advisor, ALTO.
The future of the manufacturing sector in Poland
Foreign investors who have so far developed their operations in Poland come from various countries around the world, including the US (approx. EUR 4.6 billion in invested capital), Germany and the UK, which were the leading destinations (according to data from the end of 2023). FDI projects created approximately 20,000 jobs in the mentioned period.
In the longer term, as the report's forecasts indicate, major global manufacturing players will consider expanding into Europe to mitigate associated risks and reorganize the supply chain.
Automated solutions are becoming increasingly available, especially for plug-and-play systems. This factor will undoubtedly have an impact on the industrial sector in the CEE region in the coming years. Another extremely important factor shaping the future of manufacturing is the issue of environmental protection. Sustainability and ESG strategies have a major impact on every branch of the manufacturing sector. Combined with rising energy costs, this means that investors are looking for green real estate and supply chain solutions to shorten the distance between the producer and the end consumer.
