Faurecia's Pierre Levi: A seventh operation in Poland "seemed like a good idea."
Major suppliers such as ArvinMeritor Inc. and Faurecia are accelerating Polish operations, lured by financial and geographic factors.
ArvinMeritor opened its first plant near Poznan last month. The $1.8 million factory will supply door modules to Volkswagen AG's plant in the same city.
French rubber product supplier Hutchinson SA will open a second factory in Lodz, bringing the number of its Polish factories to four.
Sanden of Japan will open a $60 million factory in Polkowice to make air conditioning compressors.
Japan's Daicel will make airbag inflators in Walbrzych. Toyota is expanding its Walbrzych factory to launch production of 1.0-liter gasoline-powered engines by year end, and its factory in Jelcz will start production of 2.0-liter diesel engines in early 2005.
Faurecia has built a factory here in Gorzow Wielkopolski. CEO Pierre Levi says, "This is our seventh operation in Poland, and it seemed like a good idea after adding in transportation, new investment and ability to reuse other assets."
Faurecia has invested more than $245 million in Poland and employs 3,300 people.
Poles are still smarting from a decision by Kia Motors Corp. in March to build a $1 billion assembly plant in Slovakia rather than in Poland - and they have been following the project's bumpy start.
But while automaker plant selection gets the headlines, Wojciech Drzewiecki of the SAMAR Automotive Market Research Institute points out that many of the jobs come from suppliers.
He says: "Now we just need a few more suppliers, and they are coming."
Poland's bureaucracy has kept some companies away.
"Coordination when dealing with multiple government departments is very difficult," says David Green, of PricewaterhouseCoopers in Warsaw.
"Then there was the problem of state aid for investors that did not comply with EU regulations," he says.
"This meant that the agency dealing with state aid lost credibility and that the investors for some time were in limbo."
While the Polish auto sector is growing, it is unclear whether Poland will develop beyond the maquiladora stage. Maquiladoras are assembly-only factories in Mexico just south of the U.S. border, where wages are substantially lower than those in the United States. Many of the new Polish factories are along the border with Germany and the Czech Republic.
"We offer a lower-cost environment and access to the EU," Green says. "Investments tend to be labor-intensive, not r&d. This will develop in time."
Delphi Corp. is one of the first non-Polish companies to open an r&d center in Poland. The r&d center in Krakow designs clutches that are manufactured in the Czech Republic and Slovakia, says Filip Hewelke, head of the automotive section at PAIIZ, the Polish foreign investment agency.
Unlike other low-wage countries such as China, Poland offers access to the European Union and protection of intellectual property rights, which are crucial for design work.
Five out of six foreign automotive companies in Shanghai calculated that total costs are lower in Poland than in China, according to an article by Paul French in the ChinaBIZ e-magazine.
Recent growth in Poland is pushed by increased sector maturity and low labor costs.
"Six or seven years ago, workers were not as educated on quality control issues as they are now," Hewelke says.
This has changed since Fiat and General Motors/Adam Opel AG began operations and pulled in suppliers.
The wage differential accelerated Volkswagen's investment in Poznan. Polish labor costs are only 13 percent of those in Hanover, Germany, Hewelke says. Hanover is the site of VW's main commercial vehicle plant.
With Poland's population of more than 38 million and an unemployment rate of 19.3 percent, finding employees is not a problem.
The infrastructure is an issue. Poor roads and construction on both sides of the Poland-Czech Republic border choke transportation. Logistics experts have to budget more than three hours for the 78-mile trip from Gorzow Wielkopolski to VW's Poznan plant.
Poland joined the EU in May. Road construction is expected to speed up as Poland taps EU funds.
Says PricewaterhouseCooper's Green: "The funds will come, but a lot slower than people have hoped."