Poland attracts -- with or without incentives

Midwifing a new engine plant for Daimler was no small project for economic development officials in Poland.

Once Daimler had decided on Poland, there was still another year of site research for the government, Daimler and the Polish Investment and Trade Agency to nail down exactly the right site.

The agency recounts that Daimler started with a list of 16 possible sites. It then whittled that to eight, and then to five, before signing an agreement in October 2016 to build in Jawor, a town within the Walbrzych Special Economic Zone in the south-west of the country. Construction began last year with the aim of starting production of four-cylinder gasoline and diesel engines late in 2019.

Walbrzych is one of 14 special economic zones across Poland, and officials promote it for providing income tax exemptions, good land prices and low utility bills. Poland's incentives program is based on the size of the investment and the number of employees that a new plant envisions. Until 2030, the Polish trade agency will offer new manufacturing projects financial support worth up to 10 percent of the eligible costs, or 15 percent if the factory is in eastern Poland. Since Poland is part of the European Union, its maximum allowable incentive package is 20 percent of total costs.

Poland's caveat is that no investment assistance is granted to projects that locate in an area where local unemployment levels are significantly lower than the national average. 

Such low unemployment numbers are becoming a challenge in Eastern Europe. Incentives played no part in interior supplier IAC's decision to build a plant in Opole, a city of about 100,000 in southwest Poland, which opened last year. IAC was unfazed. 

"You don't see much of that in Eastern Europe any more," said Jonas Nilsson, IAC's European head. "It has such low unemployment these days there are no big subsidies on offer." 

Opole authorities were able to help IAC by advertising its job openings. The $20 million, 550-employee plant supplies Volvo and other automakers with high-end interior elements, many wrapped in leather.

Of more value, Nilsson said, was the city 's geographic location close to customers, and the absence of other worker-hunger employers. He added, "We were just happy to find such a good location with such a good labor pool."