In its first year, the Podkarpacie Aviation Valley had
18 companies with total export sales of $270 million. In 2006, the number of companies in the Valley grew to 60 and their export sales totaled $700 million. By the end of this year, the figure may pass the $1 billion mark.

The Polish economy was still struggling to emerge from its late-1990s slowdown when in 2003 a group of aviation-related enterprises in southeastern Poland established the Podkarpacie Aviation Valley. It was an association of aerospace enterprises, with headquarters in Rzeszów. The Valley became Poland's first so-called cluster of companies designed to attract investors and facilitate joint operations.

The idea for industry clusters was developed in the 1990s by American economist Michael Porter. Under his definition, an industry cluster is a geographic concentration of interconnected enterprises. The companies share the same infrastructure, schools and research institutions, but they may compete with one another on the market.

In the first phase of its operations, the Aviation Valley received considerable financial support from the Pratt&Whitney company in Canada, a world leader in the design, production and maintenance of engines for aircraft, propulsion systems for rockets and gas turbines for industry. Two years after its inception, the cluster was an organization widely recognized in both Poland and abroad. Enterprises active in the Valley share strong ties and cooperate smoothly.

Science and research base
The Aviation Valley cluster established a science branch called the Aeronet Aviation Valley Center for Advanced Technologies. The organization brings together the enterprises operating in the Valley and six institutions of higher education: the universities of technology in Rzeszów, Warsaw, Łódź and Lublin as well as the Silesian University of Technology and Rzeszów University. The Rzeszów University of Technology, the only school that educates civilian pilots and mechanics, made sure that the new project focused on aviation. Every year, 40 to 50 civilian pilots and engineers graduate from the Rzeszów University of Technology, which has one of Europe's most modern aviation material laboratories set up at a cost of zl.26 million.

In order to provide favorable conditions for investment, the local government in Podkarpacie province, together with the Rzeszów City Administration, the county authorities, Rzeszów University and the Rzeszów University of Technology, established the Podkarpacie Science and Technology Park. The driving force of the project, which cost zl.40 million to launch, were the largest companies in the region: WSK PZL Rzeszów, which belongs to Pratt&Whitney; PZL Mielec; Goodrich Krosno; and PZL Świdnik, one of the largest producers of helicopter components and complete helicopters in Central Europe.

A second such center was created near Bielsko-Biała, consisting of small private enterprises specialized in the construction of ultralight aircraft and new aircraft designs. Examples include the 3Xtrim Sp. z o.o. company and Margański & Mysłowski Zakłady Lotnicze respectively. The Valley is also home to companies working on special designs, for example Serwis Samolotów Historycznych (Vintage Aircraft Service), which builds historic aircraft such as the Buecker T-131 Jungmann and the T-133PA Jungmeister on the basis of their prewar designs.

Something in the air
The cluster idea was a good move, as testified by the quick arrival of major aviation industry investors in the Valley. One of the first newcomers to open a factory in Rzeszów was TW Metals from the United States, one of the world's largest producers and distributors of metal materials for the aviation industry. Jack Elord, head of the company, said the decision to come to Poland been prompted by lower operating costs and the high skills of aerospace specialists in the Valley.

Hispano Suiza Polska, a producer of gear wheels and drive shafts for aircraft engines, opened a factory in Sędziszów Małopolski. As part of Poland's offset agreement with the U.S. government, WSK Rzeszów launched preliminary work on the production of engine components for F-16 jets destined for use in Poland. Germany's Remog, a supplier for the Embraer corporation, has launched the production of aviation parts in Mielec through its local subsidiary Remog Polska. Metallum Corp. of the United States purchased the Kuźnia Matrycowa factory in Stalowa Wola. Metallum Corp. is part of the Ladish corporation, one of the largest suppliers of precision forgings for the aerospace industry. Another investor in the Valley is RD Precision, whose RD Precision Polska subsidiary has started to make parts for the Bombardier aviation and transportation company in Canada.

In March 2007, this group of large investors welcomed a new member. The Sikorsky Aircraft Corporation, which has acquired PZL Mielec, plans to launch production of the UH-60 Black Hawk International helicopter in the Aviation Valley.

The newest investor is MTU from Germany, which occupies a 7-hectare plot of land near Rzeszów's Jasionka Airport. MTU is building a research facility and a center for the production of engines.

Ryanair, the largest budget airline in Europe, was planning to build its European maintenance base at Jasionka Airport, but these plans did not work out and the company gave up the project. However, that did not discourage LOT Polish Airlines from planning to build a similar base for itself and its budget airline Centralwings.

Other businesses interested in investing in the Valley include the EADS aerospace company, a shareholder in Airbus Industrie, and BAE Systems, one of the world's largest companies in the defense industry. This way, the Aviation Valley, which started out with a combined work force of 9,000, now employs 20,000, and is becoming one of the largest employers in the region.

Total sales by companies active in the Valley rose from $270 million in 2004 to around $700 million last year, with exports accounting for 90 percent of the figure. Companies operating in the Valley sell components and complete planes and helicopters to markets such as the United States, Venezuela, Indonesia, Italy, Greece, Canada, Spain, Germany, South Korea and Vietnam.

Technology transfer
Businesses operating in the Aviation Valley are among the most technologically advanced in Poland. An outstanding example is the Rzeszów University of Technology materials lab, which is equipped with state-of-the-art appliances that can be used by Aviation Valley companies. The lab is currently working on composite coatings for aircraft wings to resist high temperatures. The Rzeszów University of Technology is also training staff for companies in the Valley. Every year, the school's Operator Training Center provides education to 1,000 aviation industry workers, including quality supervisors and operators of precision, computer-controlled machine tools. Eventually, the center will develop to create a Regional Center for the Transfer of Production Technologies. The latter is on a list of 15 priority projects of the Regional Operational Program for Podkarpacie province. If the project is approved by officials in Brussels, it may receive 10 million euros in co-funding from the European Union.

Bright future
Over the next few years, the aviation cluster will develop in two directions.
First, it will seek to increase the number of aviation investors in the region, including the largest companies and their subcontractors seeking to cut business costs by investing in the Valley. At the same time, the Valley is supposed to become a "haven" for Polish small and medium-sized enterprises active in the aviation sector. Even today, the Valley is a partner for local subcontractors, including family businesses in small towns in Podkarpacie. However, all those who want to join the group need to have worked on this market for at least two years and obtain recommendation from two other companies in the Valley.

The other direction is the enlargement and modernization of infrastructure to create better conditions for the development of aerospace know-how. The next two years are expected to bring the emergence of a network of small design and engineering offices and laboratories. The Aviation Valley wants to attract as many companies from Europe and other regions of Poland as possible. Aviation companies in the region account for 80 percent of the entire industry in Poland.

Companies in the Valley are also considering expansion to other markets in the region, including the former Soviet Union. Last year, business executives from 17 Central and Eastern European countries met in Rzeszów. For now, Aviation Valley companies have been the most successful in working with partners in Slovakia and the Czech Republic, whereas Ukraine and Russia remain tough markets for Polish aviation companies to penetrate.
Marek Mejssner