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The Warsaw Voice » Other » July 9, 2008
Greenfield Investment
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Hats off to Greenfield Investors
July 9, 2008 By Michal Jeziorski   
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The Voice has drawn up its fourth annual list of the largest greenfield investors in Poland. As in previous years, the list is based on a league table compiled by the Polish Information and Foreign Investment Agency (PAIiIZ).

The agency ranked investors in three categories-largest foreign investment project, largest number of new jobs, and largest number of new jobs in the research and development sector.

Projects built from scratch are a breath of fresh air for the economy. Greenfield projects do not just mean big money but also contribute advanced technology, top-quality export products and thousands of new jobs. The past year has been successful in this respect, with invested funds reaching hundreds of millions of euros.

In Poland's economic life, it is common practice to group all types of foreign investment together. However, investment in the form of buying an existing factory is one thing and constructing an entirely new one is another. Greenfield investment means handling the entire construction process, along with the transfer of modern technology, equipment and the creation of new jobs. By its very nature, no other type of investment project can guarantee so many benefits for the economy and society.

The Warsaw Voice has been reporting on Poland, its economy, society and political scene for international opinion-forming circles for 19 years. A few years ago we decided that greenfield investment projects deserved special recognition. These companies have chosen Poland as the location for such projects despite stiff international competition. Greenfield investment projects are important because they will stay here and contribute to the country's prosperity.

The top guns
UPM Raflatac of Finland, one of the world's leading companies dealing with forest industry products, topped the list in terms of the largest greenfield projects planned in Poland. The company has a work force of 28,000 worldwide and its main products are printing paper, labels and wood-derived products. It has factories in 15 countries, and its main markets are Europe and North America. UPM is listed on the stock exchanges in Helsinki and New York. The company's 2006 sales totaled 10 billion euros.

The Finns plans to assign 90 million euros for their Polish project. A production complex making self-adhesive labels will be built about 10 km from the southwestern city of Wrocław, in Kobierzyce. The project includes production facilities as well as office and administration facilities with a total area of 20,000 sq m. Production is scheduled to start in the last quarter of this year.

The new UPM Raflatac factory will use the company's latest coating and finishing technology. The products made in Kobierzyce will include a wide range of plastic and paper self-adhesive labels with water-based and hot-melt acrylic adhesives. This new production and logistics center has been designed to meet growing demand for plastic labels in the whole of Europe. For UPM this will be the first industrial operation in this part of Europe. The label industry is one of the corporation's core sectors and a strategic development area.

The second largest greenfield investment project is planned by U.S. company Unicorn Chemicals LLC. Its chemical-sector project in Poland will involve licensed production of bioethanol from pre-processed rye and corn. The project will be worth 48 million euros and create 100 new jobs. The American investor already has orders for its bioethanol-all of it will be exported. The company's Polish project comes in response to a growing interest in biofuels in Europe, especially in Scandinavia, and takes advantage of the huge agricultural capacity of Poland and neighboring countries, Unicorn Chemicals says. The company has chosen Brzeg Dolny in the southwestern Polish province of Lower Silesia as the location for its project. Brzeg Dolny is a natural choice for the chemical sector, the investors says, because the city is a regional chemical industry center with all the facilities necessary for the sector's development.

TPV Technology of Taiwan, a manufacturer of AOC brand monitors, has promised to create the largest number of new jobs among greenfield investors in Poland. The company's Polish project will be its first project in Europe. The Polish factory is expected to be a springboard for the company for further expansion in Europe. TPV is listed on the Hong Kong stock exchange. Its LCD monitor and TV factory in Gorzów Wielkopolski in western Poland will cost 41 million euros to build. The plant will offer 1,200 jobs. The factory will stand on a plot of 33 hectares in the Gorzów subzone of the Kostrzyn-Słubice Special Economic Zone. Production space alone will take up 22,500 sq m. Initially, the factory will make about 4 million LCD TVs and monitors per year, but the ultimate target is 6 million units per year. The products will be sold throughout Europe. Work to build the state-of-the-art factory began late last summer along with the recruitment of staff.

The first group of employees taking part in the plant's launch had to complete a number of training programs, including courses in Żyrardów near Warsaw. These employees will train the rest of the crew as workers are being recruited all the time. Apart from personnel working for TPV itself, many other jobs will be created in companies cooperating with the factory. The city of Gorzów Wielkopolski has helped the Taiwanese investor by providing all the utilities and building a road connecting the factory with Gorzów's western beltway. The city has also offered tax breaks to the company.

TPV plans to conduct R&D work in Poland to design electrical circuits, mechanical parts and product-testing software. The company is a supplier for corporations such as Sony, Dell, Philips, HP, and Fujitsu-Siemens. It also has its own brands, including AOC, Envision and Anmark.

Japan's Toshiba came in second in the "largest number of new jobs" category. The corporation has spent 42 million euros on its new LCD TV production and sales facility in Kobierzyce near the southwestern city of Wrocław. Toshiba opened the factory in September 2006 as a key component of its strategy to strengthen its position on the LCD market and expand its production and sales in Europe. Production in Poland began in July 2007. By 2009 the factory plans to increase output to make 3 million TVs per year-mainly large-sized LCD TVs, from 32 inches upward. The operation's seed capital is almost 4.6 million yens. More than 1,000 people have found jobs at the LCD factory in Kobierzyce, and another 2,000 jobs have been created in companies supplying parts for the plant.

One of the reasons why Toshiba's managers decided to build the factory in Kobierzyce is the area's good road infrastructure. In addition, the nearby city of Wrocław is home to many universities and colleges, a good source of qualified engineers and technology specialists. Toshiba is a world leader among electronic equipment manufacturers with a global work force of 172,000. Poland is the second country in Europe where the Japanese corporation has invested. The first Toshiba TV factory was built in Britain.

In 2007-2010 Toshiba will receive more than zl.27 million in direct state aid from the Polish government. It is also eligible for various tax breaks, which will bring total public assistance to zl.84 million. Paweł Wojciechowski, president of the Polish Information and Foreign Investment Agency, says that money spent on helping an investor will return to the national budget in subsequent years in the form of taxes. State aid granted to Toshiba is expected to be repaid within three years.

Apart from TPV Technology and Toshiba, other television makers that have invested in Poland include LG-Philips, Dell and Sharp, which experts say gives Poland the chance to become the world's largest producer of TV sets within three years. In a few years' time 80 percent of TVs sold in Europe will come from Polish factories, some experts say.

Another greenfield investor singled out for praise in the new-jobs category is U.S. company Johnson Controls, which spent at least 35 million euros on a new factory that makes metal car parts in Siemianowice ¦l±skie in the Katowice Special Economic Zone. The company has created 1,000 new jobs, including 150 for university graduates. The factory will make a range of automotive parts, including components for car seats. This project is especially important because Siemianowice ¦l±skie has the second-highest unemployment rate in Silesia province, after ¦więtochłowice. To woo the investor and thus ensure new jobs for its residents, the city has promised to invest in infrastructure.

Johnson Controls was founded by Warren Johnson in 1885. Today the corporation's annual sales run into billions of dollars. Based in Milwaukee, Wisconsin, the company is a world leader in the production of car parts and automated systems for buildings. It has several hundred branches around the world, with a combined 120,000 on staff.

British company Valassis, a global leader in the marketing services industry, is number three among foreign greenfield investors who have undertaken to create the largest number of new jobs in Poland. The company processes 5 billion discount coupons per year and controls 85 percent of the global market. Its main clients are well-known companies from the fast moving consumer goods (FMCG) sector, in addition to large retail chains, airlines and publishers. At present the investor is moving its operations from Britain to open a document-processing center in Białogard in Poland's West Pomerania province. The center will create about 200 full-time jobs and up to 150 seasonal jobs. For Białogard county, where one-third of working-age adults are registered as unemployed, the investor's employment plans are especially important. The location was chosen after a lengthy selection process. The decision to set up shop in Białogard was based on a number of factors, including significantly lower operating costs than in Britain, along with Western Pomerania's attractive location and good transport links by road and air to Britain, and the availability of real estate adapted to the investor's needs. The real estate was provided by the Association for Socioeconomic Initiatives as part of the local Technological Incubator project. In addition, Valassis received support from the PAIiIZ and local authorities. The investor plans to start operations in July using a building provided by Białogard's emerging Technological Incubator. Valassis does not rule out further business involvement in Białogard and may decide to expand its operations in Poland in the near future.

Research and development
EMCC Software, a company based in the British city of Manchester with branch offices in London, is the number-one greenfield investor in terms of research and development. The company, which employs 150 people in Britain, is setting up a branch in ŁódĽ that will rely on a staff of 100, mainly C++ programmers and software testers. The ŁódĽ branch will primarily deal with developing applications for mobile telecommunications, chiefly those based on Symbian software. EMCC is also working on the application of IMS, VoIP, Java, Push-to-Talk and Push e-mail technologies in mobile phones to increase their functionality and optimize the costs of using them. The main buyers of EMCC products are Nokia and Sony Ericsson.

EMCC Software has chosen ŁódĽ due to the city's large number of university graduates and also because ŁódĽ is similar to Manchester in the sense that both cities used to be large textile industry centers that, after a period of stagnation, refocused on advanced technology. ŁódĽ has many highly qualified workers whose skills have won the thumbs-up from companies that have invested here over the past few years, including Ericpol, AMG.net and Mobica.

Ellectric 80 of Italy, second on the list in the research and development category, plans to open an R&D/IT center in Poland to develop software to be used in logistics operations. To begin with, Ellectric 80 will employ 10 to 15 engineers specializing in automation systems. Ellectric 80's project will be located within the Cracow Technological Park at Czyżyny in southern Poland.

The third largest greenfield investor in the research and development category is Kainos of Ireland, a provider of IT systems designed to improve business process efficiency in the financial and public sectors. The company's Gdańsk office is its first branch outside Ireland and Britain. The IT specialists employed at the Gdańsk branch are working mainly on a voice recognition system called SpeechStorm. In the longer term, the Gdańsk center will provide technological and service backup for numerous projects based on Net and J2EE technologies.

Kainos decided to open an office in Gdańsk due to a shortage of staff in Ireland and the large number of talented and educated people available in Poland. The Polish branch will start working in August, initially employing seven people. This number is expected to grow to 20 within 18 months. Over the past year the number of employees at the company's offices in Belfast, Dublin and London has grown by 40 percent to more than 220.

Cream of the Crop
In the past, The Warsaw Voice handed out a number of awards to the largest greenfield investors in Poland. Awards presented during the Investors' Obstacle Course conferences in 2004 and 2005 went to LG Philips LCD Poland, Michelin, MAN-Star Trucks, IBM, Delphi, Siemens, Motorola, Samsung, Gillette, Whirlpool, Merloni, Flextronics, Toyota, Basell, and Sanden.

The winners of the 2006 awards were chosen according to their position in a league table of investors compiled by the Polish Information and Foreign Investment Agency (PAIiIZ). The honorary patron of the project was the Ministry of the Economy. The largest number of promised jobs category was a tie and Crystal Certificates went to Sharp and Dell, each of which undertook to create 3,000 jobs. Dell also won the Crystal Certificate for the largest investment project, sharing the top spot with Bridgestone. Each company pledged to invest 200 million euros. Honorary certificates were picked up by the CEOs of Green Source, Sharp and Indesit.
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