In recent years, Poland has become a key trading partner for Germany’s machinery manufacturers. Thanks to steady investment in the quality of its industrial base, this year’s HANNOVER MESSE Partner Country has moved far beyond its traditional role as a contract manufacturer for Western Europe. "Poland is a highly attractive investment location for German machinery manufacturers, and has been for many years," Yvonne Heidler, an Eastern Europe expert at the Foreign Trade Department of the German Engineering Federation (VDMA), told journalists in Warsaw during a pre-HANNOVER MESSE information-gathering trip to Poland. "With its solid GDP growth rates, attractive labor costs, proximity to Germany, quality subcontractors and well-educated workforce, Poland is an obvious choice," she remarked.

Poland's growing importance is clearly evident from the German mechanical engineering industry’s export statistics, which last year ranked Poland as Germany’s eighth biggest export destination. In 2016, Germany exported 5.7 billion euros worth of plant and machinery to Poland. "That's a year-on-year increase of 0.9 percent," Heidler noted. The main plant and machinery types represented in these figures were general air handling systems (11.5 percent), drive and power transmission technology (8.1 percent), machine tools (7.2 percent) and materials handling systems (6.6 percent). Looking at Poland's import statistics, Germany has been the country’s leading supplier of machinery for many years. In 2015, for example, 34.5 percent of Poland's machinery imports came from Germany, followed – distantly – by Italy (10.3 percent), China (7.4 percent) and the USA (4.7 percent). “In Poland, German suppliers are valued for their quality products and their excellent in-market service," the VDMA's Yvonne Heidler explained.

EU funding the No.1 driver of growth for many sectors

Admittedly, 2016 machinery exports to Poland were down markedly on 2015, a year in which exports grew by an impressive 14 percent. However, the VDMA does not see this as a trend, but rather a one-off caused by delays in EU funding disbursements and business uncertainty following the election of the country’s new conservative government. "Poland looks set for a return to growth in 2017," Heidler said. The anticipated growth will be driven mainly by the EU, which has allocated 82 billion euros of development funding to Poland for the period to 2020. The funding will go mainly into infrastructure upgrades and innovation support. This, in turn, will stimulate demand for machinery across multiple sectors, thereby opening up opportunities for international suppliers. The Polish government’s innovation-focused economic strategy is also likely to generate demand for advanced automation and digitalization solutions.

Playing technology catch-up

The main challenge for the Polish economy over the next few years will be to close the technology gap. To illustrate this gap, Germany’s robot density (number of robots per 10,000 workers) is 13 times that of Poland’s. Overall, Poland's pace of innovation in this area is still somewhat slow. There is strong interest in automation in certain areas of Poland's industrial landscape, but it is often stifled by a lack of funding. This is particularly true of the SME segment. "Even so, over the medium to long term, the pace of automation will pick up as the market responds to the country’s dwindling supply of cheaper labor, particularly in the big urban centers. Growing employment rates and population aging will continue to reduce the supply of skilled labor and put upward pressure on wages. All of this will make automation an increasingly attractive option financially," Heidler said.

German machinery manufacturers have a big footprint in Poland

The VDMA's statistics on international subsidiaries show that, at last count (2014), 113 VDMA member companies had a total of 145 establishments in Poland. This number includes sales and service operations as well as production and assembly plants. "It is becoming increasingly difficult to find staff with the right technical backgrounds and foreign language skills," Heidler said. "Recruitment is not the only challenge. It is also vitally important to retain current staff members by offering attractive career development opportunities," she added.

Poland remains an attractive procurement market

Poland's domestic market for plant and machinery is growing, with Polish industrial users seeking more sophisticated solutions as they upgrade their manufacturing operations. At the same time, many German machinery manufacturers are continuing to source parts and components from Poland. Poland's key role in this regard is evident from Germany’s machinery import statistics. 70% of the 2.6 billion euros worth of machinery imported from Poland in 2016 were parts and components, and only 30 percent complete machines. German manufacturers particularly value the dedication and flexibility shown by their Polish suppliers.