Dell seeks refuge in Poland as crisis bites

4th February 2009, Comments 0 comments

The size of five football pitches, the giant factory's three lines employ 1,800 people assembling built-to-order laptops using Asian-made components for clients in Europe, the Middle East and Africa.

Lodz -- There is no joy among workers at Dell's factory here over the global computer giant's decision to shift production from Ireland to Poland but as the economic crisis bites they are relieved their jobs are safe.

"We understand it's a blow to people in Ireland -- we Poles have also suffered high unemployment -- but it's difficult not to be a little bit selfish in this (economic) situation," says Bartosz, a 23-year-old Dell employee and IT student waiting for a bus home outside the vast plant after a shift.

As he gazes down from a balcony overlooking the factory's state-of-the-art assembly lines, Rafal Branowski, communications manager for Dell Poland, says it is unclear how many of the 1,900 Dell jobs lost in Limerick will come to Poland.

The size of five football pitches, the giant factory's three lines employ 1,800 people assembling built-to-order laptops using Asian-made components for clients in Europe, the Middle East and Africa.

"The decision to transfer production from our Irish plant in Limerick here to Lodz and third parties is part of a plan to save $3 billion," says Branowski.

Pressed, he admits at least one new production line for desktops and servers creating upwards of 300 jobs is likely to begin operation within a year.

With salaries on the factory floor averaging 1,500 to 2,000 zlotys (345-460 euros, 445-590 dollars) per month, labor costs in Poland are a fraction of those in Ireland.

Aside from a competitive and skilled labor market, Branowski says its proximity to major European clients was a key factor in Dell's decision to first set up shop in Lodz three years ago.

"We did everything possible and even more to make sure Dell came here," says Aleksandra Suszczewicz, the city's investor relations coordinator.

The factory lies inside one of Poland's fourteen Special Economic Zones (SEZ), where investors enjoy exemptions from both property taxes and Poland's 19 percent corporate income tax while often getting public aid to boot.

Lodz city hall created all the necessary infrastructure -- including fences, roads and public bus service -- on the property slated for Dell.

This "the customer is always right" and "full service" approach has attracted 980 foreign investors to Lodz so far, among them Proctor and Gamble, Bosch-Siemens, CitiFinancial, Indesit, Gillette, Infosys, ABB, DHL, TNT and Flextronics.

Both production plants and business processing offshore (BPO) facilities are mushrooming in the city known until recently as a 19th Century industrial boom town gone-to-seed after being hit hard by waves of industrial collapse.

The investment boom has seen unemployment in Lodz dive from 20 percent four years ago to 6.5 percent in December 2008.

It is now aiming to attract enough investors to create 40,000 new jobs by 2015. Under EU rules, Poland's SEZs can operate until the end of 2020.

With 80-90 new foreign direct investment (FDI) projects in the pipeline for Poland this year, Pawel Wojciechowski, director of the Polish Information and Foreign Investment Agency (PAIiZ) expects 10 billion euros (13 billion dollars) in all.

While representing a 20 percent drop from the projected 11-12 billion euros in FDI Poland attracted in 2008, Wojciechowski insists this year's tally will create at least 5,000 new jobs.

Despite the global economic gloom, a quarter of Polish employers intend to create more jobs in 2009, half intend to maintain existing jobs, while a quarter are planning lay-offs, according to a recent Hay Group survey of 2,600 companies.

Poland closed 2008 with 9.5 percent unemployment and most experts predict the 2004 EU entrant could see a 2.0 percentage point rise this year.

While forecasting the EU economy will shrink by a grim 1.8 percent in 2009, a recent European Commission report said Poland would see 2.0 percent growth, after an expected 5.0 percent last year.

In Lodz, robust FDI has seen scores of dilapidated 19th century red brick factories and working-class row houses transformed into swish shopping centers and flats for the well-to-do.

"We're in a different situation from (Limerick) ... because our economy isn't based on one strategic investor, we have many," says Lodz city spokeswoman Marzena Korostenska, adding the early 1990's collapse of the textile industry taught Lodz to diversify its portfolio of investors.

"Fundamentally, it's not a competition between two European cities -- Lodz and Limerick -- but over whether jobs stay in Europe or go to Asia," she observed.

Mary Sibierski/AFP/Expatica

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