Poland is expected to become the largest producer of major appliances in Europe in 2011, overtaking Europe’s heavyweights, Italy and Germany. In 2010 production of major appliances in Poland already accounted for about one third of total Western and Eastern European production combined, reaching 15 million units, up by 18% on the previous year. In 2011 production is all set to grow by a further 23%, reaching output of over 18 million units and propelling the country to the number one spot in the region.
Poland’s emergence as a production powerhouse in consumer appliances comes as a result of the gradual relocation of the manufacturing plants of Western European players to the East. In 2005 for example BSH started to move its production of home laundry appliances and dishwashers from Germany to Poland. In 2007 Electrolux decided to move its production of dryers from Italy and is planning to further increase its overall local production capacity by 2012. In 2009 the Italian player Indesit also transferred its production of automatic washing machines from its plant in Wales to the city of Radomsko. After the acquisition of Brandt, the Spanish player Fagor is also gradually relocating its plants away from the brand’s local home in France, and plans to start a dishwasher line in 2011.
It is not just the relatively cheap labour cost that has persuaded multinational companies to relocate their production plants to Eastern Europe. Situated in Central Europe, Poland successfully meets the needs of multinational manufacturers looking to maintain proximity to their core Western European markets while reducing production and shipment costs.
Cutting both ways, in terms of consumer demand Poland is the second biggest major appliances market by volume in Eastern Europe, second only to Russia. Consequently it represents a substantial opportunity in its own right, as well as a great gateway for companies aiming to tap into fast recovering Eastern European economies.
South Korean players making Poland their European hub
Perhaps more significantly, the remarkable increase expected in 2011 has been mainly due to the investments of both Samsung and LG. With the aim of transferring its entire European production to Poland, in 2011 Samsung acquired the washing machine and refrigeration production plants from the polish company Amica, increasing its local production output by 500%, to reach 3million units.
LG also chose Poland for a new washing machine production line, with an annual capacity of 700,000 units. Furthermore it has plans to increase its refrigerator capacity there by a further 21%, to 1.4 million units by 2012, to better serve both European and North African markets.
As a consequence of all this, Poland is developing niches of global manufacturing leadership. Production of automatic tumble dryers for example largely outperformed regional growth, making Poland the world’s biggest exporter in 2010, ahead of Germany and perhaps even more strikingly given its export dominance, China. Again, the predominance of Poland’s exports is not surprising, when considering that neighbouring Western Europe accounted for 33% of global volume sales of automatic tumble dryers in 2010.
World’s Exports of Automatic Tumble Dryers and Dishwashers by Country, 2010
Source: Euromonitor International
Relocation to Poland is undoubtedly gaining momentum for future growth. Poland’s economic performance could significantly improve over the mid-term, should the country address some of the remaining deficiencies in its road and rail infrastructure and business environment. Poland’s economic stability together with the optimistic forecast on domestic demand is expected to attract further foreign investments, with major appliances players ready to increase their production capacity in the country.
Insight in this article is based on Euromonitor International’s new Consumer Appliances Production and Trade Statistics data, due to be published in November 2011.