The Other Europe: A Look at Poland

Scan any of the European front pages lately, and you're likely to see reports on Greece, France, Germany, and the debt crisis crammed in there somehow. But as manufacturers know, there's more to Europe than just what's coming off the newsfeed or TweetDeck.

Take Poland, for instance. When was the last time you heard about what was going on there? A few years back, the country was on many high-tech OEM and EMS radar screens. It was a potential low-cost, high-skill manufacturing center in a key geography. As EBN reported, there are still plenty of opportunities brewing there for those wise enough to take note. (See: Manufacturing Matures in Central, Eastern Europe and Central Europe: Where Opportunities Equal Challenges.) Recently, the buzz has quieted.

For the sake of catching us all up, here are a few things coming out of Poland that are worth watching.

First, there's a growing consumer appetite for consumer electronics, not surprisingly for the Apple gizmos that the whole world is ogling over. According to one report, 18.4 percent of all mobile Internet users in Poland are iPad users, and another 15.3 percent are connecting up through the iPhone.

The hefty price for those devices doesn't seem to be slowing down sales, either. Perhaps that's because Poland generally has weathered the financial crisis relatively well. The Financial Times recently reported that Poland has been on a lucky streak that still has some oomph in it. Among the positives cited:

• The concern about serious fiscal problems has eased
• The economy's growing pretty well
• The country will co-host the European football championships next year (an insanely popular soccer match that will throw a lot of money into the country's coffers by way of tourism)
• In July, Poland took over the Presidency of the Council of the European Union slot, giving the country a regional political boost.

To boot, there appears to be an underground shale gas bonanza, which will give the country an advantage in any natural gas energy conversation, FT reported.

But it's not all rosy skies. Inflation is troubling at 5 percent, and the central bank probably will have to step in and reel it in. And, although the country miraculously managed not to slip into the 2009 recession that swept through most of the world, it avoided a fiscal drop-off as a result of previous spending hikes and tax cuts, which, according to FT, flung the deficit to 7.9 per cent of GDP in 2010 and public debt pushing up against 55 per cent of GDP, the legal limit.

Then there's the manufacturing picture. Remember the game Red Light, Green Light, where one of your friends stood some distance away and shouted either "red light" or "green light"? If she shouted "green light," the herd of us at the line darted forward, trying to be the first to reach her. If she shouted "red light," we all froze in place, trying to balance while in mid-step. That's sort of the sense I'm getting from Poland's manufacturing picture. There was a dash a few years ago to put stakes in the ground, but there appears to be a jittery standstill happening now.

While you can find a bunch of financial and tech stats at Eurostat and OECD, I'm following a hunch based more on anecdotal things I came across. LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , for instance, has reportedly expanded its production facilities in Biskupice Podgórne as part of an underlining game plan to be the world leader in the global home appliance market in four years' time.

Young-Ha Lee, president and CEO of LG Electronics Home Appliance Co., was quoted here as saying: "The European appliance market is critical to our future success and we are confident in our ability to keep up with the growing demand from consumers there. Increasing our presence in Poland allows us to better address Europe and North Africa’s demands, putting us on course to become the world’s top home appliance company by the middle of the decade."

The news wasn't so good for Jabil Poland; it recently lost a contract to Northern European companies. Day4 Energy, which provides solar photovoltaic PV technology for the production of advanced solar panels and modules, decided to kill its outsourced manufacturing operations in Poland.

Day4 Energy President George Rubin was quoted as saying: "Since the end of 1Q/2011 we have expanded the reach of our technology and brand platform by securing license agreements with PV Products GmbH in Austria and Solar Modules Netherlands (SMN) in Holland."

I suspect there are still many untapped opportunities there, but I think high-tech companies are waiting for someone to shout "green light" once again.