CAPS Consulting - experience

here's good cause to be bullish on Poland
by John Torinus, June 15, 2007

Poznan, Poland - The admission of Poland to the European Union in 2004, cheap point-to-point airfares across Europe and the emigration of Wisconsinite Austin Campbell in 1999, all figure in the increased prosperity of Poland.

The 27-nation EU has been subsidizing Polish government and business to the tune of $12 billion a year. Companies I visited on a business trip displayed new machinery with signs that touted EU grants of up to 65% of the purchase price. That gives small and medium companies a distinct advantage in the marketplace with equipment otherwise out of reach.
The EU stimulus, along with a standard 19% tax rate on corporations and individuals, has led to a vigorous Polish growth rate of 6.67% in 2006 and 7.4% in first quarter 2007. That far outpaced the tepid EU growth rate of 2.7% last year.
Polish exporters to the EU led the charge in 2004. Also stimulative was the attraction of major manufacturers like Whirlpool, General Motors, Gillette, Sharp, Toshiba, LG and Phillips.
Though still high, unemployment fell several points over the last year to a low of 13.1% in May. Skilled labor ranges from $4.50 to $7 an hour. Young engineers earn about $10,000.

Campbell, who grew up in Cottage Grove and majored in Eastern Europe studies at St. Olaf College in Northfield, Minn., made his way to Poland eight years ago to teach English. He then got into politics and business as an aide to a Polish businessman and member of the centuries-old Parliament, the Sejm.
After three years, he started his own consulting business for companies that want to make commercial connections in the region. He takes referrals from the Wisconsin Department of Commerce and now counts three companies from the state as clients. Campbell lives in Poznan, speaks fluent Polish and has bought into a local manufacturing concern.
"You can penetrate the region with relative ease from a base in Poland," he said as we criss-crossed the country of 39 million people by car, looking for an alliance partner.
"It's a great jumping off point to all parts of Europe, west or east." Poland is central to all of Europe, its roads are improving and the emergence of low-fare airlines like Ryan Air, have made it more accessible. Campbell will fly on business next week from Poznan to London, then direct to Stockholm and direct back to Poznan.
"Three cities, three flights, three days - all for a total of about $150," he said. The economic development strategies of Poland also give cause to be bullish about its prospects. Following Slovakia early in this decade, Poland may soon make its 19% corporate rate an absolute flat tax. That compares with 12% in Ireland and more than 30% in China, India, Mexico and the U.S. (My company, Serigraph, is at 34% state and federal).

Some EU members in Western Europe are having heartburn over the possible loss of investment to the low-tax countries. Helpful EU subsidies to Poland and other poor members of the union include public infrastructure, job training and higher education in disciplines like engineering. These grants have greatly improved business morale as Poland tries to catch up to western Europe.
On the negative side, the free flow of labor over national borders inside the EU has resulted in a serious brain drain to higher wage countries like England and Ireland. From 1 million to 1.5 million Poles, often talented people, are estimated to have exited for better pay. Nonetheless, there is hope that rising prosperity in Poland will bring some of the talent back, as has happened in Ireland.
As for Campbell, he plans on making a life and career in Poland. He, and almost every other business person I talked to, believe it's a great time to be investing in Poland.

One Polish CEO said the country lost 50 years of economic development under Communism after World War II. The Poles are anxious to catch up.

<< back to experience