Poland has become a democratic, market-oriented country after many years of communism and the lingering effects of invasion during World War ll. The country joined NATO in 1999 and later became a member of the EU in 2004.
Located east of Germany in Central Europe, Poland is about 312,685 sq. km, about twice the size of the U.S. state of Georgia. Poland’s bordering countries include Belarus, Czech Republic, Germany, Lithuania, Russia, Slovakia and Ukraine. The climate is temperate with moderately severe winters and mild summers.
Poland is the sixth-largest economy in the EU. It has enjoyed continuous economic growth for the past 26 years.
Manufacturing in Poland
Poland’s manufacturing centers around machinery, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages and textiles. Automobiles account for 11% of the total industrial output.
The industrial production growth rate was 7.5% in 2017 and accounts for 40.2% of the GDP.
Other Important Industries
Agriculture is important in the Polish economy, and nearly 90% of the total farmlands are privately-owned. However, the privately-owned farms are small, with only 7% exceeding 7 hectares in size. The state-owned farms on average exceed 1,000 hectares. Even so, most of the country’s agricultural produce comes from the smaller, privately-owned farms. Wheat, oats, barley, rye, potatoes, milk, pigs, and sugar are key commodities. Large percentages of each of these commodities are consumed within Poland, leaving little for export.
Poland is also the 9th largest coal producer in the world, but also the second-largest coal consumer so most of its coal production is consumed internally.
More than 17 million tourists visit Poland each year, making it one of the most popular tourist destinations in the world.
Supply Chain Infrastructure for Manufacturing
Poland continues to have issues with rail and road infrastructure, but it does have about 291,000 km of paved roads to support truck transport. According to the World Bank Doing Business Dataset, Poland ranks number one out of 190 countries in the ability to trade across borders, which makes it ideal for doing business within the region.
With 87 airports that have paved runways, Poland’s air infrastructure is more than adequate for freight shipments. Its prime location in Europe makes it an ideal location for shipping across Europe or Asia.
Poland has almost 20,000 km of railways and 3,997 km of navigable inland waterways, so it is relatively simple and convenient to ship goods by air or water. Major seaports include Gdansk, Gdynia and Swinoujscie. Gdansk is a container port, enabling ocean shipment to anywhere in the world.
Poland’s unemployment rate was about 4.9% in 2017, down from more than 6% the year before. The labor force is 17.6 million people, and 30.4% work in industry. The services sector employs 57.6% and agriculture employs 11.5%.
The Polish workforce is well-educated, with the average worker achieving 16 years of education. Literacy is widespread, with more than 99% of the population able to read and write. However, Poland’s population is falling, and many younger workers are drawn to opportunities in other nearby countries, eroding the size of the workforce.
Real GDP growth in Poland has exceeded 3% for the last several years because of increased spending on social support. The government also tightened restrictions on business and added taxes to some economic centers such as insurance, energy, and healthcare. The 2017 GDP equaled $1.126 trillion in 2017, up by 4.7%, making it number 23 in the world.
In 2017, Poland exported about $224.6 billion worth of goods. Primary trading partners included Germany, the Czech Republic, the U.K., France, Italy and the Netherlands. Manufactured goods make up most of the exports, with machinery and transportation equipment, intermediate manufactured goods and miscellaneous manufactured goods equaling about 78%. Food and live animals are the other significant exports.
Poland imported $223.8 billion in 2017. The primary commodities included machinery and equipment, intermediate manufactured goods, chemicals, minerals, fuels, lubricants and related materials. Primary import partners were Germany, China, Russia, Netherlands, Italy, France and the Czech Republic.
Poland is a parliamentary republic and achieved its independence in 1918. The country suffered multiple invasions during the world wars but was able to regain its independence. Since August 2015, the chief of state has been Andrzei Duda. The Prime Minister, Mateusz Morawiecki, was installed in December 2017. Senate elections were held in October 2019 and will be held next in October 2023.
Taxes equal 39.5% of the GDP, putting Poland 45th in the world. The corporate tax rate is 19%, calculated on global corporate income from all sources if the company is headquartered in Poland. For non-Polish countries, only the income generated from Polish operations is taxed. The tax is paid annually, but companies are expected to make advance payments each month.
Poland is an external border country of the EU, so it has implemented strict Schengen rules to restrict illegal immigration along the borders with Belarus and Ukraine.
Getting Down to Business
Doing business in Poland has many advantages because of its prosperity, well-educated workforce and prime location for international trade. QAD Internationalization enables companies to identify and overcome the challenges associated with taxes, regulations, and globalization in Poland, and because Poland’s manufacturing industry is diverse, QAD Manufacturing can help by adapting to any manufacturing mode.
How would you describe the state of Manufacturing in Poland? Learn more about manufacturing and doing business in other great countries around the world.