Electronical Industries Poland: Recovery of electronic and electric engineering industry
Following a few years of decreased production of the majority of electronics and electric engineering products, the first half of 2017 has brought a recovery to this branch of industry. Computers, radio/television equipment, electrical engines, transformers and generators remain the hallmarks of the Polish electronics and electrical engineering industries.
In spite of the fact that in 2016, the financial net result of the Polish electronics industry fell compared to the previous year, the data for the first two quarters of this year lead us to believe that the downward trend has already been reversed. The positive changes are also visible with regards to the net profitability of the companies operating within those sectors. In 2016, this factor fell to the level of 2.8% for electrical devices and 3.0% respectively for electronics. This year’s Central Statistical Office’s (GUS) data brought no breakthrough but the subsequent quarters should be significantly better in that regard.
Significant inflow of foreign capital
The production activity (electronic and electrical products) in Poland is carried out by over 9 thousand entrepreneurs. However, the majority of them are small and medium enterprises. Amongst the 2000 largest Polish companies, only 26 represent the electronics industry and 29 the electrical engineering industry. Both sectors have a significant share of the Polish industry’s sales production (8.4%) which in absolute figures for 2016 amounted to PLN 38.6 billion in sales in the electronics sector and PLN 53.4 billion in the electrical engineering sector. The total of 164 thousand of people (as of June 2017) is employed by those industries which is 7% of all workers of the Polish processing industry.
Foreign capital which is represented by some of the industry’s key global players is of great importance to the development of the Polish electronics and electrical engineering industries. The inflow of foreign capital has created favourable conditions for Poland’s absorption of new technologies and incorporation of a large group of Polish entrepreneurs into international added value chains associated with the production processes of various goods.
The Polish electronics and electrical engineering market is characterized by a negative balance of foreign exchange regarding high technology products. According to Eurostat data, in 2015 it amounted to 6.8 billion euros, including 3.1 billion with EU states. The most important component of that deficit is the negative balance of trade in radio/television and telecommunication equipment. International trade has slightly better results within the sector of computers and office equipment with Poland having a positive balance of trade exchange with other EU states.
Outsourcing becoming more and more popular
Fewer and fewer of electronics and electrical engineering producers are self-sufficient. Therefore, with the use of outsourcing, it is profitable to commission the manufacturing of specific components and even whole electronic and electrical engineering devices to specialized companies which carry out the assembly services upon request (Electronic Manufacturing Services – EMS). Such companies are usually very well-equipped with machinery and technologies which enables them to execute even complex technological operations.
The group of Polish entrepreneurs which carry out the production of electronics upon request currently consists of over 100 companies of various size and scale of operation. However, it can be assumed that this is just the beginning as the Polish market is far from being saturated with the contractual services. This is because there are still many companies on the market which believe that having own production services is a good solution from a business point of view as it enables greater quality control, protects intellectual property and contributes to the company’s growth of technological potential. However, the economic calculations show that it is not always profitable and the development of outsourcing services shall be the natural course of events.
For the Western European countries, Poland has for many years been an alternative for the assembly of electronic equipment in comparison to the subcontractors from the Far East. The advantages of the Polish outsourcing enterprises are the highly qualified engineering workforce, application of modern technologies, geographical proximity, lower prices for services compared to the western countries and easier enforcement of patent ownership. This is why, Polish EMS companies have, for a long time, been receiving many commissions from abroad (mainly from France, Germany and Scandinavian countries) and their position on the European market is likely to keep on growing due to the successive improvement of the quality of production.
The electronics industry shall be of key importance to the development of the Industry 4.0 concept. Hence, there is no doubt that Poland must emphasize its strengthening should it desire to be of importance on the economic map of Europe and the world.