Source: ITA Country Commercial Guide

Overview

Industry 4.0 refers to the adoption of automation and data exchange in manufacturing technologies and is commonly referred to as the fourth industrial revolution. It includes cyber-physical systems, the internet of things (IoT), cloud computing, and cognitive computing.

Industry 4.0 creates what has been termed a “smart factory.” Within modular structured smart factories, cyber-physical systems monitor physical processes, create a virtual copy of the physical world, and make decentralized decisions. Using IoT, cyber-physical systems communicate and cooperate with each other and with humans in real-time, both internally and across organizational services offered and used by participants in the value chain.

Poland continues to grow as a manufacturing power in Europe. There is increasing demand for new and innovative manufacturing technologies in Poland, even though Polish entrepreneurs are still not taking full advantage of what Industry 4.0. has to offer. Technologies which most increase competitiveness of Polish companies include automation, big data and AI analytics, and cloud computing.

Poland is the fifth largest manufacturing country within the EU (based on sales figures, Eurostat). Leading manufacturing sectors include food and beverages, automotive, metal products, rubber and plastic, electrical equipment, chemicals and chemical products, non-metallic mineral products, basic metals, furniture, paper and paper products, machinery and equipment, computers, electronics, and optical products. After years of steady growth, industrial production is slowing down in 2023. According to the Polish main statistics office, in July 2023 it was 2.7 percent lower than one year prior.

Leading Sub-Sectors    

New technologies will be especially important in the aviation, defense, and automotive industries. Polish suppliers comprise a large part of the manufacturing process in these industries, and manufacturers must meet the technological standards of their suppliers. Industry 4.0 is also spreading to logistics and storage operations. In terms of Industry 4.0, the most promising sectors are automotive and aviation, followed by pharmaceuticals and household appliances. Both the automotive and aerospace industries are important to Poland’s manufacturing sector.  Automotive manufacturing alone employs more than 213,000 workers. Many Original Equipment Manufacturers (OEM), such as Fiat, Toyota, VW, and Opel, among others, have made investments in Poland, and their Tier 1 and Tier 2 suppliers, such as Lear, Delphi, Federal Mogul, Tenneco, etc., have followed them. Factories in Poland manufacture engines (Mercedes-Benz, PSA, Volkswagen Motor), tires (Goodyear, Michelin, Bridgestone), parts and components (Valeo, Hutchinson, BorgWarner, Faurecia, Johnson Controls, Delphi). There are several R&D centers located in Poland, such as Delphi, Wabco, Faurecia, Nexteer, Tenneco, and Eaton. Poland is considered the region’s largest automotive market in terms of sales and services. Each year, new investments in Poland’s automotive sector are announced, especially in electromobility. According to the Polish Investment and Trade Agency, in 2022 foreign companies invested over 3.7 billion EUR through the agency, out of which 40 percent were e-mobility projects. Mercedes Benz is starting its third investment in Poland, a construction of a $1.45-billion factory, which will produce electric cargo vehicles.

Before 2020, aerospace was a dynamic and growing sector of Poland’s economy. Global demand for Polish-made products and increasing air passenger travel and the development of associated infrastructure drove this growth. As a result of the pandemic, however, the aviation sector has suffered in recent years. The European Funds planned for 2021-2027 in the amount of 25 billion EUR may help the aviation sector to recover. In 2023, Poland’s aerospace sector is expected to return to pre-pandemic levels. Aerospace manufacturing is largely centered in the Aviation Valley and in the Silesian Aviation Cluster – specialized industry clusters with a large concentration of aerospace OEMs, scientific research centers and educational and training facilities, with more than 170 companies. International companies such as Sikorsky, Augusta Westland, Pratt & Whitney, and Airbus, among others, have made investments in the region. Most production focuses on helicopters, airplanes, engines, and engine components. GE Aviation established R&D facilities in Poland, and in 2019 Lufthansa Technik and GE Aviation opened XEOS, a new engine maintenance and repair operation, to service mainly GEnx-2B engines. Growth in these two sectors is heavily reliant on the development of advanced technologies and will drive demand for the latest in automation and additive manufacturing in Poland.

Opportunities    

Recent analyses indicate that Poland has much potential in industrial automation and manufacturing technology.

Opportunities for U.S. exporters include:

• Additive manufacturing equipment  
• Sensors and instruments   
• Electric motors and actuators   
• Electrical relays and industrial control equipment
• Material handling equipment   
• Industrial robots, including those used in spot welding, sorting, palletizing, and painting 
• Machine tools for cutting metal and forming metal pieces 
• Machine tools parts, both OEM and after-market 
• Tools, dies, jigs, and fixtures for manufacturing applications
• Welding and soldering equipment  
• Plastics and rubber manufacturing equipment  
• Industrial molds

There are also good prospects for IoT, advanced analytics, virtual reality, augmented reality, and general innovative solutions as the key elements toward the development of Industry 4.0 in Poland.

Source: ITA Country Commercial Guide

Overview 

Poland leads the former Eastern-bloc countries in parting from Soviet-era equipment and has long term plans to replace any remaining Soviet era equipment with modern NATO-compatible platforms.  However, the Government’s plans to strengthen and reorganize the armed forces and domestic defense industry compete with other reforms that are financed through the state budget.  

The 2023 defense budget raised defense spending to about $24.0 billion (PLN 97.4 billion), which amounts to 3 percent of 2022 GDP.  This represents a 68.6 percent increase from the previous year’s budget and can in part be accredited to Russia’s 2022 full-scale invasion of Ukraine.  The defense budget increase is also expected to involve an increase in military personnel to up to 300,000 (including 50,000 in the Territorial Defense Forces).  Additionally, the Government plans to allocate up to 10 billion dollars via the Armed Forces Support Fund*, for modernization of the Polish Armed Forces. Altogether, Poland’s defense spending in 2023 will likely exceed 4 percent of GDP. 

Support Fund

*In May 2022, the Minister of National Defense signed an agreement with the President of Poland’s national development bank Bank Gospodarstwa Krajowego (BGK) regarding BGK’s management of the Armed Forces Support Fund.  The “Homeland Defense Act” of 2022, consolidated defense regulations, increased the number of active personnel, increased defense spending to 3 percent of GDP by 2023, and established the Armed Forces Support Fund as an extrabudgetary means to significantly increase financing of defense expenditures and modernization. 

Poland has a very ambitious “Technical Modernization Plan” for its Armed Forces.  The Plan currently estimates spending $131 billion on new equipment between 2021-2035.  The plan is based on three principles: 1) assessment of Polish military needs; 2) timeframe for delivery of equipment; and 3) Polish industrial participation.  The program places an emphasis on using Polish defense industry capabilities, especially Polish Armament Group (PGZ) companies.

To increase the competitiveness of Polish defense industry, in 2013, the creation of the Polish Armaments Group (PGZ) consolidates approximately 50 Polish state-owned companies of which 30 are defense companies and 20 others including shipbuilding, and new technologies.  In 2022, Defense News ranked PGZ  70th out of the 100 biggest defense companies in the world.  Cooperation with PGZ has been a key to success for many foreign defense firms entering the Polish market.

U.S. companies are encouraged to team with Polish defense companies seeking cooperative agreements or joint venture opportunities that, combined with the relatively lower cost of production in Poland, will be attractive to potential customers.

Major recent Foreign Military Sales agreements with the United States include the Abrams M1A2 SEPV3 main battle tank, the Integrated Battle Command System (IBCS), PATRIOT air and missile defense system, F-35 Lightening II fighter aircraft, High Mobility Artillery Rocket System (HIMARS), Javelin anti-tank missile, and Joint Air-to-Surface Standoff Missiles-Extended Range (JASSM-ER).

In late 2022, Poland was a recipient of $288 million in Foreign Military Financing (FMF).  FMF grants helped backfill capabilities Poland provided from its own stocks to add to Ukraine’s defense. In September 2023, Poland received a milestone $2 billion FMF direct loan agreement to accelerate Poland’s defense modernization by supporting urgent procurements of defense articles and services from the United States. The U.S. government also provided up to $60 million in FMF grants for the cost of the loan. Loan proceeds will further advance Poland’s military modernization effort across a wide range of capabilities, substantially contributing to strengthening the defense and deterrence of NATO’s Eastern Flank.

Leading Sub-Sectors 

Opportunities for American defense firms exist mainly in investment, technology transfer, and co-production work. Polish defense companies routinely seek cooperative agreements or joint venture opportunities with foreign defense companies.

Receptivity to American products is high due to an excellent reputation for high quality products, reliability, and technical assistance. However, technological advantage is not the only factor determining success in the Polish market.  American companies should focus on educating end-users in the defense sector.  A successful U.S. exporter is expected to support its agent/representative at trade shows, seminars, and conferences.

Polish officials maintain that the most important factor in awarding a contract is price (which is particularly critical for big-ticket purchases), after which other variables, such as quality, availability of services and training, technical assistance, and start-up operation of the equipment, become important.  Therefore, superior performance offered from U.S. companies will not always win the deal.

The Polish government is required by law to hold public tenders for major procurements, though there is a national security exception. Financial value, project complexity, international cooperation, and political sensitivity determine the project category.   

American companies that are well informed about upcoming projects are free to submit tenders to the contracting authority directly.  However, direct purchases from foreign suppliers are very rare and we encourage U.S. firms to identify local agents/representatives who can provide necessary assistance. Selecting an appropriate representative is very important.  The agent should have close contacts in the military/defense market.  A reputable agent with good contacts can provide important and timely information, which is often not readily available through public sources.  American companies exporting to Poland should be familiar with the country’s Public Procurement Law, Polonization, and Offset Act.  Polonization is part of Poland’s long-term plan to become more self-sufficient, and to increase and promote local industrial production.  The bottom line is that it is nearly impossible to effectively sell defense products without a competent agent.

The Office for Offset Agreements at the Ministry of National Defense (MoND) coordinates Poland’s defense offsets. The offset requirements are an important part of defense procurement contracts. On June 26, 2014, the Polish Parliament adopted a new Offset Act – the “Act on Certain Agreements Concluded in Connection with Contracts Essential for National Security.” The new Offset Act was signed into law by the President of Poland on July 7, 2014.  The new law covering the use of offsets in defense acquisition brings the country in line with European Union (EU) military procurement rules.

The U.S. Commercial Service identifies the defense industry as one of its sectors with sizeable American sales potential in Poland. It offers several commercial export promotion programs and advice on regulation compliance, the market potential for a product or service, agent/representative vetting, as well as advocacy support. Please visit the Commercial Service in Warsaw for more information on how we help U.S. companies do business in Poland.

Foreign investors and joint venture partners with local firms can take advantage of government incentives. Joint ventures are an excellent way to facilitate export sales to the Polish market.  U.S. companies competing for Polish defense contracts are encouraged to look for joint ventures, co-production, and other cooperative opportunities with Polish companies to make their bid offers more attractive.  The relatively low cost of production in Poland has led many foreign defense companies to seek cooperative agreements or joint venture opportunities with Polish defense firms. Examples of such projects include co-production of tanks, armored vehicles, artillery, ships, aircraft, and helicopters. 

The potential of the Polish private defense sector is growing, with private companies offering more innovative solutions.  Major U.S. defense companies (e.g., Raytheon Technologies, Lockheed Martin, Northrop Grumman Defense Systems, Boeing Defense, Bell Textron, L3Harris Technologies, General Dynamics, Oshkosh Defense, and BAE Systems North America) are active in the Polish market.

Overview

Electricity production in 2022 reached 178.8 terawatt hours (TWh). Electricity demand was at the level of 177.1 TWh. For the first time in seven years, Poland was a net exporter of electricity. Exports amounted to 1.68 TWh in 2022. The share gross electricity generation from coal in 2022 was 70.7%, 1.7 percentage points less than in 2021. In 2022, the share of renewal energy sources (RES) capacity increased to 38.3% (from 32%). At the end of 2022, RES capacity exceeded that of coal-fired power plants. This fact is purely symbolic, as the operating characteristics and functions performed by these sources in the system are quite different. Photovoltaics are responsible for more than half of RES capacity (53%). Wind power accounts for 40%, with 60.0 GW achievable capacity at the end of 2022.

The pace of expansion and modernization of energy generation units is still insufficient to ensure energy security in the face of planned shutdowns in the conventional power generation. Despite high CO2 prices, coal-fired generation was less expensive than natural gas-fired generation, resulting in a record increase in the use of coal-fired capacity and a decrease in the use of natural gas-fired capacity. For the first time in years, wholesale electricity prices in Poland were among the lowest in Central Europe. This resulted in high exports and production. The average spot price of CO2 in 2022 amounted to $44.2/t CO2. Poland’s revenue from the sale of CO2 allowances was more than $4.94 billion in 2022. There is an ongoing energy crisis, triggered by Russia’s aggression against Ukraine and a decline in electricity generation in Europe from hydro and nuclear sources. Combined with fluctuations in supply, demand, and commodity prices caused by the COVID-19 pandemic, EU wholesale markets witnessed a steep rise in energy prices of up to 400 EUR/MWh in 2022. The Polish Government’s commitment to coal while the rest of the EU steps up climate action also led to high energy prices. Energy prices can be monitored at Electricity prices Europe (euenergy.live) as well as at U.S. Energy Information Administration – EIA – Independent Statistics and Analysis.

Source: ITA Country Commercial Guide

Electricity Generation in 2022

• The share gross electricity generation from coal in 2022 was 70.7%, (1.7 p.p. less than in 2021).
• For the first time, production from RES exceeded 20% of the mix and amounted to 20.6%, thanks to record production of 36.8 TWh and reduced demand for electricity (by 1.9%).
• Production from natural gas reached its lowest level since 2017, due to record high gas prices on global exchanges.
• Production from photovoltaics doubled relative to 2021, to 8.0 TWh.
• Gas and coal-fired capacity recorded the lowest-ever capacity factors.
• Production from natural gas fell by 4 TWh (-25% y/y), and from hard coal by 4.7 TWh (-6% y/y). This is a result of high prices for these fuels and increased production from RES, with reduced electricity consumption.
• Production from lignite increased by 1.3 TWh (+3% y/y).
• Among renewable sources, photovoltaic power generation grew most rapidly (+102% y/y, +4 TWh), while biomass sources recorded the largest decline (-11% y/y, -0.5 TWh), due in part to the cutoff of fuel supplies from Belarus.
• Production from wind farms increased by 19% y/y (+3.1 TWh), or 7 p.p. more than the capacity increase alone, thanks to more favorable wind conditions in 2022.
• Pumped storage power plants were used at record levels, 38% more than in 2021.

Gross domestic electricity production amounted to 178.8 TWh, 0.5% less than the prior year. Over a 10-year period, electricity generation increased by 8.7%, from 164.4 TWh in 2013. Production from conventional sources fell by 4%, from 146.9 TWh in 2013 to 140.9 TWh. Production declines were recorded from anthracite (-0.9 TWh, or -1%) and lignite (-9 TWh, or -16%), while production from gas sources increased (by 7.3 TWh, or 169%). Generation from renewable energy sources increased by 117%, from 17 TWh in 2013 to 36.8 TWh.

In 2022, 36.8 TWh of electricity was produced from RES – 20% more than in 2021. Wind power was responsible for more than half of the production from RES (53%) in 2022, solar PV accounted for 22%, and biomass for 12%. The largest increase, aside from solar PV, was in wind generation – up 222%, from 6 TWh in 2013 to 19.4 TWh in 2022. Declines were recorded in biomass co-firing, down 57%, and hydro generation, down 19%.

In 2022, bituminous coal imports totaled 16.9 million tons – 7.9 million tons more than in 2021. 34% (17% each) of the imported coal came from Kazakhstan and South Africa; 15% came from Colombia, with only 13% coming from Russia. As much as 37% came from other countries, mainly Australia and Indonesia. In 2022, 2.1 million tons of steam coal were exported. The main customers were Czechia (55%), Ukraine (18%), Germany (12%), and Slovakia (8%). Starting in May 2022, Poland stopped importing coal from Russia.

According to Forum Energii estimates, anthracite consumption in 2022 amounted to about 66 million tons, down about 4 million tons (-5.9% y/y) from the previous year. Net imports increased by 8.5 million tons (up 143.2%; to 14.5 million tons), mining fell by 2.5 million tons (down 4.4%; to 52.8 million tons), so according to estimates, about 1 million tons were put on the heap (increased stocks). Over the 10-year period, anthracite consumption fell by 13 million tons (-16.4%), mining fell by 24.2 million tons (-31.4%), and net imports increased by 14.8 million tons.

In 2022, the commercial power industry consumed 36.5 million tons of coal, of which 29.7 million tons were used for electricity generation. Industrial power generation consumed 3.4 million tons (mostly for heat – 2.8 million tons), and heating plants consumed 4.9 million tons. Coal consumption fell in every category of consumption, but the most for heat production in commercial units (-9.1%; -0.7 million tons). About a third of the anthracite (32.4%, or 14.5 million tons) was used for heat production. The remaining 67.6% (30.3 million tons) was used to produce electricity.

In 2022, natural gas imports (both via pipelines and LNG) amounted to 15.4 bcm, 3.1 bcm (-17% y/y) less than in 2021. 29% of imported natural gas came from Germany. Other significant import destinations were the United States (23%), Russia (19%), and Qatar (15%). Imports from the United States rose by 118% from the previous year, while those from Russia fell by 72%. In 2022, 0.6 bcm of natural gas was exported. More than two-thirds (67%) flowed to Ukraine. The remaining 23% flowed mainly to Germany (15%) and Czechia (12%). LNG imports accounted for a record 40% (6.2 bcm after regasification) of gas fuel imports. The main suppliers were the United States (55%) and Qatar (37%). Estimated consumption of natural gas fell by about 12% (about 88 PJ) to about 630 PJ in 2022.

Most Polish coal-fired power plants were built between 1960 and 1980 and now must be retired and replaced. Poland’s newest and the last coal-fired power plants are Kozienice (1,000 MW) and Opole (2×900 MW, Jaworzno (910 MW) and Turow (450 MW) commissioned in the early 2020’s. Subsequent power plant investments in Dolna Odra (2 x 700 MW) and Ostroleka (750 MW) will utilize natural gas sources. Ostroleka is evidence of the transition from coal to gas; the plan was originally contracted as a coal facility, but losing a legal challenge brought by shareholders, the plants owners were forced to convert the half-finished project into a gas fired plant.