In the 19th century, the Polish novelist Wladyslaw Reymont titled his masterpiece about Lodz "The Promised Land" because the city attracted people from throughout Central Europe to work in its booming textile mills.
These days, the industries have changed, but something similar is happening again, helping Poland to escape the searing global recession. With multinationals like Procter & Gamble, Dell and ABB leading a wave of foreign investment, cities like Lodz, in central Poland, are experiencing relative booms.
Poles who left the country in search of work years ago are trickling back.
As its peers in Central and Eastern Europe face a very rough year, Poland is emerging as the one economy in the region that has the heft to withstand a vicious downturn. And it just may end up being the one economy in Europe that avoids an outright contraction in 2009. One of the most flourishing corners of Lodz is a vast former textile factory that is now a complex of stores, restaurants and even a beach volleyball court. The brisk business at the site, known as Manufaktura, illustrates how far Poland is removed from the searing experiences of Latvia or Hungary, not to mention London or New York. "Maybe without the crisis, business would be better," said Slawomir Murawski, the director of Manufaktura."But who knows?" Poland has the advantage of being preoccupied with itself these days. Because it sells far less to the rest of the world than its neighbors, Poland is shielded from the vicissitudes of the global economy, while reaping its benefits, reflecting a wave of foreign investment. That, in turn, has helped keep its labor market strong at a time when many Europeans fear for their jobs.
The government reported Friday that Poland's economy expanded at an annual rate of 1.1 percent in the second quarter, bolstered by exports, construction and services. Growth in gross domestic product was well above the 0.5 percent expected by analysts, as well as the first quarter's 0.8 percent annual rate of growth. "We're the only country in the whole European Union that has such good growth, and we've come here to brag," Prime Minister Donald Tusk said at a news conference in Warsaw, Bloomberg News reported. "Poland is the E.U.'s undisputed growth leader." At the beginning of the year, Poland suffered along with other emerging markets as investors pulled their money out en masse. To the immense frustration of Polish business, however, the picture of the region for outsiders has been dominated by countries like Hungary, Latvia, Serbia and Ukraine, whose crushing debt loads drove them into the arms of the International Monetary Fund.
For Poland, a relatively light borrower, the crisis created a riptide in the form of a fast-depreciating currency, the zloty. That hurt some companies, namely those that had carefully hedged themselves against a rising currency, which was the previous year's problem. But Polish banks, keen to avoid driving their clients into bankruptcy, refinanced the hedges to reflect the new reality. "In retrospect, the crisis proved manageable in Poland," said Ryszard Petru, chief economist at BRE Bank in Warsaw. "But it was hard to know at the time." The zloty plunged 27 percent against the euro in the six months ended in March. It has since risen more than 13 percent.
Poland has landed more softly than its neighbors because its economy is far less dependent on exports than other Central European countries, where exports can approach 90 percent of the gross domestic product. Poland, a nation of 38 million people, lives far more from domestic demand, and that depends on a stable labor market. Mr. Petru predicts that unemployment will rise to 9.9 percent by the end of 2009, from 7.1 percent, but that is about even with the European Union average. And it masks some pockets of strong growth; the jobless rate is 2 percent in Warsaw, and about 8 percent in Lodz, or less than half what it was five years ago.
One reason for the surprise in Lodz is clearly the influx of foreign investment. Procter & Gamble has one factory in Lodz and is opening another this fall. Fujitsu, the Japanese computer company, opened a service center in the city this year. Others include Infosys Technologies, the Indian information technology firm; ABB, the Swiss manufacturer of infrastructure equipment; and TNT, a Dutch logistics firm. Even after the shock of last September, when the bankruptcy of the investment house Lehman Brothers sent global business into free fall, "companies in Lodz kept searching for labor," said Piotr Broncher, the Lodz regional director for Manpower, a provider of temporary employees. "I was surprised. Everybody was surprised."
Manpower will probably find jobs for 1,200 people in the Lodz area this year, down slightly from 1,500 in 2008. Dell, the computer maker, made the investment that truly electrified Lodz. In January, Michael S. Dell, the company's founder and chief executive, officially opened a 400,000-square-foot plant that will handle logistics and assemble computers, particularly for customers from Central and Eastern Europe and Scandinavia. Over the next three years, it will employ up to 3,000 people. In a symbolic shift, Dell moved operations to Lodz from Limerick, Ireland. Ireland has protested the 52.7 million euros in subsidies that Dell got from the Polish government, but Dell cited the skilled work force in Lodz and proximity to growing markets as the reasons for its move.
The Irish boom, now possibly the worst bust in Europe, attracted many Poles, who worked with Dell there and are now finding their way home. "We even have some workers in Lodz who have come from our Limerick, Ireland, factory and who are very happy to have come back to help set up this one," Mr. Dell said at the opening in January. Tomasz Rybinski, 30, was among those Poles who left the country after it joined the European Union in 2004. He found work in Britain, which was booming and where he spent three years mixing salads, moving boxes in a warehouse and then, finally, working in a factory that made industrial refrigerators.
Rumors this year that layoffs were in the works were enough to convince Mr. Rybinski that the possibilities in his native Lodz trumped what had by then become a shattered British economy. After taking some time off, he found a job quickly. He recently started work in a factory that produces monitor and computer parts as an operator of a machine that molds plastic into specific shapes. Financially, Mr. Rybinski said he would earn about the same monthly pay, the equivalent of about $500, that he earned in Britain.
The turnaround in Lodz has been startling for a municipality whose population was still declining as recently as three years ago. Mr. Murawski, the director of Manufaktura, said his business benefited from that growth. But one multinational on the horizon might be less welcome for his operation, which combines shopping, eating and entertainment for children. This autumn, the Swedish retailer Ikea will open its own complex in Lodz, employing much the same strategy: bring them in to shop, but amuse them as well.
"That is likely to affect us much more than the crisis," Mr. Murawski said. "It is something concrete." By: Carter Dougherty Source: The new York Times
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