Market Analysis Tool, Die and Mould Making in Poland and the Czech Republic
Poland and the Czech Republic have a well-trained and competitive workforce and serve as an extended workbench and an alternative for companies in Southern Germany. Moreover, the Czech Republic has also been showing positive signs of further economic recovery.
Poland, one of the countries with the most lakes in the world, is located on the border to Germany and to the east of Central Europe with a population of 38.25 million. It is considered to be a highly developed country and occupies a top position regarding the standard of living. This is related to security and social structure and particularly to the educational system. Within the OECD, Poland is in second place and only Finland ranks better. 90% of all Poles have a higher education degree and the school system is of excellent quality, which can be seen in consistently outstanding PISA Study results.
The Czech Republic, famous for its beer, the Vltava River (Moldau) and the “Golden City of Prague”, borders Germany and boasts of a population of 10.6 million. It is the sixth most densely populated country in the EU. 92% of all adults have a higher education degree. 57.4% of the population speaks English and an even larger share speaks German. The school system’s quality is above average, but compared to other eastern European countries, the Czech Republic fares worse than Poland and Slovenia. Approximately 80% of all citizens have access to the Internet, which is about 5% less than in Germany. With regard to the labour market, the healthcare system and income, the Czech Republic cannot keep up with the world's most developed countries.
The Polish Economy and the Industry
Since 1990, Poland has systematically supported the liberalisation of its economy. During the global financial and economic crisis in 2008 and 2009, Poland was the only country in the EU that steered clear of a recession. In terms of gross domestic product (GDP), Poland is among the larger European economies. In recent years, the economy has shown positive growth rates and grew moderately in the last four years by 2.9% per annum. Especially from the years after its EU accession until 2009, the country enjoyed growth rates as high as 7%.
The outlook for the year 2016 is positive. Poland is currently the 27th-largest export nation and 24th-largest import nation worldwide. The country exported products and goods worth €153bn in the 2013. The three most important export goods were parts for the automotive industry, machinery and chemical goods. The industrial production shrunk considerably in the years after 1990 due to the decommissioning of many state-owned companies.
Consolidation and privatisation of the remaining companies resulted in modernisation and these companies are now able to compete internationally. The level of wages was close to an average of €18,879 in 2013 and therefore significantly below the average of all industrial nations. The distribution of income within the population is homogenous. 20% of the wealthiest Poles earn approximately twice as much as the poorest 20%; a better figure than, for example, Italy, where the difference is six times higher. On an average, a Pole works 1,931 hours every year, which is 10% above the average of all other industrial nations.
As of January 2016, the rates of unemployment and youth unemployment were 10.3% and 20.4%, respectively. However, they show significant regional differences; in the cities of Posen and Warsaw, the rate of unemployment is below 3%, whereas in rural regions, it is partially above 20%.
The Czech Economy and the Industry
In terms of the gross domestic product (GDP), the Czech Republic has a GDP per capita of €17,500 and is the 53rd-largest economy in the world. Scaled on purchasing power, the Czech GDP approaches the average of the EU, but the positive progress has tapered off in the last few years. The Czech economy could initially not recover after the crisis of 2008-2009 and has only grown moderately with about 0.6% per annum in the last four years. However, the prospects for 2015 and 2016 are positive. Economic growth of up to 2.6% is predicted. The Czech Republic exported goods worth €143.5bn in 2014. The three most important exports are automobiles, machinery and chemicals.
Germany is by far the most important trade partner for the Czech Republic and constitutes 30% of foreign trade. Poland, the second-most important trade partner, achieves only 8%. The Czech Republic is the 11th-most important trade partner to Germany and plays a bigger role than Russia. The Czech Republic is also a popular country for German direct investment: Since 1993, German companies have invested about €19.1bn.
Škoda Auto, a brand of the Volkswagen Company, is among the largest companies of the country and makes up a major part of all exports. The level of wages was close to €16,948 in 2013 and therefore below the average of all industrial nations. The real wage increase has stagnated in the last few years. An employee works on average for 1,799 hours every year, which is 3% above the average of all other industrial nations. The rate of unemployment is 7.2%, which is significantly below the average of the European Union (9.6% in 2015).
Polish Toolmaking and the Tools
The tool and die industry in Poland produced tools and dies worth €141.76m in 2013. This is an increase of 39% since 2010, at which time it was €101.83m. Although Poland and the Czech Republic are frequently mentioned in one breath, Poland’s tool and die production volume is significantly lower than that of the Czech Republic. However, it is said that Poland scores better than the Czech Republic in macroeconomic terms. In 2013, 2,087 tonnes of tools and dies worth €140.12m were exported, which is almost the entire production. Total export is apportioned as follows: €107.19m for injection moulds, €25.67m for solid and sheet metal forming tools and €7.27m for die casting moulds.
At the same time, Poland imported tools and dies worth €226.76m. This included €149.06m of injection moulds, €56.86m of solid and sheet metal forming tools and €20.83m of die casting moulds. The Polish trade of tools with foreign markets for 2014 is illustrated in Fig. 4. The largest trade partners for importing injection moulds are China, South Korea and Germany. Injection moulds are mostly exported to Germany, Russia and Italy. The largest trade partners for importing sheet metal and massive forming tools are Germany, South Korea and China, while they are exported mainly to Germany, Italy and Sweden.
Due to its good education system, Poland is very popular for carrying out engineering services. Meanwhile, there are independent offices or outsourced departments in Poland, which engineer or design tools and dies completely or as an extended workbench. This gives Poland an edge over other countries with comparatively low labour costs but a lower level of competency. Well educated, competent employees in the tool and die industry and the good quality of Polish products positions the Polish tool and die industry well. In the future, the production figures will increase and the industry will gain more importance. However, Poland is not a traditional country for such products, hence implying an average development potential.
Czech Toolmaking and the Tools
In 2013, the Czech Republic produced tools and dies with an overall value of €313.89m. Since 2010, this value has risen by 48% from €212.22m. Some 5,301 tonnes of tools and dies worth €261.64m were exported in 2013. The export apportions among €172.41m for injection moulds, €85.24m for solid and sheet metal forming tools and €3.99m for die casting moulds. Simultaneously, the Czech Republic imported tools and dies worth €313.54m, including €187.35m of injection moulds, €113.58m of solid and sheet metal forming tools and €12.61m of die casting moulds.
Every year, more than 5,000 mechanical engineers graduate from Czech universities. Engineers are trained for three to four years in special engineering schools and no other European country has a comparable availability of engineers as the Czech Republic. This useful foundation, combined with the foreign language skills, has resulted in an increase in export-oriented tool and die manufacturers. Like Poland, which also has well-trained and competent workers, it serves as an extended workbench and offers an alternative to companies in southern Germany. Overall, the Czech Republic has been showing positive signs of economic recovery.
- ISTMA International Special Tooling and Machining Association, 2014
- Organisation for Economic Cooperation and Development OECD, 2012-2014
- United Nations Comtrade Database, 2010-2014
This article was first published by Maschinenmarkt International.