Poland takes the chequered flag in Daimler race

Poland takes the chequered flag in Daimler race
Daimler has chosen to remain in the Central European carmaking heartland.
By Tim Gosling in Prague May 4, 2016

Daimler confirmed on May 4 that Poland has won the race to host a new engine plant. The German carmaker announced that it will invest €500mn in a facility near Wroclaw.

The German carmaker has been parading its favours around Central and Eastern Europe in recent weeks in an apparent bid to raise the bidding. It now appears to have baulked at the thought of heading further afield, and will concentrate its operations in Central Europe’s car making heartland, with investments headed to Poland and Hungary.

The Mercedes maker sparked a tussle in CEE earlier this year as “leaks” suggested several states – including Romania and Russia – could be chosen to host up to two new major plants in the region. The Romanian press were even reporting as late as May 3 that the country is still in with a chance.

However, the announcement of the choice of Poland appears to have put an end to the drama. Daimler also announced in late April that it will invest €595mn to expand its Hungarian production plant in Kecskemet.

“The planned construction of a new engine plant in Poland is a further step in our global growth strategy," Markus Schafer, a board member at Mercedes-Benz said in a statement. "Capacity expansion in Eastern Europe reflects the increasingly international orientation of our powertrain production compound. This will lead to more flexibility and efficiency in our worldwide production network.”

The chase for the investment has resembled that whipped up amongst CEE countries last year by Jaguar Land Rover as it searched for a host for a new €1.3bn plant. Slovakia, which was also reportedly in the running for one of the new Daimler facilities at one point, won the bidding in the end.

Poland was the other main contender, it seems, but claimed somewhat bitterly after losing out that it simply couldn’t compete with the huge incentives offered by Bratislava. Other reports suggested the Indian-owned British marque had been put off by claims from Polish officials that the deal was in the bag, and JLR would settle in Jawor, in the south west of the country.

Similar worries surfaced on April 25, when sources in Warsaw claimed Daimler had decided to build its first Polish facility.  However, the Poles appear to have pushed the boat out to ensure they won't get pipped at the post again, and the German auto giant will now take up a site that was originally prepared for the JLR bid.

"The location decision and implementation of the project are dependent on various final commitments regarding the investment conditions, including the granting of state aid for the investment in Jawor," Daimler's press release notes. "An investment of approximately €500mn is planned for the first stage of the new engine site."

The investment is "evidence of the good state of our economy," said Polish Economy Minister Mateusz Morawiecki. "We are open for international investment and will systematically implement our plan for sustainable development so that we are attractive for further investors.”

The new factory will turn out four-cylinder gasoline and diesel engines for Mercedes-Benz passenger cars. Several hundred jobs will be created as Daimler seeks to move its production footprint outside its home market. The launch of production at the Polish plant is planned for 2019.