Asian LCD investments boost Poland BERLIN – In the last 18 months, has benefited from a burst of investments from Asian electronics manufacturers, largely for LCD-TV plants. The parade of multimillion-euro LCD-TV factories or expansions includes those of Funai, LG-Philips, Quanta, Sharp and Toshiba. “Suppliers are coming in and they build up the infrastructure that will attract others,” added George Tomka, international technology promoter at the ’s Department of Trade and Industry, who has analyzed ’s technology potential. “ has become the EU’s real center of LCD manufacturing.” In 2006, ’s Sharp was the big investor with a four-year, €150 million (about $200 million) investment in an LCD assembly plant. In 2005, the centerpiece was LG-Philips’ €429 million (about $555 million) phased investment. To service the LCD base, dozens of small suppliers are clustering around the factories, including Sumitomo Corp. and 3M Corp., according to the Polish Information and Foreign Investment Agency (PAIIZ) in Warsaw. The Sharp plant alone has drawn more than a half-dozen. The flood of LCD makers is due to several factors that happen to align just when the government has targeted development of the electronics sector. Europe’s LCD-TV market is exploding. In fact, Europe is expected to become the world’s largest LCD-TV market in 2007, growing 50 percent to 20 million units, according to Andrew Murray, display research director for iSuppli Europe. But manufacturing the complete TV in the Far East and shipping it to Europe has big drawbacks. The European Union applies a 14 percent import duty on finished TVs. Moreover, LCD prices are continually falling and shipping them to the EU would result in further price erosion on arrival, Murray added. So manufacturers began seeking a European assembly base, a search that led east. While the and pulled in some LCD plants, has emerged as the clear winner. Financial incentives have served as a magnet. Iwona Chojnowska-Haponik, director of investment services for PAIIZ, said that has been generous compared to neighboring countries. “We have the idea to develop the electronics sector,” she said. Incentives are typically a basket of local and state grants and discounts and are negotiated on a case-by-case basis. Dell Computer, for example, announced a €200 million (about $260 million) server and notebook plant last year in Lodz, an area of high unemployment. It received €54 million (about $70 million) in a package that included tax holidays, labor discounts and local and state grants, according to PAIIZ officials. Size also helps. has 38 million people, the largest domestic market of the new EU countries. And smaller neighbors also face skilled labor shortages. According to Chojnowska-Haponik, companies in the Czech Republic and are recruiting Polish technicians. “In you can find people to work in the electronics sector,” she said. As a sweetener, is slated to receive €67 billion (about $90 billion) in EU structural funds between 2007 and 2013. Much will go toward infrastructure improvement, but foreign companies can also benefit directly through programs aimed at manufacturing and R&D. All this investment comes at a crucial time for , which has been struggling to wake sleeping economic potential. An unemployment rate close to 18 percent has contributed to a wave of immigration to countries such as the , where official estimates say 200,000 Poles are now working. Misplaced government spending, weak institutions and protected labor markets made the worst EU performer in the World Economic Forum’s Global Competitiveness Index report for 2006-2007. But becoming Europe’s factory is not the main goal. Officials hope to use the investment momentum to invigorate R&D, said Chojnowska-Haponik. has a strong academic tradition in hard sciences and clusters of R&D institutes that have produced commercially viable technology spinoffs. According to the PAIIZ, more than 23,000 students in electronics and IT graduate from Polish educational institutions annually. The upshot, said ISuppli’s Murray, is that the LCD makers will look for links with local universities, which could develop into R&D contracts. “There’s an opportunity for more skilled processes to be done in over the next two to three years,” Murray said. “[The manufacturing investments] have a positive knock-on effect for the local economies and the country