Volkswagen Announces Investment of $1.1 Billion in New Polish Van Manufacturing Facility

Volkswagen has unveiled plans to invest approximately 3.4 billion zlotys ($1.1 billion) in establishing a new manufacturing facility in Wrzesnia, Poland, dedicated to producing the Crafter large delivery van, according to a statement released by the company on Tuesday. The forthcoming plant is expected to create over 2,300 jobs and is slated to commence production towards the end of 2016, following the scheduled start of construction by the year's end.

Leif Oestling, who leads Volkswagen's truck operations, highlighted the strategic importance of this move, stating, "By choosing to manufacture the Crafter in Poland, we are laying down a significant marker for the strategic realignment of our light commercial vehicles."

This strategic decision to locate the Crafter's assembly in Poland is part of Volkswagen's broader strategy to leverage the cost benefits of manufacturing in the country, where it already produces the Caddy and T5 commercial vehicles near Poznan. The move is anticipated to substantially lower production expenses, capitalizing on Poland's more competitive labor costs. In 2012, the manufacturing sector in Poland had an average labor cost of 6.65 euros per hour per worker, considerably lower than Germany's 36.98 euros, as reported by the Cologne-based IW economic institute.

Since 2005, Volkswagen has been assembling the current Crafter model in Germany under a cooperative agreement with Daimler. However, this partnership is drawing to a close, prompting Volkswagen to shift production to Poland.

Following the announcement, there was a slight uptick in the value of Poland's zloty, as markets responded to the expected influx of euros into the Polish economy over the forthcoming periods. The exchange rate at the time of the announcement was $1 to 3.0344 Polish zlotys.