Not only the film industry

Culture and business have intertwined in the central Polish city of Łódź for dozens of years. On the one hand there was the world-esteemed Łódź film school and the Łódź Kaliska group of artist performers, on the other there were smoking factory chimneys mainly on textile mills. David Lynch could be called the first to reconcile those two separate natures of Łódź city. It seems he is interested in a 9-hectares site in the Retkinia estate and a building of 2,000 sqm in the centre city where a film-producing and student-educating company is to be constructed. Negotiations with Łódź city officials are proceeding apace.

Making jeans

Meetings and negotiations have reached a successful conclusion, on the other hand, concerning an investment by another American giant, not in films but in clothing. Lee jeans have been produced, to the present, in a hall sub-let from the Merloni Indesit consortium. Their production is to be shifted soon to a new plant which Budimex Dromex is constructing for VF Corporation. Tomasz Daniecki of Cushman Wakefield Healy and Baker, supervising the project for VF Corporation, remarked: "The investor was thinking about getting out of Łódź a year ago, but was restricted from so doing by the availability of skilled and tested workers. When the decision was finally taken, we started looking for an appropriate site". He went on: "Łódź city officials neither helped nor interfered during that stage of discussions, until the moment when VF Corporation began to have a serious, close look at a site near commune land which had been offered for sale. That led them to the conclusion that if they did not start moving, they would lose a buyer. So they gave us a much more favourable look, resulting in a smoothly performed site purchasing process, followed by granting a building permit. The factory building, to cost 6.5 million euros, should be ready in September this year at the latest.

Michalik, the investor's friend

Łódź Deputy President Marek Michalik, responsible for investments, repeatedly stresses how deeply he is committed to the city's growth. This is evidenced on the City Office website which holds information concerning Michalik's business meetings, most recently with a group of some 30 German businesspersons. Jadwiga Kaczorowska of the Łódź branch of the Construction Industry and Commercial Chamber noted that: "On such occasions the vice-president encourages businesspersons to invest in our city, describing its potential - the outcome of which has been to create business contacts between Polish and German companies. The Germans arrived in Poland on an official invitation, preceded by Austrian and French groups. At a recent meeting between the vice-president and local construction companies organised by the Chamber, they were told by Marek Michalik that everything which is related to new investments and the ensuing new jobs for city citizens has City Office blessing". The incentives offered to investors include property tax exemption for large companies should they invest 100 million euros in Łódź and create at least 600 jobs.

Land integration for Gillette

Łódź has been successful in attracting several such investors. Much was recently said of a contract under which Gillette is to invest 120 million euros in the construction of a plant (80,000 sqm) producing razors, among other items. Prime Minister Leszek Miller was present at the contract-signing ceremony. The investment is to cover 20 hectares of the Łódź Special Economic Zone, construction to be commenced this August. Several problems have to be resolved before that is possible, including the integration of several land properties belonging to that Zone, the State Treasury Agricultural Property Agency and Łódź commune. The investor will also have to obtain a construction permit and the City Council has to approve an amendment to the city spatial development plan. Should these conditions be satisfied on time, the factory will open in 2007, though the first production line should be commissioned in 2005. Gillette will employ 1150 persons in Łódź.

"Europe talks about Łódź"

Such was the title of an article in the local edition of the "Gazeta Wyborcza" national newspaper, describing the plans of the Philips consortium to shift their accountancy centre to Łódź. The present centre operating in Dublin is to be closed. The first press information on the issue was published in July 2003 when the company head in Poland Bogdan Rogala and Polish Prime Minister Leszek Miller appeared in Łódż. The information was officially confirmed this January. The site, purchased for 2.3 million zlotys, on which the accountancy centre building is to stand, is situated in the city centre. Philips intends to employ a target number of 500 persons serving the company's operations in 20 European countries. The decisive factor which aroused the international giant's interest in this central Polish city was, primarily, costs. It is going to cut costs substantially by employing equally skilled but less expensive Polish workers

Consent for a shopping centre

Many other firms operating in various fields also wish to invest in Łódź. One is IKEA already present in the region at Jarosty near Piotrków Trybunalski. The Swedish firm has invested in a regional distribution centre and is now thinking of constructing an IKEA shopping centre at Pabianicka Street. This centre of 75,000 sqm will also hold shops other than IKEA. They will offer interior furnishing articles of other makes, a supermarket of at least 2,000 sqm and a parking site for around 3,500 cars. It is an interesting fact that the investment received a positive appraisal by the Łódź Business Council, though such investments by large foreign competitors are very frequently frowned upon. Yet another example is BSH Bosch und Siemens Hausgerate, which is intending to build a factory at a cost of around 50 million euros, with jobs for 300 to 400 persons. BSH representatives are sure there are enough appropriately qualified workers in Łódź. A large percentage of such workers are presently unemployed.

BBB with a small minus

Foreigners purchased 256.3 hectares of land in Łódź province in 2003, according to the register of foreign real estate transactions with foreign participation, a figure ranking the province fifth after Mazowsze, West Pomerania, Wielkopolskie and Świętokrzyskie. And wherever foreign companies buy property, investments generally appear together with jobs. That must give rise to much satisfaction, the sense of wellbeing being improved by Standard and Poor's agency which raised the city's rating at the turn of March from BBB minus with negative prognosis, to BBB minus with stable prognosis. In other words, those companies which wish to contract credit in European banks for Łódź-based investments will bear lower costs in so doing.

Enterprise centre

McKinsey & Company have a plan to assist Łódź in getting rid of that "minus" rating. Its consultants have presented the city authorities with a plan which could increase earnings by a half and reduce unemployment by the same extent. That ambitious plan could be implemented by creating a so-called "cluster", that is an enterprise development centre in the city which, as elsewhere in the world, would bring together companies operating in one field, near to one another. Silicon Valley in the USA is the best known example. McKinsey & Company specialists think Łódź has a good opportunity to bring together firms in the services industry (call centres, finance and accountancy centres, e.g. Philips) household appliances (e.g. Merloni Indesit), and in the textile (e.g VF Corporation) and biotechnology industries. Several conditions must be met if that plan is to succeed: above all a strong leader must be found able to cope with its implementation. Hopefully, local government could fulfil that role. In the next stage McKinsey & Company consultants would define the city's strongest points and then choose the fields which should be developed. The result would also be a strategy and action plan, due to which new investors would set up business in Łódź. The city authorities expressed great interest in the proposals of those international consultants, but have yet to decide whether they will use it. McKinsey & Company has told us that negotiations are still proceeding.