The place of Central Europe in the European automotive industry: mechanisms and barriers of upgrading

Mots-clés:

Résumé:

The place of Poland and Central Europe in the European automotive industry: mechanisms and barriers of upgrading

Bolesław Domański
Jagiellonian University, Krakow, Poland
boleslaw.domanski@uj.edu.pl

Central Europe has been playing an important role in the business strategies of European, American and Asian carmakers and major automotive suppliers in the last two decades. The reorganization of production systems and supply chains led to a great expansion of the automotive industry in this region and found expression in the spectacular growth of exports to West European core countries and growing local sourcing. Industrial upgrading processes taking place since the 1990s have resulted in a currently complex picture, with a dual role of the Central European automotive sector in the European division of labor. It comprises a whole range of activities from the simple production of labor-intensive parts to advanced high-value added components and some R&D. This shows that rapid industrial upgrading through foreign investment and its regional embeddedness may lead to significant value creation in the periphery. However, the crucial question in the context of development led by foreign investors is the role of local producers and the long-term sustainability of such a model of growth. It can be argued that a further upgrading of the Central European automotive industry will be determined by the building of a stronger independent position by domestic suppliers and the functional upgrading of foreign subsidiaries including the development of design capabilities. Otherwise, the limited decision-making and innovation competences will keep Poland and other Central European countries in an inferior position dependent on the core countries. Solaris, one of the European leaders in the manufacturing of hybrid and electric buses, and Boryszew, a fast growing producer of plastic components expanding through global acquisitions, provide examples of successful Polish automotive companies. At the same time, the majority of domestic suppliers face significant barriers to functional upgrading including limited financial capabilities and design expertise as well as lack of trust on the part of their global customers. The motivation and qualities of local managers and labor cannot be ignored here together with industrial relations and government policies and regulations providing general framework for the functioning of the automotive industry.