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VW to Build $1.11 Billion Van Factory in Poland

March 20, 2014

Volkswagen AG, Europe’s biggest auto manufacturer, has chosen Poland as the location of its newest van factory. The automaker is expected to invest $1.11 billion in the production plant.

VW’s Polish plant is where the Crafter van will be built. The decision to move output from Germany is in line with VW’s goal to make its commercial-vehicle production global. Leif Oestling, the automaker’s board member responsible for commercial vehicles, said this in a statement: “With the decision to produce the Crafter in Poland, we have laid the foundations for the strategic reorientation of our light commercial vehicles.”

“The Crafter is outstandingly well-suited for all the growth markets of the world,” he added.

The factory will be erected in Wrzesnia, located about 170 miles west of Warsaw. Construction is said to begin at the end of the year, while assembly will start in the second half of 2016. The factory will employ 2,300 people. It is the first production plant built in Europe since Mercedes-Benz opened its factory in Hungary two years ago.

Crafter vans are currently manufactured at two plants owned by rival Daimler AG, which has been building the van under a cooperation accord with VW since 2005. The contract will expire in 2016. Daimler will then use the plants, which are located in Ludwigsfelde and Dusseldorf in Germany, for the production of the new Mercedes-Benz Sprinter, the Crafter’s rival.

Moving Crafter production in Poland allows the VW Group to cut costs. Labor costs in the country’s manufacturing industry is considerably lower than those in Germany. According to the Cologne Institute for Economic Research (IW), the hourly rate per worker in Poland is €6.65 while the hourly rate per worker in Germany is €36.98.

The VW Group already has one factory in Poland. Its Poznan plant, which opened in 1993, manufactures the Caddy and T5 utility vehicles, as well as intake pipe modules, cylinder heads and steering gear housings.

Aside from building the new plant, the VW Group is shifting production in Germany and to Slovakia. It will be moving the production of the Porsche Panamera four-door coupe to Leipzig to free capacity in the Hanover plant for the production of the VW Tiguan compact SUV. The Tiguan, which is one of VW’s best-selling models in the region, is currently assembled in the automaker’s Wolfsburg plant. Meanwhile, VW-owned carmaker Porsche will move production of its Cayenne SUV from Leipzig to VW’s Bratislava plant.

The VW Group has been increasing capacity overseas, especially in North America and China. Its luxury division Audi will invest more than €1 billion on facilities in Brazil and Mexico, as it seeks to assemble more vehicles outside its home country this year. VW also has two joint ventures in China which will spend €18.2 billion in new factories and products until 2018.

Porsche is expected to invest €220 million on its Leipzig plant for the production of the Panamera from 2016. Last year, the brand invested €500 million to equip the site for the production of the latest model of its Macan SUV.

Photo credit: Roger Wollstadt/ Flickr/ CC BY-SA

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