Poland Touts $550 Million Daimler Deal After Airbus Setback

  • Government has sparked French diplomatic row over Airbus order
  • Investors still attracted to Poland, prime minister says

The Polish government on Thursday sealed a 500 million euro ($550 million) deal with Daimler AG, promoting it as a sign that foreign investors remain interested amid a push for more "economic patriotism" and a row with Airbus Group SE.

Damiler’s Mercedes-Benz factory in Jawor, southwest Poland, will produce four-cylinder gasoline and diesel engines for passenger vehicles starting in 2019, employing 500 people. The site, Daimler’s second engine plant outside Germany, offered a welcome distraction for the government after a failed $3.5 billion military helicopter deal that led to a diplomatic dispute with France this month.

The Polish government’s rejection of "privileges" for foreign companies and policies including tax increases for banks have stunned foreign investments. Prime Minister Beata Szydlo, whose party has triggered a rating downgrade by S&P Global Ratings and a European Union probe with its consolidation of power, emphasized that inward investments must be to Poland’s benefit.

“The fact that Mercedes builds a plant here is a signal that foreign investors want to locate their operations here,” Szydlo told a news conference in Warsaw. “But cooperation must be based on partnership. We have a very good climate for investors, but we say it clearly - it has to be based on mutuality.”

New Jobs

Opposition parties have called for an investigation to determine why Poland’s government walked away from a deal with Airbus after 11 months of talks. Within days, the government announced it would instead buy aircraft from Lockheed Martin Corp., while Airbus said it would “seek remedies” after being “misled.”

Still, the government said the Daimler deal would be followed by more such announcements. An "American company from the auto industry" also wants to invest in Poland, creating hundreds of new jobs, said Mateusz Morawiecki, Szydlo’s deputy, without naming the potential investor.

Szydlo and Morawiecki both declined to give details of the benefit package that lured Daimler to Poland over eastern European neighbors, which also serve as locations for Daimler and other automakers including Volkswagen AG and Kia Motors Corp.