The Wall Street Journal reports that should this trend continue, the Polish factory will be the biggest out of L’Oreal’s factories in Europe within two years time. By 2011 the prediction is it will be the biggest in the world.
L’Oreal has 42 factories producing cosmetics in the world. Currently its largest production unit is in Brazil with an annual 280 bln cosmetic products made.
It is estimated L’Oreal has invested around 350 mln zloty into the development and modernization of the factory in Poland in the last 10 years. The Wall Street Journal reports that in the first year of the factory’s production, 7 mln units of shampoo were produced. Today the same amount is made within a month. Only 18 percent of the items made reach the Polish market. The remainder is exported mainly on the East European market.
The French L’Oreal purchased the factory in 1998 from the German Henkel, introducing major changes. New production lines and warehouses have been developed. Wojciech Kowalik, the factory’s director, explains that Poland is a perfect place for the production of cosmetics, as the system allows for continuous working hours. In Western Europe the laws are more stringent and disallow production lines to be in operation during the night or on the weekend. Poland does not have that problem.
Further, during communism, Poland was the country selected by the Soviet government as the supplier of cosmetics for the whole Bloc. This meant large investments were made on dermatological cosmetic specialists and a large amount of currency was pumped into the sector. Today this means Poland is a leading competitor with its lower labor costs and experienced specialists.
The turnover for L’Oreal last year was 373.7 mln zloty. A large amount of land is available for further expansion. At this stage L’Oreal Poland is increasing its production lines and fulfilling its order of another 65 mln cosmetic items to be produced by the end of the year.
Other foreign investors are also interested in the Polish cosmetics production sector. The American Procter & Gamble will spend 157 mln zloty on opening a factory by 2009. It will produce the face cream Olay and the factory will be based in Aleksandrow.