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8 October, 2021updated 13 Oct 2021 07:16

Katowice looks to regain pre-Covid momentum

Katowice has struggled to make its voice heard as a destination for investment or tourism when compared with nearby Kraków, but before Covid-19 the city had been making impressive progress.

By Ruth Strachan

KATOWICE, POLAND – SEPTEMBER 30: An aerial view of the iconic communist-era arena complex named Spodek lit up in red lights during a global action to raise awareness of the live events sector amid the coronavirus pandemic on September 30, 2020 in Katowice, Poland. Poland’s Chamber of Stage Technology decided to join the USA, Australia, Bangladesh, Brazil, Canada, Hong Kong, New Zealand, Belgium, Germany, South Africa, Slovenia and Chile in a solidarity campaign for the dozens of thousands of professionals from the music, cultural and business events who cannot work due to the ongoing COVID-19 restrictive measures. (Photo by Omar Marques/Getty Images)

Katowice’s Spodek arena forms part of the Polish city’s quirky architectural landscape. (Photo by Omar Marques/Getty Images)

The southern Polish city of Katowice may sit in the shadow of neighbouring tourist hub Kraków, but since the mid-1990s the city has been quietly reinventing itself away from a long-held legacy in mining.

Katowice is described as “an architectural cocktail” by Ryan Socash on an episode of Undiscovered Poland, a series of YouTube travel documentaries. The city, which has undergone extensive redevelopment since the start of the 1990s, offers a mix of older architecture styles, with communist-era blocks dotting its skyline, and modern architecture, with skyscrapers and modern offices popping up all over its city centre. One of its most iconic buildings is the Spodek (or ‘flying saucer’), a multipurpose arena complex that opened in 1971.

The post-industrial city is also known for music and culture, with 27 annual music festivals including Off Festival and Tauron New Music, and the Polish National Radio Symphony Orchestra calling Katowice home. In fact, since 2015, Unesco has recognised Katowice as a City of Music.

Alongside this reputation for culture, mining will always be synonymous with Katowice; the city sits in the centre of the Upper Silesian Coal Basin, making it rich in both coal and steel. Yet, industrial jobs in the city have slowly been in decline over the past 90 years. In fact, 49.5% of the city’s population worked in industry in 1931 (with 12.5% of those working in coal mining alone); in 2018, this figure had fallen to 20.4% (which is below Poland’s national average).

Katowice has endeavoured to use its industrial history to position itself as an economic and industrial hub. An integral part of this strategy is Katowice’s special economic zone (SEZ).

Katowice SEZ enjoys continued success

Established in 1996 and covering a total area of 2,750 hectares, the Katowice SEZ has seen an estimated investment of $10.5bn (41.7bn złotys) and created more than 80,000 new jobs. Covering the area of the whole Śląskie Voivodeship and six districts in the Opolskie Voivodeship, more than 450 business entities operate in the zone.

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Offering incentives such as corporate income tax credits, the SEZ has established a strong international reputation. Dominant subsectors include automotive, glass products, construction and food production. Companies such as General Motors Manufacturing Poland, NGK Ceramics Polska, Electrolux, Isuzu Motors Polska and Fiat Powertrain Technologies all operate from within the zone.

As Katowice recovers from the impacts of Covid-19, the SEZ is proving significant for investment. In July 2021, German company Isringhausen announced plans to invest more than $8.5m in a new car seats and springs production plant.

Alongside this, Katowice boasts an eco-friendly reputation. Alongside topping Forbes’s ranking for the most eco-friendly cities in Poland in both 2018 and 2019, it is home to a number of car battery manufacturers.

The Katowice SEZ is also strengthening trade relationships post-Covid. In June 2021, a new technology park to be built in the Suez Canal SEZ was announced. The Polish technology park is part of an agreement between the two zones.

While its SEZ is building on Katowice’s industrial legacy, there has also been significant growth in the city’s business sectors.

Business blossoming in Katowice

There has been parallel growth in employment in both the industrial and service sectors in Katowice since 2015, although services sits slightly higher with regards to employment in the city.

The Association of Business Service Leaders – an organisation representing business services in Poland – produced a report in early 2021 that found that Katowice’s business services were continuing to develop dynamically, accounting for 3–3.5% of Poland’s overall GDP.

Furthermore, the report stated that in the past four years employment in business service centres has increased by almost 70% in Katowice and the surrounding area, with approximately 27,000 workers taken on in the service centres. With 114 business service centres operating from 19 countries active in Katowice and the surrounding area, the sector is a hive of investment activity.

Main subsectors include IT services, e-commerce, business process outsourcing and R&D, with companies such as Accenture, Fluor, Randstad and KPMG operating from Katowice.

An important draw for both the industrial and service sectors in Katowice is access to talent.

Population down, graduates up

Between 2000 and 2020, the population of Katowice and the surrounding area has been steadily shrinking. Despite this, there is still a steady stream of talent being made available to the city's businesses.

Katowice and the surrounding area is home to 18 universities, which teach more than 85,000 students a year (over 52,000 in Katowice city) with approximately 23,000 graduates coming out into the workforce annually.

The main universities for the area are the University of Silesia, the University of Economics in Katowice, the Silesian University of Technology and the Medical University. A majority of these students study business and administrative subjects (about 18,000) with ICT (6,000) and engineering and technology subjects (approximately 10,000) coming in close behind.

Katowice shines for quality of life

Despite a dwindling population, Katowice’s economic outlook has remained fairly stable in the wake of Covid-19. Fitch Ratings stated in May 2021 that Katowice had an “operating performance and debt ratios in line with 'A-' rated peers over the medium term”.

Katowice is seeing a promising recovery from Covid-19. At the end of 2020, the city maintained one of Poland’s lowest unemployment rates at 1.7%. Katowice residents also had an average higher salary, which was 19% higher than the national average at the end of 2019.

More generally, the Slaskie region also saw a rise in tourism between 2010 and 2019. During this time, tourist arrivals increased from 1.52 million visitors to 2.47 million.

Whether it was the blend of kooky architecture, the rich mining history or lively musical pulse of the city drawing tourists to the area, pre-Covid Katowice was beginning to step out from Kraków's shadow and is hoping to continue this trend in the coming years. Elsewhere, a burgeoning business scene and a highly regarded SEZ put the city on a strong footing as the world continues to recover from the pandemic.

This is the fifth article in Investment Monitor's 'Future of Polish Cities' series, with the first looking at Łódź, the second Wrocław, the third Poznań and the fourth Gdańsk. In the coming weeks we will profile Kraków and Warsaw.

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