Impact of foreign investors on regional and local development: The case of GlaxoSmithKline...

Research project carried out by a team of researchers and doctoral student s from Adam Mickiewicz University and the University of Economics in Poznań

Authors: Prof. Tadeusz Stryjakiewicz (project manager) Prof. Lucyna Wojtasiewicz Dr. Anna Tobolska Dr. Justyna Weltrowska Michał Męczyński Krzysztof Stachowiak Bartosz Stępiński Jacek Wajda Jarosław Jurkiewicz (co-operation)

Reviewed by: Prof. Henryk Rogacki

Translation by: Maria Kawińska

ISBN 83-60247-15-3

Bogucki Wydanictwo Naukowe www.bogucki.com.pl

Druk i oprawa: Uni~druk

Poznań

1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2. Beginnings and growth of GlaxoSmithKline Pharmaceuticals (GSK) in Poznań .... 7

3. Place of GSK among other enterprises in Poznań and Wielkopolska in the light of basic economic indicators. . . . . . . . . . . . . . . . . . .

4. Regional multiplier effect of GSK location in Poznań. . . . . . . . . . . . 4.1. Networks of links with suppliers of raw materiais, production components

and semi-finished goods. . . . . . . . . . . . . . . . . . 4.2. Networks of links with product consumers . . . . . . . . . . . . . 4.3. Networks oflinks with firms providing services to GSK ...... . 4.4. Networks of links with scientific and R&D institutions, hospitals,

and the education system . . . . . . . . . . . . . . . . . . . . . . . 4.5. Links of GlaxoSmithKline Pharmaceuticals with enterprises and institutions

. ... 10

· 21

.23 23

. 23

. .. 27

in Wielkopolska in the light of a survey research . . . . .. ......... . 28 5. Effect of GSK on the regionallabour market . . . . . . . . . . . . . . . . . . . . . . 35

5.1. Employment figures and structure . . . . . . 35 5.2. Qualitative changes in the labour market . . 38 5.3. Commuting . . . . . . . . . . . . . . . . . . . . 39 5.4. GSK wages and the regional mean ..... . 43 5.5. Social activi ty . . . . . . . . . . . . . . . . . . . 44 5.6. Competitiveness of GSK on the locallabour market . . . . . . 45

6. Role of GSK in innovative and R&D activity . . . . . . . . . . . . . . . . . . 48 6.1. GSK' s R&D activity . . . . . . . . . . . . . . . . . . . 48 6.2. Innovative, modernising and standardising activity. . . . . . . . . 49 6.3. Clinical trials ......................... 51 6.4. Regional dimension of GSK's innovative and R&D activity ..... . 55

7. Place of foreign corporations (including GlaxoSmithKline) in the network of regional and local institutionallinks ......................... 57 7.1. Development programmes of the city and region - main considerations

for foreign investors ................................ 58 7.2. Policy of the city and region towards foreign investors and its implementation . .. . 59 7.3. Place and role ofGSK in the network oflinks with local government institutions

and local business environment institutions . . . . . . . . . . . . . . . . . 64

8. Place of foreign corporations (including GSK) in the development strategy of Wielkopolska voivodeship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.1. Priorities in the development of Wielkopolska voivodeship and its expectations

towards large foreign corporations . . . . . . . . . . . . . ..... 67 8.2. Conclusions and proposals concerning GSK . . . . . . . . . . . . . . . .. . 70

9. Summing up . . . . . . . . . . . . . . .

References and published source materials ..

Appendix - a sample questionnaire . .

List of figures . . . . . . . . . . . . .

List of tables. . . . . . . . . . . . . .

. .. 71

. .. 73

· 76

· 80

· 81

Sinee the very start of the systemic transformation in Poland, foreign enterprises have been an inereasingly important element of the eountry's eeonomy. Their role in eeonomic growth has been the subjeet matter ofmueh diseussion and researeh (ef. e.g. Bąk, Kulawezuk 1996; Błuszkowski, Garlieki 1997; Olesiński 1998; Domański 2001; Durka 2002). However, the researeh usually eoneerns the national eeonomy as a whole and rests on basic eeonomic indicators. It is only to a lesser extent that it foeuses on the effeet that foreign firms have had on the development of towns and regions where they are loeated, Le. on their embeddedness in the regional and loeal eeonomies (ef. Dicken, Forsgren, Malmberg 1994; Pavlinek, Smith 1998; Phelps 2000). There are eonflicting opinions in the world literature about the importanee of foreign eorporations in the eeonomies of their host regions. On the one hand, they are pereeived as 'eathedrals in the desert', or manufaeturing enc1aves with no signifieant links with the loeal eeonomic system (ef. Grabher 1994; Hardy 1998). On the other, many studies have shown them to be highly integrated with their regional and loeal environments. Henee, there is a need for a wide-ranging researeh on the role of foreign firms in regional and loeal development not only from the perspeetive of a firm, but also its town or region, especially in the eountries undergoing asysternic transformation. That is why a team of researehers from Adam Mickiewicz University and the University of Eeonomics in Poznań launehed a projeet whose goal was to define the effeet of GlaxoSmithKline Pharmaeeuticals S.A. (GSK) on the eeonomic growth of the Wielkopolska region1

•

The projeet met with mueh friendly interes t on the part of GSK management, whom we wish to thank here for the researeh grant and assistanee in eolleeting data.

The GSK plant is one the biggest foreign investments in Wielkopolska ereated as a result of the sale on 28 January 1998 ofPoznań's Polfa Pharmaeeutical Works to the British eoneern Glaxo Welleome. The nearly eight years of the eoneern' s operation in the region is a time span long enough to attempt an assessment of the degree of its embeddedness in the loeal eeonomy and its role in the spatial-eeonornic strueture of Wielkopolska voivodeship.

The empirical researeh providing the basi s for this assessment was earried out in the first half-year of2004 by a team ofresearehers and doetoral students from the Institute ofSocio-Eeonomic Geography and Spatial Management, Adam Mickiewicz University in Poznań (Dr Anna Tobolska, Dr Justyna Weltrowska, Michał Męezyński, KrzysztofStaehowiak, Bartosz Stępiński, andJaeek Wajda) under the supervision ofDr Tadeusz Stryjakiewicz, professor at AMU and the University ofEeonomics and head ofthe Institute's Department ofRegional Policy and European Integration. Beeause ofthe regional dimension of the analysis and the neeessary eontaets with the region' s top loeal government officials, the targets of the projeet would have been very diffieult to aehieve without the participation of Prof. Lueyna Wojtasiewicz, head of the Centre of Regional Eeonomie Researeh of the University of Eeonomics in Poznań, who supervised the team that had worked out a strategy for the development ofWielkopoIska voivodeship.

The implementation of the researeh projeet reported here proeeeded in three stages: l. Colleeting data from the following sourees:

(a) appropriate GSK departments following a shopping list provided by the projeet participants; (b) firms and institutions eo-operating with GSK to which questionnaires were sent eoneerning

the role of GSK in their aetivity as a whole as well as an assessment and prospeets of mutual relations (following a list of those firms and institutions supplied by GSK2

; for the questionnaire form, see the Appendix);

l The notions of the Wielkopolska region and Wielkopolska are treated in the present work as identical with Wielkopolska voivodeship, a highest-level administrative unit created on 1 January 1999. Because of the business secret, no names of co-operating firms, hospitals or research centres are given in the present publication.

(c) loeal government institutions (strategies and programmes of the socio-eeonomic development of the city of Poznań and Wielkopolska voivodeship; interviews with representatives of the 10-cal authorities and persons responsible for the region's eeonomic development);

(d) regional and loeal business-environment institutions; and (e) the literature on the subjeet (including eomparative studies); published statistical materiais.

2. Analysing the material eolleeted and presenting the results visually in the form of tables, charts, maps, and diagrams.

3. Drawing up a final report, preparing it for print, and publishing in a book form. The next stage was making the results public at a scientifie session with the participation, among

others, of representatives of GSK, loeal government authorities and loeal media, as well as at other seminars and eonferenees (e.g. the Industrial Spaee Organisation Commission of the International Geographical Union, Regional Studies Association, and the Committee for Spaee Eeonomy and Regional Planning of the Polish Aeademy of Sciences), and business forums. .

The eontents of this book refleet the range of problem s eovered by the researeh projeet. They include: l. The beginnings and growth of GSK in Poznań. 2. The place of GSK among other enterprises in Poznań and Wielkopolska voivodeship in the light of

basic eeonomic indieators. 3. The regional multiplier effeet of GSK loeation in Poznań from the point ofview of:

- networks of links with suppliers of raw materials and semi-finished goods; - networks of links with produet recipients; - networks of links with firms providing services to GSK; - networks oflinks with scientifie and researeh and development (R&D) institutions, hospitals,

and the edueational system. 4. The effeet of GSK on the regionallabour market:

- employment: figures, strueture, and changes - GSK wages and the mean wages in the region; - the level of sodal aetivity; - qualitative changes in the labour market (including training eourses and measures intended to

re-train the employees); - eompetitiveness of GSK on the loeallabour market.

5. The role of GSK in innovative and R&D aetivity. 6. The place of GSK in the network of regional and loeal institutionallinks. 7. The place of GSK in the development strategy of Wielkopolska voivodeship.

Condueting sueh a detailed researeh was only possible thanks to the involvement and help with the eolleetion of material of a lot of people, both in the GSK Warsaw Offiee and the GSK Poznań establishment, firm s eo-operating with GSK which eompleted the questionnaires, representatives of the loeal authorities and institutions who agreed to be interviewed, and AMU students who assisted in polling Poznań residents and in the statistieal processing of a part of the data. Gratefullyaeknowledgin g their help, the present authors would like to express the eonviction that their book will eontribute not only to a deeper view of the effeets of the operation of GlaxoSmithKline Pharmaeeuticals S.A. in Poznań and Wielkopolska, but also to a diseussion about the possibility and eonditions of reinforcing the links between foreign eorporations and their host towns and regions.

The sale of the Poznań Polfa Pharmaceutieal Works to the British concern Glaxo Wellcome was the biggest capital transaction of the State Treasury during the transformation period between 1989 and 1998. The details of the transaction are a good illustration of the strategy of big global corporations towards the so-called emerging markets of East-Central Europe. The information presented in this chapter comes from the interview given to the present author by Simon C. Davidson, Glaxo Wellcome's Director for Central and Eastern Europe, on 20 April 1998 in the company's headquarters in Greenford, Middlesex; materiaIs obtained there (primarily Glaxo Wellcome Annual Report and Accounts and Glaxo Wellcome Key Facts); materiaIs ofthe GlaxoSmithKline Pharmaceutieals Office in Warsaw from 2003; and data collected at a field practiee by 3rd year geography students of Adam Mickiewiez University in Poznań in 1996. Use was also made of studies by Weltrowska (1996), Górski (1998), Olbrot (1998), and Cylwik (2002).

In the estimation ofthe World Bank (after Górski 1998), in 1996 the Polish pharmaceutieal market was worth $1.6 billion, with a relatively low index of drug consumption per head ($49) and hence potentially capable of dynamie growth (at an annual average of 10%)3. The market was largely supplied by more than 300 domestie firms, predominant among which were 14 biggest enterprises once belonging to the Polfa association (their detailed characteristies are presented in Weltrowska 1996). By 1997, four were privatised either through sale to strategie investors or the publie offer of stocks (not counting enterprises embraced by the National Investment Funds program me) . The 1990s saw domestie drug makers facing ever stiffer competition from imports, which reached more than $2 billion in 2002.

Glaxo Wellcome (GlaxoSmithKline since 2001) has been present on the Polish pharmaceutieal market ever since 1978, and its interest in the region greatly increased in the 1990s. In 1984 the firm set up a Glaxo business representation in Poland, while in 1992 an enterprise called Glaxo Wellcome Poland Ltd. was established with a seat in Warsaw to create a distribution network and promote the company' s products in the country. In 1997 the firm opened a drug packaging plant and a storehouse at Duchniee near Warsaw. Thus, it to ok a typieal development path of a multinational corporation: an earlier market penetration through export contacts followed by establishing a sales representation and ending in the launching of its own manufacturing plant. The firm considered taking part in the privatisation of one of the Polfa plants, but not just any one of them. As S.C. Davidson stated candidly, "We had selected three plants in Poland that we were interested in, but in fact we were waiting for the sale of the Poznań establishment". Thus, an element of space played a crucial role in the decision, but not in the traditional sense oflocation factors (like the cost of transport or labour) or other territorially localised investment incentives (e.g. tax relief). The following factors were decisive for the company: 1. Line (specialisation) of production. The Poznań plant was the only producer of anti-asthmatie

aerosol s in the country. It manufactured them relatively cheaply, but using an obsolescent (Freon-based) technology. Glaxo Wellcome produced more modern, Freon-free aerosols. Thus, it achieved a special sort of complementarity: combining lower manufacturing costs with modernised technology, whieh was supposed to let the firm expand also into other Central and Eastern European markets.

2. Good production record: high profitability, the majority of products having international quality certificates (GMP - Good Manufacturing Practiee), and a relatively high productivity oflabour. Un-

In 2001, according to IMS Health data, the Polish pharmaceutical market was worth $2.88 billion.

I

derstandably enough, the company was not going to buy a factory that would only cause trouble (even in return for a larger share of the market).

3. Market-oriented attitude ofthe loeal milieu. The managing organs ofthe Polfa plant in Poznań expressed a wish to have a dynamie strategie investor from the same line ofbusiness (and not, as many other enterprises, one that would merely supply capital, e.g. banks).

4. Complementarity of the distribution network. While Polfa had had a well-developed network supplying pharmacies, in the 1990s Glaxo Wellcome also developed a direct-supply network for hospitals (Polfa' s activity in this field had been restrieted by the centralised hospital-supply system run by a state-owned firm, Cefarm). Besides, Polfa had had an extensive network of links with Central and Eastern European countries from the COMECON times, while Glaxo Wellcome set up a new network in this area. Apart from the above factors related primarily with the plant and its place in the company's ne

twork, equally noteworthy is the firm's motivation for choosing Poland as an East-Central European country with the highest level of its capital investment (the Poznań plant was the first to be bought by Glaxo Wellcome in this part of Europe). According to S.C. Oavidson, the decisive factor, next to the absorptive and rapidly expanding domestie market, was an advanced stage of the transformation of the Polish economy.

The sale of the Polfa Pharmaceutieal Works in Poznań to Glaxo Wellcome stood out among privatisation transactions completed at that time for ensuring the employees the best social conditions. The concern had contracted to keep up employment (of about 1,400 workers) for four years and all the components ofwages and benefits (including the holiday bonus amounting to 1000/0 ofwages and an increase in wages at least by the inflation rate), and to maintain social benefits (including the financing of the modernisation of the plant' s holiday compounds at U stronie Morskie and Sieraków). Besides, each employee received not only the statutory 150/0 of free shares, but also a sort of 'privatisation bonus' to the amount of 10.5 monthly wages ca1culated as for child-care leave. A fitness club for the employees was also set up on the premises. All this sprang from two causes: (a) a wish to arouse a friendly fe eling towards the privatisation and the new owner among the staff (as

Anna Tobolska's 1996 research results listed in Table l show, more than one-third of the Polfa crew had no definite opinion about advantages of the privatisation and its effect on the plant's future); and

(b) a low proportion oflabour costs in total costs ofpharmaceutieal production (in comparison with, e.g., expenditure on R&O and the purchase of raw materiais and packaging) , as a result of whieh the company could afford the above benefits package and employment guarantee, especially in view of the antieipated increase in output. In 2001, Glaxo Wellcome and SmithKline Beecham fused to create the GlaxoSmithKline (GSK)

corporation. In Poland it was registered under the nam e of GlaxoSmithKline Pharmaceutieals S.A., a company in whieh GlaxoSmithKline holds more than 970/0 of shares and the State Treasury, 2.73%. In

Table 1. Employee attitudes towards the privatisation of the Polfa Pharmaceutieal Works in Poznań (per cent of responses)

Thesis

The future of the Works depends primarily on its successful privatisation

Buyout by a Western pharmaceutical firm is achance for acquiring new technologies and markets

I agree

24

16

I rather agree Hard to tell

17 37

19 34

I rather don't agree

8

12

I definitely don't agree

14

19

Source: Results of a survey research carried out by A. Tobolska in 1996 among the crew of the Polfa Pharmaceutical Works in Poznań (unpublished).

this way Poland has found itself a part of the global network of one of the biggest producers of medicines and health protection products (GSK is estimated to have about a 70/0 share ofthe world pharmaceutical market). The network embraces 108 factories located in 41 countries and 16 research and development centres in 8 countries (including one in Poznań).

The purchase of the Poznań Polfa plant gave the British firm a 7-11 % share of the Polish drug market (the exact figure depends on the indicators employed) and it has kept this market share ever since. The investor has met his privatisation obligations fully, having invested more than US$106 million over the years 1998-2002. In that period atotal of 99 new products started to be manufactured in the Poznań factory, of which 49 were medicines devised by the local R&D Department and 50 were transfers from GSK (Cylwik 2002). Thanks to the investment and the transfer oftechnology, the GSK establishment in Poznań has become the only producer ofFreon-free aerosol s in this part ofEurope and one of the four in the world, and the leading manufacturer of gelatine capsules in the entire GSK group. The foreign investor has also played a big part in product certification by the GMP (Good Manufacturing Practice) standards and adjustment of the drug registration procedure to the European U nion standards.

On 28 June 2004 a Regional Centre for Drug Individualisation and Distribution was opened in the Poznań plant, which has enhanced the status ofWielkopolska's capital as one ofthe major European GSK centres responsible for the manufacturing, preparation and distribution of drugs on East-Central European markets.

Determining the place of GlaxoSmithKline Pharmaceuticals among other enterprises of Poznań and Wielkopolska in terms of comparable economic indicators is not an easy task. The reasons are two: (a) not all firms publish a fulI list of those indicators each year (especially financial ones), and (b) even in the case of the simplest and most popular indicators used in comparative analyses (e.g.

employment or sales) , there are no data collected on the individual-plant basis, which makes it impossible to associate the results with a concrete location (the data are assigned to the seat of the enterprise) . The latter reason accounts for the fact that the regional impact of a company that is Poznań-based

but has an extensive network of units throughout Poland (like the largest firm in Wielkopolska, Jeronimo Martins Dystrybucja sp. z 0.0.) is much more modest than the published indicators might suggest. This should be kept in mind when interpreting the data presented in this chapter (in the tabIes and charts, such enterprises are marked with an asterisk) .

The analysis rests on data published annually by the daily "Rzeczpospolita" and the weekly "Polityka" (lists ofthe 500 biggest firms in Poland), regional press (e.g.lists ofthe biggest Wielkopolska companies in "Głos Wielkopolski"), the State Agency for Foreign Investment, in brochures of listed companies, and on the Internet. These materiais (Tabies 1-7 and Figs 1-12) cover the period from 2001 (the first year of GSK in Poznań after the merger of Glaxo Wellcome and SmithKline Beecham) to 2003. Their spatial aggregation refers to two levels: (a) local - the city of Poznań, and (b) regional - Wielkopolska voivodeship.

Table 2 shows that the place of GSK among other Poznań and Wielkopolska companies in term s of two most popular indicators used in regional comparative studies (Le. sales and employment) is high. Over the years 2001-2003, sales proceeds ensured GlaxoSmithKline Pharmaceuticals 7th or 8th position in Poznań. In Wielkopolska, GSK moved from 12th place in 2001 to 9th in 2003 as a result of higher sales than those reported by some other enterprises in the region (e.g. Amica Wronki or the Consortium ofTobacco Products Distributors in Luboń). In terms of employment, the situation was different: in the city ofPoznań GSK felI from the high 5th position in 2001 to 9th in 2003, and in the region, from 10th to 13th.

Table 2. GSK' s position among other enterprises in Poznań and Wielkopolska voivodeship in the years 2001-2003

In terms of sales In terms of employment

2001 2002 2003 2001 2002 2003

Poznań 8 7 8 5 7 9

Wielkopolska 12 10 9 10 15 13

Source: Own calculations based on Tables 3-8

However, GSK's position in the light of such indicators crucial for regional development as investment outlays and the income tax paid is higher (both in absolute and per-worker terms) . The company ranked 5th-8th in Wielkopolska on both counts (Figs 13 and 14). A quantitative analysis and an appraisal of the investment activity of the firm will be presented in further chapters.

Table 3. Poznań's largest enterprises in 2001

Sales Profit before Income Net Investment Employment

Enterprise taxation tax income outlays (thous. (thous. (thous. (thous. (thous. (full-time zlotys) zlotys) zlotys) zlotys) zlotys) jobs)

l Jeronimo Martins Dystrybucja sp. z 0.0. * 4,381,000 no data no data no data no data 11,810 2 Kompania Piwowarska S.A. 2,479,944 558,386 161,799 396,587 358,974 2,000 3 Volkswagen Poznań sp. z 0.0. 2,287,642 -18,793 -2,291 -16,502 430,860 2,646 4 Selgros sp. z 0.0. * 1,431,736 24,263 8,213 16,050 no data no data 5 Energetyka Poznańska S.A. 1,406,872 30,123 10,100 17,398 151,826 1,653 6 Skoda Auto Polska S.A. 1,266,713 12,153 3,115 9,038 4,423 85 7 Aral Polska sp. z 0.0. * 1,026,533 no data no data no data no data 104 8 Glaxo Wellcome S.A. 847,745 38,012 25,354 12,658 55,418 1,731 9 Preem Polska sp. z 0.0. 718,032 -49,714 ° -49,714 5,709 252

10 H. Cegielski-Poznań S.A. 611,662 6,451 1,356 4,331 10,618 2,055 11 Bestfoods Polska sp. z 0.0. 568,243 53,670 no data no data no data 889 12 Wrigley Poland sp. z 0.0. 537,817 129,451 34,904 94,547 79,085 420 13 Orłen Petrozachód sp. z 0.0. 458,727 574 289 285 1,580 201 14 Beiersdorf-Lechia S.A. 413,972 28,377 8,090 20,245 65,519 405 15 Dea Mineraloel Polska sp. z 0.0. 408,397 -9,938 ° -9,938 53,122 no data 16 SCA PR Polska sp. z 0.0. 400,000 no data no data no data no data no data 17 Jedynka Poznań GK 369845 13,406 4,054 9,528 3,414 751 18 Zespól Elektrociepłowni Poznańskich S.A. 344,011 22,069 6,979 12,824 21,282 956 19 Tadmar S.A. * 309,493 -44 23 -66 3,236 519 20 Hydrobudowa-9 Przed. Inż.-Bud. sp. z 0.0. 286,584 4,005 1,383 2,621 2,478 1,178

* enterprise with a Poznań-based seat and an extensive network of outlets throughout Poland Source: The 500 List, Rzeczpospolita and Polityka, 2002

Table 4. Largest enterprises in Wielkopolska voivodeship in 2001



l Jeronimo Martins Dystrybucja sp. z 0.0., Poznań * 4,381,000 no data no data no data no data 11,810 2 Kompania Piwowarska S.A., Poznań 2,479,944 558,386 161,799 396,587 358,974 2,000 3 Volkswagen Poznań sp. z 0.0., Poznań 2,287,642 -18,793 -2,291 -16,502 430,860 2,646 4 Reemtsma Polska S.A., Tamowo Podgórne 1,903,888 170,576 26,903 143,673 no data 996 5 Selgros sp. z 0.0., Poznań * 1,431,736 24,263 8,213 16,050 no data no data 6 Energetyka Poznańska S.A., Poznań 1,406,872 30,123 10,100 17,398 151,826 1,653 7 Zespół Elektr. Pątnów-Adamów-Konin S.A., Konin 1,354,548 85,606 25,019 60,586 138,630 1,993 8 Skoda Auto Polska S.A., Poznań 1,266,713 12,153 3,115 9,038 4,423 85 9 Aral Polska sp. z 0.0., Poznań * 1,026533 no data no data no data no data 104

10 Konsor. Dystr. Wyrobów Tytoniowych S.A., Luboń 950,238 907 212 696 no data 312 11 Amica Wronki S.A., Wronki 856,194 3,392 -1,673 5,065 21,788 2,121 12 Glaxo Wellcome S.A., Poznań 847,745 38,012 25,354 12,658 55,418 1,731 13 Preem Polska sp. z 0.0., Poznań 718,032 -49,714 ° -49,714 5,709 252 14 Energetyka Kaliska S.A., Kalisz 708,086 4,903 1,607 3,297 55,018 1,458 15 Farmutil HS Holding S.A., Śmiłowo 674,469 16,720 ° 15,169 no data no data 16 Kopalnia Węgla Brunatnego Konin SA, Kleczew 662,783 43,616 14,470 24,770 34,524 5,850 17 H. Cegielski-Poznań S.A., Poznań 611,662 6,451 1,356 4,331 10,618 2,055 18 Huta Aluminium Konin S.A., Konin 592,484 3,334 -36 3,309 19,112 1,167 19 Bestfoods Polska sp. z 0.0., Poznań 568,243 53,670 no data no data no data 889 20 Wrigley Poland sp. z 0.0., Poznań 537,817 129,451 34,904 94,547 79,085 420


Table 5. Poznań's largest enterprises in 2002


Enterprise taxation tax income outlays

(thous. (thous. (thous. (thous. (thous. (full-time zlotys) zlotys) zlotys) zlotys) zlotys) jobs)

l Jeronimo Martins Dystrybucja sp. z 0.0. * 4,991,829 -312,049 O -312,049 168,706 8,039

2 Volkswagen Polska sp. z 0.0. 2,325,973 -59,723 O -59,723 517,051 2,730

3 Kompania Piwowarska S.A. 2,244,834 510,245 l39,089 371,156 228,987 2,200

4 Selgros Cash&Carrry sp. z 0.0. * 1,685,892 62,956 18,971 43,986 no data no data

5 Grupa Energetyczna ENEA S.A. 1,557,823 24,120 8,067 14,575 124,679 1,643

6 Skoda Auto Polska S.A. 1,319,268 l3,326 4,224 9,102 6,814 91

7 GlaxoSmithKline Pharmaceuticals S.A. 1,120,916 147,000 88,925 84,000 45,000 1,538

8 Wrigley Poland sp.z 0.0. 668,620 125,664 39,452 86,212 149,482 471

9 miniMaI sp. z 0.0. * 637,778 -182 638 -820 8,146 2,281

10 Żabka Polska S.A. * 592,481 -39,345 O -36,345 46,377 180

11 Cukrownie Pfeifer&Langen GK 590,000 no data no data no data no data no data

12 SCA PR Polska sp. z 0.0. 551,570 no data no data no data no data 100

l3 Beiersdorf-Lechia S.A. 457,411 43,371 10,664 32,707 l3,208 404

14 Orlen Petrozachód sp. z 0.0. 379,218 no data no data -2,039 no data no data

15 Grupa Raben 368,000 no data no data no data no data 1,600

16 Zespół Elektrociepłowni Poznańskich S.A. 327,204 -10,888 O -8,943 7,854 933

17 AlupIast sp.z 0.0. 323,500 16,300 no data 12,000 no data 111

18 Maxer S.A. 321,608 6,816 1,905 4,911 3,281 1,086

19 MAR-OL sp. z 0.0. * 319,000 3,000 no data 1,800 2,979 230

20 Centra S.A. 284,061 1,203 4,557 -3,354 8,944 528





l Jeronimo Martins Dystrybucja sp. z 0.0., Poznań* 4,991,829 -312,049 O -312,049 168,706 8,039

2 Volkswagen Polska sp.z 0.0., Poznań 2,325,973 -59,723 O -59,723 517,051 2,730

3 Kompania Piwowarska S.A., Poznań 2,244,834 510,245 l39,089 371,156 228,987 2,200

4 Reemtsma Polska S.A., Jankowice 1,860,065 66,109 14,781 51,328 16,818 801

5 Selgros Cash&Carrry sp. z 0.0., Poznań* 1,685,892 62,956 18,971 43,986 87,l39 2,646

6 Zespół Elektr. Pątnów Adamów Konin S.A., Konin 1,601,148 15,588 10,282 5,306 158,716 1,950

7 Grupa Energetyczna ENEA S.A., Poznań 1,557,823 24,120 8,067 14,575 124,679 1,643

8 Philips Lighting Poland S.A., Piła 1,341,856 145,203 40,954 104,249 38,702 3,542

9 Skoda Auto Polska S.A., Poznań 1,319,268 l3,326 4,224 9,102 6,814 91 10 GlaxoSmithKline Pharmaceuticals S.A., Poznań 1,120,916 147,000 88,925 84,000 45,000 1,538

11 Konsor. Dystr. Wyrobów Tytoniowych S.A., Luboń 1,028,389 8,197 3,211 4,986 207 342 12 Amica Wronki S.A., Wronki 937,566 6,042 890 5,152 26,751 2,171

l3 Energetyka Kaliska S.A., Kalisz 827,858 8,795 1,481 6,238 52,891 1,459 14 Inter Groclin Trading sp. z 0.0., Grodzisk Wlkp. 735,914 4,564 1,712 2,851 89 80 15 Farmutil HS Holding S.A., Śmiłowo 722,889 24,674 2,099 22,575 37,073 2,860 16 Wrigley Poland sp. z 0.0., Poznań 668,620 125,664 39,452 86,212 149,482 471 17 KWB Konin S.A., Kleczew 665,594 8,590 4,228 3,738 41,572 5,768 18 miniMaI sp. z 0.0., Poznań* 637,778 -182 638 -820 8,146 2,281 19 Żabka Polska S.A., Poznań* 592,481 -39,345 O -36,345 46,377 180 20 Cukrownie Pfeifer&Langen GK, Poznań * 590,000 no data no data no data no data no data


Table 7. Poznań' sIargest enterprises in 2003



l Jeronimo Martins Dystrybucja sp. z 0.0.* 4,232,947 -57,003 ° -57,003 98,385 8,573 2 Grupa Energetyczna ENEA S.A. 4,102,483 112,768 76,589 28,382 318,216 6,000 3 Volkswagen Polska sp. z 0.0. 3,380,988 -127,723 3,770 -131,493 784,097 4,359 4 Kompania Piwowarska S.A. 2,493,744 538,331 173,854 404,477 171,359 2,280 5 Selgros Cash&Carrry sp. z 0.0. * 1,965,629 30,633 14,773 15,860 80,462 3,395 6 Skoda Auto Polska S.A. 1,676,954 12,780 5,927 6,853 10,678 98 7 Eurocash sp. z 0.0. * 1,374,545 6,535 2,428 4,107 3,230 1,424 8 GlaxoSmithKline Pharmaceuticals S.A. 1,303,988 149,000 87,428 88,000 29,000 1,567 9 Żabka Polska S.A. * 896,498 no data no data -18,892 49,588 3,989

10 Wrigley Poland sp. z 0.0. 808,221 124,256 31,084 93,181 82,360 530 11 miniMai sp. z 0.0. * 551,909 6,880 no data no data no data 2,200 12 Grupa Raben 502,000 no data no data no data no data 2,000 13 Beiersdorf-Lechia S.A. 480,897 59,754 no data 36,071 no data 394 14 Alupiast sp. z 0.0. 440,340 15,574 4,152 11,422 2,266 174 15 Apexim AB S.A. 366,466 20,478 ° 20,478 2,866 92 16 Zespół Elektrociepłowni Poznańskich S.A. 339,071 9,005 5,208 2,331 12,004 904 17 Hydrobudowa 9 sp. z 0.0. 338,806 9,867 4,004 5,863 5,184 871 18 H. Cegielski-Poznań S.A. 325,648 2,444 ° 2,444 no data 1,461 19 Maxer S.A. 320,186 1,656 ° 1,656 5,896 1,149 20 Centra S.A. 317,790 10,448 4,304 6,144 11,731 498





l Jeronimo Martins Dystrubucja sp. z 0.0., Poznań* 4,232,947 -57,003 ° -57,003 98,385 8,573 2 Grupa Energetyczna ENEA S.A., Poznań 4,102,483 112,768 76,589 28,382 318,216 6,000 3 Volkswagen Polska sp. z 0.0., Poznań 3,380,988 -127,723 3,770 -131,493 784,097 4,359 4 Kompania Piwowarska S.A., Poznań 2,493,744 538,331 173,854 404,477 171,359 2,280 5 Selgros Cash&Carrry sp. z 0.0., Poznań* 1,965,629 30,633 14,773 15,860 80,462 3,395 6 Skoda Auto Polska S.A., Poznań 1,676,954 12,780 5,927 6,853 10,678 98 7 Philips Lighting Poland S.A., Piła 1,570,007 266,766 70,972 195,794 75,081 3,245 8 Eurocash sp. z 0.0., Poznań* 1,374,545 6,535 2,428 4,107 3,230 1,424 9 GlaxoSmithKline Pharmaceuticals S.A., Poznań 1,303,988 149,000 87,428 88,000 29,000 1,567

10 Konsor. Dystr. Wyrobów Tytoniowych S.A., Luboń 1,193,849 10,249 3,076 7,173 4,810 383 11 Amica Wronki, S.A. 972,249 2,271 -566 2,837 6,740 1,990 12 Żabka Polska S.A., Poznań* 896,498 no data no data -18,892 49,588 3,989 13 Wrigley Poland sp. z 0.0., Poznań 808,221 124,256 31,084 93,181 82,360 530 14 Farmutil HS Holding S.A., Śmiłowo 785,567 30,744 6,314 24,430 40,386 3,561 15 Aluminium Konin-Impexmetal S.A., Konin 659,906 29,315 -1,277 30,592 21,897 1,098 16 Wistil S.A. GK, Kalisz 591,443 46,018 11,116 33,159 45,383 5,265 17 miniMai sp. z 0.0., Poznań * 551,909 6,880 no data no data no data 2,200 18 Man Star Trucks & Buses sp. z 0.0., Sady 542,169 35,357 9,562 25,793 48,801 2,088 19 Grupa Raben, Poznań 502,000 no data no data no data no data 2,000 20 Grupa Mahle GK, Krotoszyn 498,592 57,468 10,851 46,617 74,110 1,379


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Jeronimo Martins Dystrybucja sp. z 0.0.*

Volkswagen Poznań sp. z 0.0.

H. Cegielski-Poznań S.A.

Kompania Piwowarska S.A.

Girom Wellcome S.A.

Energetyka Poznańska S.A.

Energopol-7 GK S.A.

Hydrobudowa Przed. Inż.-Bud. sp. z 0.0.

Zespół Elektrociepłowni Poznańskich

S.A.

Bestfoods Polska sp. z 0.0.

Jedynka Poznań GK

Poznańska Energetyka Cieplna S.A.

Tadmar S.A. *

Wrigley Poland sp. z 0.0.

Beiersdorf-Lechia S.A.

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Volkswagen Poznań sp. z 0.0.

Selgros sp. z 0.0. *

Energetyka Poznańska S.A.

Skoda Auto Polska S.A.

Aral Polska sp. z 0.0.*

Girom Wellcome S.A.

Preem Polska sp. z 0.0.


Bestfoods Polska sp. z 0.0.

Wrigley Poland sp. z 0.0

Orlen Petrozachód sp. z 0.0

Beiersdorf-Lechia S.A

Dea Mineraloel Polska sp. z 0.0

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miniMai sp. z 0.0. *


Grupa Energetyczna ENEA S.A.

Grupa Raben

GlaxoSmithKline Pharmaceuticals S.A.

Maxer S.A.


S.A.

Centra S.A.

Bridgestone Poland sp. z 0.0.



MAR-OL sp. z 0.0. *

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Grupa Energetyczna ENEA S.A.

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miniMai sp. z 0.0.

Żabka Polska S.A.*

Cukrownie Pfeifer&Langen GK

SCA PR Polska sp. z 0.0.


Orlen Petrozachód sp. z 0.0.

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Grupa Raben



Eurocash sp. z 0.0. *

Maxer S.A.


S.A.

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miniMai sp. z 0.0.*

Grupa Raben


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Apexim AB S.A.

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Kopalnia Węgla Brunatnego Konin S.A., Kleczew

Inter Groclin Auto S.A., Grodzisk Wlkp.

Volkswagen Poznań sp. z 0.0.,

Poznań

Adamów Kopalnia Węgla Brunatnego S.A., Adamów

Amica Wronki S.A., Wronki

H. Cegielski-Poznań S.A., Poznań

Kompania Piwowarska S.A., Poznań

Zespól Elektr. Pątnów-Adamów-Konin S.A., Konin

Girom Wellcome S.A., Poznań

Energetyka Poznańska S.A., Poznań

Energetyka Kaliska S.A., Kalisz

Energopol-7 GK S.A., Poznań

Hydrobudowa-9 Przed. Inż.-Bud. sp. z 0.0., Poznań

Huta Aluminium Konin S.A., Konin

Reemtsma Polska S.A., Tarnowo Podgórne

Zespól Elektrocieplowni Poznańskich S.A., Poznań

Sanitec Kolo sp. z 0.0.,

Koło

Bestfoods Polska sp. z 0.0.,

Poznań

Jedynka Poznań GK: p Poznan

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Reemtsma Polska S.A., Tarnowo Podgórne

Selgros sp. z 0.0.,

Poznań*

Energetyka Poznańska S.A., Poznań

Zespól Elektr. Pątnów-Adamów-Konin S.A., Konin

Skoda Auto Polska S.A., Poznań

Aral Polska sp. z 0.0.,

Poznań*

Konsor. Dystr. Wyrobów Tytoniowych S.A., Luboń

Amica Wronki S.A. Wronk

Girom Wellcome S.A. Poznań

Preem Polska sp. z 0.0.

Poznań

Energetyka Kaliska S.A. Kalisz

Farmutil HS Holding S.A. Śmiłowo

Kopalnia Węgla Brunatnego Konin S.A., Kleczew

H. Cegielski-Poznań S.A. Poznan

Huta Aluminium Konin S.A. Konin

Bestfoods Polska sp. z 0.0

Poznan

Wrigley Poland sp. z 0.0

Pozna

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KWB Konin S.A., Kleczew

Wistil SA GK, Kalisz

Philips Lighting Poland S.A., Piła

Inter Groclin Auto S.A., Wolsztyn

Farmutil HS Holding S.A., Śmiłowo

Volkswagen Polska sp. z 0.0.,

Poznań

Selgros Cash&Carrry sp. z 0.0.,

Poznań*

miniMai sp. z 0.0.,

Poznań



Zespół Elektrowni Pątnów Adamów Konin S.A., Konin

Grupa Energetyczna ENEA S.A., Poznań

Grupa Raben, Poznań

GlaxoSmithKline Pharmaceuticals S.A., Poznań


Aluminium Konin-Impexmetal S.A., Konin

Maxer S.A., Poznań

Winkowski sp. z 0.0.,

Piła

Zespół Elektrociepłowni Poznańskich S.A., Poznań

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Reemtsma Polska S.A., Jankowice

Selgros Cash&Carrry sp. z 0.0.,

Poznań*

Zespół Elektrowni Pątnów Adamów Konin S.A., Konin





KDWT S.A. Luboń



Inter Groclin Trading sp. z 0.0.,

Grodzisk Wlkp.


Wrigley Poland sp. z 0.0.,

Poznań

KWB Konin S.A., Kleczew

miniMai sp. z 0.0.,

Poznań*

Żabka Polska S.A., Poznań*

Cukrownie Pfeifer&Langen GK, Poznań

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Poznań*



Man Star Trucks & Buses sp. z 0.0.,

Poznań



GlaxoSmithKline Pharmaceuticals S.A., Poznań*

H. Cegielski-Poznań S.A. Poznań*

Eurocash sp. z 0.0.

Poznań*

Grupa Mahle GK Krotoszyn

Maxer S.A. Poznan

Winkowski sp. z 0.0.

Piła

Aluminium Konin-Impexmetal S.A. Konin

Zespół Elektrociepłowni Poznańskich S.A., Poznań

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Eurocash sp. z 0.0.,

Poznań*


Konsorcjum Dystrybutorów Wyr. Tytoniowych S.A., Luboń




Poznań


Aluminium Konin-Impexmetal S.A., Konin

Wistil SAGK, Kalisz

miniMai sp. z 0.0.,

Poznań

Man Star Trucks & Buses sp. z 0.0.,

Poznań


Grupa Mahle GK, Krotoszyn

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Glaxo Wellcome S.A., Poznań






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Poznań

Beiersdorf-Lechia S.A., Poznań

Glaxo Wellcome S.A., Poznań






Hydrobudowa-9 Przed. Inz.-Bud. sp. z 0.0.

+>- +>-o Ol :r o o a a o o o c: o o !'>

N O-~ t/)

Multiplier effects arise out of links between individual elements of urban and regional systems, in particular enterprise-surroundings relations. S. Marek (1999) distinguishes five groups of such relations:

- enterprise-households (in terms of income earning and spending); - enterprise-other enterprises; - enterprise-authorities; - enterprise-financial institutions; and - enterprise-subjects of economic democracy (e.g. trade unions, employer organisations, con-

sumer organisations, foundations). The relations and multiplier effects associated with them can be beneficial or detrimental, sponta

neous or carefully designed (controlled), they can also be assessed differently by various participants of economic life and when seen in a short- or a long-term perspective.

Multiplier effects spring from a variety of causes (cf. Domański 1983: 305; 2002: 128). Among them can be the construction of a new industrial plant; an extension or change of the line of production of an existing one; or the appearance of a new owner introducing signif1cant changes into the system of management, technological innovativeness and economic links (as has been the case of GSK). A hypothetical diagram of a regional multiplier effect resulting from the location of GSK in Poznań, based on Lloyd and Dicken's (1972) model, is presented in Fig. 15 (after Domański 2002: 128).

The initial multiplier effect of the location of a multinational corporation results from a new pattern of local demand. The demand is shaped in four possible ways: (1) by attracting associated activities, (2) by new investment: building and infrastructure; (3) by introducing new services for the enterprise; and (4) by new opportunities for inventiveness and innovation.

When a firm does not engage in a greenfield type of investment but buys an existing plant, it usually also takes over at least a fragment of the old co-operation network. This was also the case with GSK, although there have developed new links as well due to outsourcing, or the practice of subcontracting some of the factory's old functions to economic entities outside.

As a result of more intensive collaboration among various specialised economic entities, there form micro-markets for unique products and services. Under the influence of globalisation processes, in turn, the operation of each of those micro-markets becomes restricted by a system of standards and detailed technical, commercial and environmental regulations that have to be accommodated in strategies concerning competition on macro-markets. To meet the new market requirements, especially the increase in diversity and efficiency, co-operating firms often establish economic networks based on synergistic effects.

The GSK plant in Poznań has also developed its micro-market for unique products and specialised services. This proces s has produced an initial multiplier effect in the form oflocal dem and for the provision of raw materials, semi-finished goods, and services for the factory. The analysis of the regional multiplier effect of GSK embraces the following issues:

- networks of links with suppliers of raw materiaIs, production components and semi-finished goods;

- networks of links with product consumers; - networks of links with firms providing services to GSK; and - networks oflinks with scientific and R&D institutions, hospitals, and the educational system.

M,"." il

I

I

GSK ~

Initial multiplier effect New local demand

New opportunities

~ for inventiveness and innovation

Attracting associated ... activities .ggggg_ggL __ ---,

Suppliers of new establishment

I

II New investment

(e.g. facilities, production buldings)

-Consumers of a new

products

•• I Growth of tertiary sector. I New services for

enterprises

."

Secondary multiplier effect. Additional investment brought about by expansion of non-manufacturing sectors

New level of local/regional develop- I<IIII~I------ł _ ment, higher diversification of .....

economic structure, higher local 14 ...... ___ --------------'

incomes, improvement of region's image as site of new investments

~--------------------~·I . . . Ir-----------~ I nventlveness, mnovatlon

Fig. 15. Hypothetical regional multiplier effect of GSK location in Poznań Source: Own compilation based on Lloyd and Dicken's model, quoted after Domański (2002)

iF

The analysis is carried out from two perspectives: (1) that ofGlaxoSmithKline Pharmaceuticals, on the basis of data obtained in the company's various

departments, and (2) that of GSK partners, on the basi s of materiaIs collected in a survey research.

The network of suppliers from Wielkopolska providing GSK with a variety of raw materials, production components and semi-finished goods embraces 79 economic entities. Most suppliers of raw and production materiaIs have been co-operating with the Poznań plant for more than 5 years (58.20/0, cf. Fig. 16). The next 3.8% are those co-operating for 3 to 5 years. Hence, those suppliers can be said to form a network of links deriving from a long history of contacts, often established in the Polfa times.

Fig. 16. Period of co-operation of material suppliers with GSK

Source: GSK data

38%

58%

4%

over 5 years 3-5 years Dunder 3 years

Most of the suppliers are based in Poznań (60.80/0) and the suburban communes of Komorniki, Suchy Las, Tarnowo Podgórne, and Rokietnica (20.2%). The remaining one s are located at a fairly long distance from the GSK seat, e.g. in Rawicz, Krotoszyn, Kalisz, Leszno, Czarnków, or Trzemeszno. A detailed distribution of the suppliers is presented in Figs 17 (by type of their activity in terms of NACE, or the Classification of Economic Activities in the European Community) and 18 (by what they supply: raw materiaIs, production components, and services). The figures show the multiplier effect of the location of GSK in Poznań in the field of production supply to be felt mainly in the Poznań metropolitan area and the southern part of the voivodeship.

With respect to product consumers, the effect of GSK location is not striking, the reason being that the recipients of those highly specialised goods are hospitals and warehouses throughout Poland.

Predominant among the Wielkopolska consumers of the goods manufactured by the Poznań plant are hospitals - 71.8%. The remaining recipients are pharmaceutical warehouses, with more than one-third of them (35.9%) located in the city ofPoznań. A detailed distribution of GSK product consumer s is presented in Fig. 19. It shows them to be spread evenly throughout Wielkopolska - there is at least one in each poviat of the voivodeship.

The Poznań GSK factory co-operates with 48 Wielkopolska businesses providing services in the fields of:

- transport, - disposal of production waste and its examination,

personal and property security, - laundering protective clothes, - servicing forklift trucks,

Number of suppliers by activity type

III Agriculture, hunting and forestry III Manufacturing • Construlion III Wholesale and retail trade D Transport, storage and communication G:J Real estate, renting and business activities III Other activities

Fig. 17. GlaxoSmithKline suppliers in Wielkopolska voivodeship in 2003 by type of activity

Number ot suppliers by type ot supplies --~--10

D Suppliers ot production components D Suppliers ot services II Suppliers ot raw materials

Fig. 18. GlaxoSmithKline suppliers in Wielkopolska voivodeship in 2003 by type of supplies

·pp. f

Number of customers in 2003

• Hospitals D Warehauses

Fig. 19. GlaxoSmithKline customers in Wielkopolska voivodeship in 2003

- fire prevention monitoring, - construction, - customs clearance, - translations, - document archivisation, - servicing air conditioning systems, lifts, blinds, office equipment, electrical appliances, boilers

(carried out by businesses based in Poznań or its metropolitan area), and - running the factory canteen. GSK is also provided with marketing, legal, financial, insurance and consulting services, but lack of

data makes their detailed analysis impossible. It seems, however, that unlike the services listed above, links of this type often extend beyond the Wielkopolska region. For instance, consulting services concerning the introduction of the ISO 14001 quality management system are offered by a Wrocław-based firm.

Out of the service providers from Wielkopolska, 27.1 % have been co-operating with GSK for more than 5 years, and a further 16.3% for 3 to 5 years (Fig. 20). This means that the long-established network of links embraces less than half of the service providers, and that the taking over of the Polfa plant in Poznań by GSK has affected the service links more than the other types.

56%

over 5 years 3-5 years Dunder 3 years

27%

17% Fig. 20. Period of co-operation of service providers

with GSK Source: GSK data

The majority (54.20/0) of the service providers are located in Poznań. The rest com e from the suburban communes just outside the city, e.g. Suchy Las, Stęszew, Kórnik or Tarnowo Podgórne, but also from farther away, like Piła, Jarocin, Zbąszyń or Leszno. A detailed distribution of the Wielkopolska-based service providers is presented in Fig. 18.

Contracts and agreements with service providers are an example of the practice of outsourcing in modern business management. It involves an enterprise giving up certain functions that are not its basic activities and subcontracting them to an independent economic entity specialising in them. It is primarily intended to improve the quality of the services through the choice of contractors from among many competing businesses. Another important consideration is the streamlining of the firm's organisational structure and thus its release from functions rather remote from its basic purposes.

In the case of Poznań GSK, however, outsourcing does not embrace services and organisational units thought to be crucial for the operation of the plant. They include the distribution, Human Resources (staff affairs), and information departments. Also an organisational part of the Poznań establishment is an outpatient faci li t y employing a practitioner and nurses on a full-time basi s, although some specialists (e.g. the gynaecologist) work under contract (i.e. outsourcing is practised at a lower, 'intra-unit' level).

The choice ofbusinesses co-operating with the Poznań division of GSK is largely made without involving the company's central decision-making bodies, and rests on invitations to tender and procedures established by the management of the Poznań factory. A firm is then selected on the basis of the attractiveness of the terms presented in its tender, the decisive factor being the relation of the price of a service to its quality. Still, there are fields of GSK activity where the choice of a partner is decided by the company's central managing unit. This concerns those operations where the most important consideration is maintaining the quality guaranteed by the brand name. Thus, those service providers are

favoured who meet the stringent manufacturing standards set by the company. Among such suppliers for the Poznań plant is MAT-OIL, a distributor of specialised oils for machine maintenance, recommended for use in all GSK factories throughout the world and ensuring the proper operation of equipment. Another example of co-operation with a firm handpicked by the company is Marchezzini, an Italian supplier of packaging machines. However, the packaging concerned is not the regular type like cardboard boxes, which are subcontracted to local manufacturers, but specialised, like aerosol botdes. Wherever the prime concern is preserving the established quality of a drug, an original GSK product (whether in term s of raw materials, manufacturing technology, or direct packaging) , the company demands compliance with rigorous standards it has devised which only few centrally selected producers can meet. Hence, in those specific areas also the Poznań branch of the corporation is obliged to use only the services of firms tested and recommended by the headquarters, which means that in this respect the possibilities of developing regional patterns of links are limited.

The new opportunities for inventiveness and innovation created by the GSK plant in Poznań stimulate the establishment of new networks oflinks with scientific and R&D institutions. In most cases, co-operation with such unit s leads to permanent, years-Iong contacts, and as a result, to an increase in innovativeness and accumulation of knowledge in the co-operating institutions. This, in turn, raises the generallevel of knowledge in the place s where the institutions are located. The co-operation of GSK with such units in Wielkopolska contributes to an increase in innovativeness and accumulation of knowledge in this region.

Research in the field of GSK's line of production, viz. pharmaceuticals, is a long-term process. From the moment of putting forward a co-operation proposal, it usually takes a few months to find a suitable institution. During this time there are a host of formaI matters to arrange, such as obtaining permission of the Bioethics Commission of the District Medical Chamber. Recruiting patients for clinical triaIs also usually takes about half a year, with the patients being involved in the research for a period of three months to four years. Thus, a contract signed with an R&D institution stipulates at least a year of co-operation. The choice of a unit follows the choice of a concrete researcher, usually a scientist known from an earlier period of co-operation.

GSK in Poznań conducts clinical and laboratory research for the entire corporation, relying on co-operation with R&D units from the whole of Poland. It usually concerns innovative drugs to be introduced in the various branches of the corporation. This is a significant change from the attitude of Polfa before Glaxo Wellcome bought the factory. Polfa manufactured the type of drugs called

R ietnica

Swarzędz

Oopiewo

Kleszczewo

\

Fig. 21. Networks of links between GSK and clinical research institutions (as of July 2004)

generics, and research on them was only intended to test their bio-equivalence, while a study of innovative drugs is mainly designed to prove them to be safe and effective.

In Wielkopolska, the GSK Medical Department is engaged at present Ouly 2004 data) in c1inical triais carried out in 11 units located largely in Poznań, but also at Mosina (Fig. 21). Some of them are working on more than one project. Co-operation rests on a contract signed for the duration ofthe research. Some of the units have been working on the triais unbrokenly for five years.

The GSK Medical Department in Poznań does not collaborate directly with any schools in the training of their staff for tasks performed in the Department. However, as follows from interviews conducted in GSK and various institutions, both sides intend to change this state of affairs. In this respect, Poznań higher schools might be well-advised to show greater activity.

Steps taken by GSK to transfer innovations and technologies as well as the company' s place in the region al innovative system are discussed in greater detail in chapter 6.

From the economic perspective, multiplier effects are usually considered in terms of employment, income, and investment. Their quantification, however, is extremely hard, and moreover, today qualitative aspects are increasingly being seen as no less important.

To assess the regional multiplier effect resulting from the location of the GSK plant in Poznań in a more objective and comprehensive way, the issue was approached not only from the point ofview of the company producing this effect, but also of the entities co-operating with it. To this end, questionnaires were sent to aU GSK partners providing it with materials and services, as well as to consumers of its goods (following a list supplied by GSK). The form (see Appendix) contained detailed questions concerning the nature of co-operation with GSK, its duration, legal status, forms, importance for the performance of the respondent, evaluation, and prospects for further development. The questionnaire consisted of three parts. The first covered a firm' s data, like its address and year of establishment. The second dealt with the firm's links with GSK and contained nine complex questions, usually of the free-answer type. The third concerned the respondent s' perception of GSK's place and role in the region' s economy.

The research was carried out between April andJune 2004 by a team of researchers from the Institute ofSocio-Economic Geography and Spatial Management, Adam Mickiewicz University in Poznań, under the supervision of Prof. Tadeusz Stryjakiewicz.

By assumption, the study of GSK' s links with partners in Wielkopolska was to be exhaustive, i.e. to cover all the firms co-operating with the company. However, since the questionnaire was filled on a voluntary basi s, 62 firms responded, which constituted 240/0 of the total. Among them were 32 suppliers of raw materials and production components (they made up 51.60/0 of all respondents) and 30 consumers of GSK goods (inc1uding 28 hospitals and 2 drug warehouses). Among the suppliers, the largest group (500/0) embraced those from Poznań, and in the consumer group 26.60/0 entities that completed and returned the questionnaire we re Poznań-based.

Forms of links To start with, the firms polled were asked to indicate the most important forms of their links with

GSK, with some respondents choosing more than one type of linko For the largest group (38.70/0), co-operation with GSK involved the provision of services, with maintenance and assembly operations accounting for three-fourths of them. A somewhat smaller group (35.50/0) bought GSK products. For 290/0 of respondents the principallink was the supply of materials and semi-finished products. A few indicated participation in GSK-organised training courses (9.70/0) and drug testing (6.50/0).

Period of co-operation 36.60/0 of firms co-operating with GSK's Poznań factory today started to do so before 1998, Le.

when it was still owned by Polfa. Among those long-term GSK partners, suppliers of raw materiaIs, production components and services predominate: those that used to supply Polfa constitute 20%, while product consumers, only 16.60/0. A detailed distribution of co-operation time of GSK suppliers and consumers is presented in Figs 22 and 23.

40

30

20

10

o up to 1998 1999 2000 2001 2002 2003 1997

Fig. 22. GSK suppliers by time of co-operation (in per cent)

40

30

20

10

o up to 1998 1999 2000 2001 2002 2003 1997

Fig. 23. Consumers of GSK products by time of co-operation (in per cent)

For the majority of those polled, links with GSK are a continuation of their earlier connections with Polfa. In the remaining group ofbusinesses and hospitals, the proposal for co-operation was put forwar d by GSK three times more often than by those entities. A smalI proportion of firms established contact with GSK on yet other occasions, like meetings with GSK's medical and commercial representatives, training courses and seminars, a response to an invitation to tender, and a recommendation of a foreign partner.

Legal foundations of co-operation with GSK Co-operation is predominantly under contract (45.20/0), with one-year contracts signed by more

than half of the respondent s in this group. Few firms have two-year contracts (7.1 0/0), and more than one-fifth work for an indeterminate period of time (Figs 24 and 25).

other

task-werk contracts

long-term contracts

o 10 20 30 40 50 r

Fig. 24. Legal foundations of co-operation with GSK (per cent of firms)

7%

• shorter than 1 year • 1 year D 2 years D indeterminate time

Fig. 25. Structure of contacts by their duration (in per cent)

Task-work contracts account for 290/0 of the firms, and 35.5% of respondents indicate other legal foundations of their co-operation with GSK. They usually describe them as current, occasional, phone-call, or ad hoc orders, or as short-term contracts for a concrete task, e.g. a training course or drug testing.

Proportion of respondent firms' employees involved in co-operation with GSK The poll results show that the average proportion of employees involved in contacts with GSK in

the co-operating firms is 28%. However, the index varies considerably with the group: it is much higher in the supplier group than in the recipient group. It should be kept in mind that the consumers of GSK goods, Le. mostly hospitals, are very large entities: their employment level ranges between

140 and 400. Henee the average pereentage of workers engaged in eo-operation with GSK is lower than amon g the suppliers, predominantly small and medium-sized businesses. For the smallest of them, Le. with up to 9 employees, the pereentage shows eo-operation with GSK to be often the foundation oftheir existenee. It varies between 12.50/0 and 71.4%, which means that for the workers eontaets with GSK are of major importance for their jobs. A detailed distribution of the proportion of employees involved in eo-operation with GSK in the particular types of firms is presented in Fig. 26. 100

80

60

40

20

o suppliers of

materials

service providers

employees involved in co-operation with GSK

GSK produet

consumers

III others

Fig. 26. Proportion of employees involved in eo-operation with GSK by type of firm (in per cent)

The highest mean pereentage of sueh workers, about 450/0, is among service providers. It is about half that figure in the gro up of suppliers of raw materials and produetion eomponents - 23.30/0.

Contribution of GSK to the turnover/sales of the firms surveyed Interesting results were obtained when trying to establish the mean eontribution of GSK to the

turnover and/or sales ofthe respondents (ef. Fig. 27). Among those whieh were able to ealculate the pereentage, most (45%) declared it to be from 1 % to 10%. A smaller gro up (350/0) defined it as under 10/0. For the smallest group (20%) the value of GSK-related turnover exeeeded 100/0.

20% 35%

45% Fig. 27. Proportion of GSK in the turnover of firms

under 1 % 1 %-1 0% D over 10% surveyed

Worth emphasising is the faet revealed by the survey that half of the firms at all able to define the signifieanee of eo-operation with GSK for them listed GSK amon g the first five most important partners.

Dynamics of business contacts and co-operation with GSK An attempt was also made to use the questionnaires to determine changes in the intensity of

eo-operation of the respondent firms with GSK from the moment of establishing eontaet. What strikes one is the faet that a large gro up of firms (420/0) were unable to define the direetion of those chan ges owing to their eonsiderable tluetuations (ef. Fig. 28). Among the rest, most (290/0) believed

13%

16% 42%

29% Fig. 28. Changes in the intensity of eo-operation • hard to tell • doesn't change D increases D decreases of respondent firms with GSK

the level of co-operation to be stable. For 16% business with GSK tended to increase, and for 12.90/0 to decrease. It should be emphasised that the last group did not inelude consumers of GSK products, i.e. hospitals. One can state, therefore, that for the co-operating hospitals the intensity and range of contacts with GSK show a marked upward tendency, despite the financial crisis in health care.

Strong and weak points of co-operation with GSK Among the advantages of co-operation with GSK (Fig. 29), most respondents emphasise the reli

ability of the partner (35.50/0) folIowed by favourable prices (29%). The important points for 22.60/0 of respondents are the company's maintaining good business relations with the contractors and its innovation-oriented attitude. Many firms (12.90/0) appreciate its convenient dates of payment, while for every tenth firm a strong point is the elear criteria of evaluation of the quality of materials and services they supply. The smallest group (6.50/0) sees as an advantage the prestige of maintaining business relations with a corporation which is a world-wide name. Among other advantages of co-operation with GSK are elear tender procedures, continuity of supplies, and a wide range of products.

prestige of the firm's brand

elear eriteria of evaluation of eontraetors

favourable dates of payment

maintaining good relations with eontraetors

innovation-orientated attitude

favourable priees

reliability

o 10 20 30 40

Fig. 29. Strong points and advantages of co-operation with GSK (per cent of responses)

Weak points of co-operation with GSK (Fig. 30) were chosen by much fewer respondents (about two-thirds). Among them logistic difficulties (16.10/0) and excessive bureaucratisation of administrative procedures (12.90/0) were indicated most frequently. Onlya few respondents (6.5%) complained of a long time of order execution or partner-seeking strategies that we re unfavourable to them. There were single responses indicating high prices of GSK products, the necessity ofbuying omnibus packing, and gradual withdrawal from the production of cheaper alternative drugs.

unfavourable partner-seeking strategies

long time of order exeeution

bureaueratisation of proeedures

logistie diffieulties

o 5 10

Fig. 30. Weak points of co-operation with GSK (per cent ofresponses) 15 20

Apart from direct material effects, most of the firms and hospitals surveyed (530/0) reported also other benefits to be derived from co-operation with GSK. They ineluded access to knowledge, information and advanced technological solutions, as well as access to professionalliterature.

Prospects for the development of co-operation with GSK Figure 31 shows more than half of the firms polled (53.30/0) to foresee no change in the present

level of co-operation with GSK or its forms. More than one-fourth are planning to intensify the links, with suppliers greatly predominating among them (750/0). The smallest gro up (70/0) ineludes firms intending to limit their co-operation with GSK. 13.30/0 of respondents anticipate a change in the nature of their links with the company, and they are largely consumers of GSK goods. For them the change will usually involve giving up the present contracts and awaiting new tenders.

7%

Maintaining present level and form

l1li Intensification of links

53%

D change in nature of links

D regression Fig. 31. Prospects for the development of co-oper

ation with GSK (per cent of responses)

Chances of and threats to the development of co-operation with GSK Among positive factors that may affect the firms' future links with GSK (Fig. 32), the one chosen

most often was an increase in investment; it was indicated by 400/0 of firms able to see such chances for the development of co-operation at alI. Next came the building up of the range of products offered by GSK (26.70/0) and their favourable prices, which were a co-operation promoting factor for every fifth respondent. For 13.30/0, such a factor would be the opening of a GSK warehouse in Poznań.

opening GSK warehouse .l1lil1lil1lil1lil1li11

better prices '-l1lil1lil1lil1lil1lil1lil1lil1li_

building up product range '-l1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1li11

increase of investment .l1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1lil1li_

o 5 10 15 20 25 30 35 40

Fig. 32. Chances of the development of co-operation with GSK (per cent of responses)

Only 26.70/0 of respondents saw any threat to the development of their co-operation with GSK (Fig. 33). For half of them, it was stiffer competition from other large pharmaceutical corporations, and for the other half, an unfavourable government policy towards drug makers. The latter was especially the concern of the suppliers of raw materials and production components. Listed among other factors detrimental to co-operation with GSK were the rising prices of drugs and financial difficulties of the partners, cessation of the manufacture of some preparations, and changes in the product range by GSK involving a change in subcontractors. Also mentioned was too little interest shown by GSK in co-operating with small businesses.

unfavourable government policy

stiffer competition

o 1 o 20 30 40 50

Fig. 33. Threats to the development of co-operation with GSK (per cent of responses)

Initiatives for the development of co-operation Initiatives for the development of co-operation on the part of GSK were noticeable to 640/0 of re

spondents. What they listed as such were offers of new order s (24%), promotional actions on launching new products and visits of GSK representatives in firms (120/0), sending in new tenders (120/0), and professional consultancy (40/0). The respondents also appreciated such measures as offers ofnew services and reductions in the prices of drugs.

professional consultancy

sending in new tenders

promotional actions and visits of GSK representatives in firms

offers of new orders

o 5 10 15 20 25

Fig. 34. GSK initiatives for the development of co-operation with firms (per cent of responses)

770/0 of firms reported their own initiatives for the development of co-operation with GSK. The biggest group (45%) mentioned their proposaIs for expanding the range of goods and services offered. Next came attendance at conferences and a quick response to new projects launched by GSK. Among other initiatives on the part of the firms were offers of technical consultancy and maintenance services.

quick response to new GSK products

attendance at conferences

proposais for expanding range of goods and services offered

o 10 20 30 40 50

Fig. 35. Firms' initiatives for the development of co-operation with GSK (per cent of responses)

Attitude towards the sale of the Polfa plant To see how the firms co-operating with GSK perceived it place and role in the regi6n's economy,

they were asked to give their opinion about the decision to sell Polfa Poznań S.A. to the British investor. The largest group (40.6%, see Fig. 36) considered it right and the smallest (28.10/0), wrong. The remaining respondents (31.30/0) had no opinion on the matter.

28% Fig. 36. Appraisal of the decision to sell Polfa

Poznań S.A. • it was correct it was wrong D don't know

The most important arguments supporting the decision to sell Polfa to a foreign corporation were an increase in the region' s investment level and the introduction of new technologies.

The firms which considered the 1998 decision wrong emphasised that the plant sold was an expanding and profit-producing one ("they sold a hen laying gol den eggs"). Other arguments included a drop in employment in the enterprise, a reduction in the product range, a decline in the importance of the factory for the economy of Poznań, an increase in the prices of goods when produced by GSK, absence of state-of-the-art technologies, and no confidence in a foreign investor.

Advantages and disadvantages of GSK location in Poznań The advantages of GSK location in Poznań were observed by a decided majority of respondents -

61 % (Fig. 37). Its disadvantages were only pointed out by a mere 7.30/0 of them, while a fairly big group (nearly 320/0) had no opinion on the matter.

The most commonly listed advantages included an increase in the region's job opportunities (360/0), the possibility of co-operation of regional firms with the new enterprise (240/0), and an in-

increase in region's income • __ ..

introduction of new technologies ......... _ Increase in region's prestige ................. _

increase in num ber of contractors in region ..................... _

increase in region's employment level ~~~~~~~~~~~~~~~~~~~_~

o 5 10 15 20 25 30 35 40

Fig. 37. Advantages of GSK location in Poznań (per cent of responses)

crease in the prestige of Poznań and Wielkopolska as a result of the location decision (200/0). Next came the benefits of the advanced technologies employed by the foreign investor (120/0) and an increase in the region's income, as well as a shorter delivery time. There we re single responses indicating better contacts with GSK representatives than with Polfa officials and an improvement in collaboration with the Medical Academy in Poznań.

Among the disadvantages of GSK location in the city the respondents listed a drop in the number ofjobs and a threat to the natural environment. The latter seems to show an insufficient knowledge of the measures taken by GSK for environmental protection.

Propositions presented to GSK In the final part of the questionnaire the respondents could freely express comments about the

functioning of GSK in Poznań and their relations with it. A suggestion that appeared three times was that GSK should build up its co-operation with the firms, mainly through increasing its orders and making them more steady. In justification, it was stated that in such circumstances the quality of the goods and services provided would improve, since they would enable the co-operating partners to make investments and obtain suitable certificates. An expectation was also expressed that a big enterprise like GSK might contribute mor e to the financing of sport, culture and recreation in Wielkopolska. Among the opinions given by GSK product consumers there appeared aremark that " .. .it is good to have a big foreign pharmaceutical firm in the region, friendly towards the city and its health service administration".

The basic feature of the Polish economy after 1991 was the start of the process of privatisation of economic entities and their restitution to former owners. It has produced structural changes also in the labour markets. The former socialist labour markets oflocal and regional dimensions have gradually transformed in quantitative, qualitative, and spatial terms. What has also changed was the role of individual plants, including GlaxoSmithKline Pharmaceuticals S.A.

The privatisation of the factory and advances in its restructuring have caused several significant changes both in employment figures and its structure. Underlying them is the need to make the firm competitive.

The employment level and structure in GSK in Poznań by sex in the years 1998-2004 are presented in Table 9 and Fig. 38, while the turnover of staff, in Table 10. On the day of privatisation (28 January 1998) the plant employed 1,497 people. Until that day employment had been rising steadily (1960-30 persons; 1970 - 500; 1980 -1,040; 1990 -1,127), while ever since it has kept declining. Over the analysed period of 1998-2004, there was a mean annual fall of70/0. Among the most important factors responsible for the drop in employment (despite an increase in the number of goods manufactured) one should mention:

- the introduction of advanced technologies in the automation and mechanisation of manufacturing processes, quality control, and research systems which greatly improved the productivity of labour; the introduction of advanced technologies in storage a warehouse has been built with state-of-the-art solutions in storing methods and with computer-operated cranes instead of storekeepers;

- the implementation of unique management systems to eliminate ineffective, time- and energy-consuming activities; as a result, work started to be better organised, which led to a survey of jobs and elimination of those which were found redundant;

- broadly understood organisational changes following the inflow of know-how from an international corporation with years of experience, which helped to boost productivity and as a result, led to a reduction or fusion of jobs; and

Table 9. Employment in GSK Poznań by sex in the years 1998-2004

Year Employment Feminisation

total females % males % index

1998 1455 no data no data no data no data no data

1999 1397 929 66 468 34 199

2000 1181 773 65 408 35 189

2001 1119 723 65 396 35 183

2002 922 582 63 340 37 171

2003 901 569 63 332 37 171

2004 891 564 63 327 37 172

Source: GSK Personnel data

2004

2003

2002

2001

2000

1999

1998

o 200 400 600 800

workers

1000 1200 1400 1600

Fig. 38. GSK employment in Poznań in the years 1998-2004

- the outsourcing of some ta sks connected with the operation of the plant to outside firms (cleaning, care of greenery, washing, transport), which helped to reduce labour costs.

Over the six analysed years after privatisation,

Table 10. Turnover of GSK staff in Poznań in the the greatest number of employees (273) were made redundant in 2000. This was caused by the

years 1999-2004 closing down of the surgical threads department

Year totaI

1999 1397

2000 1181

2001 1119

2002 922

2003 901

2004 891

Workers

taken on dismissed

20

57

24

24

31

29

78

273

86

221

52

39

Source: GSK Personnel data

net

-58

-216

-62

-197

-21

-10

owing to expiry of the licence to manufacture them. The production process had been highly labour-consuming because of the totallack of automation. The second stage of lay-offs was the year 2002 with 221 redundancies resulting from organisational and technological changes. The year 2003 and the first half of 2004 did not bring any major job losses. Worth noting, however, is the already mentioned steady decline in employment since the privatisation of the plant: by the end of June 2004, there had been 891 redundancies, or 600/0 of the initial employment level (1,497). So

far, employment reduction has been a continuous process resulting from a systematic survey of tasks and processes and the fine-tuning of the management system, followed by the reduction of those elements which have been found unnecessary.

Because of the factory' s line of production, an interesting matter is an analysis of the sex structure of its workforce (Table 9). A characteristic feature of the pharmaceutical industry is a high proportion of female workers. Over the study period, there was a mean annual drop in female employment in the plant of 90/0. The feminisation index, or the number of women per 100 men, declined steadily from 199 in 1999 to 172 in 2004. This was due to the fact that it was primarily female jobs that had been made redundant: the closed surgical threads department was totally women-operated; the automation of packing rested on female staff; and so did cleaning and washing outsourced now to outside firms. A similar process can be observed on the regional market.

Another employment-related issue is the division of the staff by type of job (Table 11 and Fig. 39). Organisational changes and the implementation ofhigh-tech systems have produced qualitative changes in GSK staff. Over the years 1998-2004, there was a decline in the number of blue-collar workers (by an annual mean of 40/0) and an increase in the white-collar group (byan annual mean of 5%). This was due to the fact that, first, it was mainly blue-collar workers that had been made redundant, and secondly, some members of the staff had been retrained and given other jobs as a result of technological upgrading of manufacturing processes.

Education is another important aspect of the employment structure (Table 12 and Fig. 40). Since privatisation, significant changes could be observed in the level of education of GSK staff. Between 1999 and 2004, there was a marked drop in the proportion of workers with primary education from 150/0 to 80/0, and with vocational training from 290/0 to 210/0, while the percentage of employees with secondary education gr ew from 31 % to 330/0, and that of people with higher education soared from 25% to 380/0. The reasons for those changes are similar to those responsible for the increase in the proportion of white-collar workers and the decline in that of blue-collar ones. Thus, one can put forward the thesis that by reducing employment GSK has crucially contributed to qualitative changes on the regionallabour market.

Table 11. Employment in GSK Poznań by type of job in the years 1999-2004

Year

1999

2000

2001

2002

2003

2004

totaI

1397

1181

1119

922

901

891

bIue-colI ar

888

717

657

492

476

468

Workers

%

63.6

60.7

58.7

53.4

52.8

52.5

white-colIar

509

464

462

430

425

423

%

36.4

39.3

41.3

46.6

47.2

47.5

Source: GSK PersonneI data

en ID

1400

1200

1000

~ 800 o s: 600

400

200

o 1999 2000 2001 2002 2003 2004

IIItotal blue-collar D white-collar

Fig. 39. GSK employment in Poznań by type of job in the years 1999-2004

Table 12. Employment in GSK Poznań by level of education in the years 1999-2004

Workers Year

totaI primary % vocationaI % secondary % higher %

1999 1397 208 14.9 402 28.8 439 31.4 348 24.9

2000 1181 174 14.7 239 20.2 426 36.1 342 29.0

2001 1119 123 11.0 252 22.5 404 36.1 340 30.4

2002 922 78 8.5 199 21.6 299 32.4 346 37.5

2003 901 76 8.4 188 20.9 296 32.9 341 37.8

2004 891 75 8.4 185 20.8 290 32.5 341 38.3

Source: GSK PersonneI data

higher

25%

1999

31%

primary

15%

vocational

29%

higher

38%

2004

Fig. 40. Education level of GSK employees in Poznań in 1999 and 2004

primary

8%

secondary

33%

21%

Several qualitative changes can be observed in GSK consisting in the re-skilling of staff and alI kinds of training courses. The company makes huge outlays for the development of its workers through the financing of training, both at home and abroad. These can be specialised courses, e.g. in quality systems, preparation of drug documentation, implementation of unique management systems like Lean Sigma (identification of consumer needs and a prompt response to them) and value chains (the idea that value accrues at each stage of work; activities that are not effective and only timeand energy-consuming are eliminated), as welI as 'sof t' training, e.g. in such skilIs as presentation, team building, or being a good manager. The firm also finances English courses (150-200 people annually) as well as higher and post-graduate studies for a few dozen employees a year.

GSK's training activity in the years 1998-2003 is presented in Table 13. Over the six years after privatisation, highly favourable changes occurred in this respect. The measures employed inc1uded outlays for training courses, the number of the courses, and the number of employees trained. AlI these elements showed a very conspieuous increase. Especially striking is the rise in training outlays by as much as 4170/0 over the studyperiod (whieh yields an annual average of390/0) and in the number of employees trained by 451 % (or by 41 % annualIy on average). The greatest increase in the outlays was recorded in 1999, while the year 2000 saw the most dynamie growth in the number of those trained and the number of courses.

In the recent years the company has trained 28 in-house trainers. In the Poznań plant, there is an employee performance appraisal programme known as Performance and Development Planning (POP) for all jobs. In 2004, a core competence system was implemented to help employees build indi-

Table 13. GSK's training activity in the years 1998-2003

Year Dynamics 1998 1999 2000 2001 2002 2003 (1998 = 100)

Outlays for training courses 1154 2161 3270 3000 5273 5962 517 (thous. zlotys)

Number of training courses 297 172 637 690 970 825 278

Number of trained employees 1771 1534 4791 5078 4770 9767 551

Source: GSK Human Resources and Organisation Department

vidual plans of their development. Each employee has his job specification deseribing all the skilIs he is required to possess to do that job. There is also a career-planning project know as a Leadership Survey. Under this project, employees define their occupational aspirations and then, taking into consideration their predispositions, achievements, and the company's possibilities, plan growth activities and possible careers.

It should be emphasised that this commendable promotion by GSK of new forms of organisation and personnel management has been noted by the city's and region's authorities, which will be the subject matter of subsequent chapters.

Over the years 1999-2004 there was a change in the spatial structure of commuting to the Poznań plant. Thus, GSK influenced the formation of a new labour market in Poznań and Wielkopolska. The share of GSK in the development of the new spatial structure of the local and the regionallabour market can be expressed in the dichotomy: Poznań-based employees and those living outside Poznań (commuting to work). The data listed in Table 14 show that, following a drop in employment by 360/0, there was a decline in the number of people travelling to work, both from Poznań (by 440/0) and from outside it (by 14%), with the number of commuters from Poznań poviat decreasing by 8% and those from farther away by 180/0. There was also a lengthening of the commuting distance, both mean (by 16%) and maximum (by 80/0), and an increase in the number of communes and poviats of Wielkopolska from which GSK workers travel. The spatial structure of commuting to work in GSK by commune in the years 1999 and 2004 is presented in Figs 41 and 42.

Table 14. Commuting to GSK in Poznań in 1999 and 2004

1999 2004 Dynamics (1999 = 100)

Empolyment 1397 891 64

Commuters from Poznań 1042 585 56

Commuters from outside Poznań 355 306 86

Commuters from Poznań poviat 236 216 92

Commuters from outside Poznań poviat 85 70 82

Commuters from outside Wielkopolska voivodeship 34 20 59

Mean commoting distance from Wielkopolska voivodeship (km) 37 43 116

Maximum commoting distance from Wielkopolska voivodeship (km) 121 131 108

Number of voivodeships from which commuters come 14 10 71

Number of poviats in Wielkopolska voivodeship from which 18 20 111 commuters come

Number of communes in Wielkopolska voivodeship from which commuters come

51 56 110

Number of communes in Poznań poviat from which commuters come 18 18 100

Number of communes outside Poznań poviat from which commuters come 33 38 115

Number of localities in Poznań poviat from which commuters come 62 59 95

Number of localities outside Poznań poviat from which 52 50 96 commuters come

Number of localities outside Wielkopolska voivodeship from which 23 20 87 commuters come

Source: Own calculations on the basis of GSK Personnel data

Fig. 41. Number of commuters to GSK by commune in 1999

Fig. 42. Number of commuters to GSK by commune in 2004

N

WEST POMERANIA

1999

LUBUSKA LAND

o 50

.. ~

r- .. '

L,

POMERANIA _ ~c, ~~ ,0- "'-'/;- L __ . ~

)-\_,~~_.,

LOWER SILESIA

100 km

Legend resultant vector (proportion of red corresponds to directional non-uniformity)

vector of journeys from Poznan poviat vector of journeys outside Poznan poviat

boundaries of voivodeships boundaries of poviats

KUJAWY-POMERANIA

ŁÓDŹ

~------\.,J\ f'-.

OPOLE )' __ --r-,.

Fig. 43. Commuting vectors of GSK employees in 1999 and 2004

The change in the spatial structure of commuting also involved a shift in the directions from which commuters came in 1999 and in 2004. To identify those shifts, use was made of vector analysis. Figure 43 shows the location and length of six vectors in a co-ordinate system. Red lines denote resultant vectors of all journeys to work from the entire area ofWielkopolska voivodeship. Green lines are vectors of commuting from Poznań poviat, while yellow lines are vectors depicting journeys from outside the poviat. A comparison of the vectors for the 1999 and 2004 data suggests the following conc1usions: (1) Both resultant vectors for journeys from the entire area ofWielkopolska voivodeship lie in a quar

ter situated north-west of Poznań. Their directions indicate the area of the highest concentration of commuting to GSK. Both in 1999 and 2004 the westerly direction predominated. However, the 2004 vector lies above that for 1999, which means that over those five years there was a shift in the bulk of commuting slightly to the north. In turn, the length of the vectors and their degree of redness show that in 1999 the bulk of commuting was greater, as was the directional unevenness in journeys to work. If commuting occurred from various directions with an equal intensity, the resultant vectors for the two years would not be red at all.

(2) The vectors indicating the main directions of journey to GSK from the area of Poznań poviat also lie in the north-westerly quarter. Hence, both in 1999 and 2004 the commuters were predominantly travelling from places in the poviat. However, as with the resultant vectors, there was a shift of origin localities to the north of Poznań. One can also notice that the 2004 vector is shorter than that for 1999. This confirms the general tendency towards a decline in the number of commuters from Poznań poviat between 1999 and 2004.

(3) The vectors depicting journeys to work from outside Poznań poviat have a totally different location: they are both in the north-easterly quarter. Hence the obvious conc1usion that those commuters travel from localities situated primarily east of Poznań. Also in this case there was, first, a significant decrease in the number of commuters over the five years because the 2004 vector is visibly shorter, and secondly, a shift of origins to the north of Poznań. The shift is also confirmed by the indices of commuting structure. In 1999 the rate of commuters from localities north ofPoznań and outside the poviat to those from the remaining places was 0.77, while in 2004 it was markedly higher, at 1.12. Thus, both vector analysis and structure indices confirm that between 1999 and 2004 there was a gradual reorientation of journeys to work in GSK.

GSK is a much sought-after employer on the regionallabour market. One of the reasons is that it offers its staff more attractive wages than do other enterprises of the region.

It is this wage competitiveness that is one of the key goals of the company. GSK management is aware that only high earnings can attract first-c1ass specialists. The mean GSK wage equals 100-1500/0 of the Wielkopolska average. The chief motivating instrument is a system of bonuses. Each worker can receive an award payable once a year whose amount depends on his individual performance and the results of the firm as a whole.

Since the moment of privatisation, Le. 1998, there has been a steady increase in earnings in GSK. The mean annual increase over the study period was 120/0. The highest growth (by 250/0) was recorded in 1999, while the year 2003 was the least prosperous for the employees with wages going up by a mere l%. In the first half of 2004, the earnings rose by an average 11 % compared with the previous year. This means that the check in wage increase observed in 2003 was not a permanent development.

When comparing mean GSK wages with the average for Wielkopolska, one can find that GSK's advantage was becoming more and more pronounced. Thus, while in 2000 the wages in the company constituted 1140/0 of the regional average, in 2003 they surpassed the regional mean by 58%. This increase is connected with the qualitative changes in employment discussed earlier.

GSK engages in a wide range of sodal activity to ensure its employees go od conditions of both, work and leisure time. GSK's statutory sodal fund is swelled by an additional allocation of300 zlotys per employee as well as allocations for retirees and those working in spedal conditions.

The expenditure ofthe GSK sodal fund during the years 1998 to 2004 (1st half) is presented in Table 15. Over those six and a half years, it grew by an annual average of 90/0. The company started to spend more heavily on sport and recreation (an increase by 1750/0) and loans (by 75%). There was also a change in the structure of the expenditure: a decline in means for holidaying and an increase in those for sport and recreation and other types of activity.

Table 15. Expenditure ofthe GSK sodal fund in the years 1998-2004

Loans Sport and recreation Holidaying Other Year Total thous. thous. thous. thous.

zlotys %

zlotys %

zlotys %

zlotys %

1998 2836 1142 40.3 204 7.2 800 28.2 690 24.3

1999 3716 1330 35.8 276 7.4 1150 30.9 960 25.8

2000 4209 1790 42.5 280 6.7 1395 33.1 744 17.7

2001 3973 2150 54.1 367 9.2 740 18.6 716 18.0

2002 6815 4752 69.7 441 6.5 920 13.5 702 10.3

2003 3687 1400 38.0 550 14.9 810 22.0 927 25.1

2004 4828 2000 41.4 560 11.6 780 16.2 1488 30.8

Source: Own calculation on basis of GSK Personnel data

GSK keeps a substantial training-recreational centre at Sieraków Wielkopolski that its employees can visit on preferential terms. Its operation, located as it is in an area ofhigh unemployment, is an additional source ofbenefits for residents ofthe western part ofWielkopolska. Besides, employees can avail themselves of various forms of finandal support and attractive housing loans (10,000 zlotys for 5 years at 1 % interest rate). There are energetic sports and recreation sections, many tournaments, skiing competitions and regattas are organised. GSK' s basketball and football players are among Poznań's top-ranked amateur teams. There are also a vigorous automobile and a riding club. The company also carries out sodal activity apart from the fund by finandng additional benefits for its workers, like medical care, a gym, a sauna and a solarium on the premises, free attended car parks, and a canteen.

GSK also takes care of its employees' health, safety, and working conditions. The Poznań plant has an ambulatory?patient facility where they can consult spedalists in industrial medidne, an orthopaedist, a cardiologist, a gynaecologist, a dentist, etc. Medical care for them is also ensured in one of Poznań' s clinics.

AlI GSK employees are additionally insured in a private insurance company. Moreover, the company was one of the few pharmaceutical firms to launch in 2003 an Employee Pension Scheme joined by 950/0 ofthe plant's workforce. GSKcontributes 2.60/0 ofmonthlywages andan employee can volunte er to pay an additional contribution. GSK also provides its staff with group life insurance covering death, temporary incapadty, and disability. This insurance scheme has be en joined by 980/0 of employees. The contribution, to the amount of 0.70/0 of wages, is paid by the company. The amount of the benefit depends on the case and is a mul tipi e of the salary.

GSK shows exceptional care for its employees. It has a spedal scheme of wages and benefits which allows for additional severance pays when a member of the staffhas to leave for employer-related reasons. Depending on the length of service, he may receive 2 to 12 monthly salaries. Besides, GSK al-

lows its workers to attend training courses, does not require them to serve out their notice, and offers them expert advice. The following facts confirm the care that GSK takes of its employees: (1) GSK has been the winner of the Carin g Employer competition announced by the daily

"Rzeczpospolita" and IMC Kariera. The firm has given support, also financial (22.5 million zlotys), to mor e than 300 dismissed staff. It has also helped its former employees in looking for new work, finding jobs for 100. They have been offered employment in GSK subcontractors involving security, cleaning, care of greenery, and driving.

(2) In March 2004 "Newsweek Polska" chose GSK as the best employer among pharmaceutical firms and second in the entire chemical industry.

(3) In a survey carried out by the Poznań branch of the Polish Personnel Management Association among 14 leading firms and organisations in Wielkopolska, the social and worker benefits offered by GSK' s Poznań plant have been appraised as some of the most attractive.

The best proof that GSK is a highly competitive firm on the regionallabour market is that it is one of the most sought-after employers. This statement is substantiated, first, by the number ofjob applications the GSK recruitment department gets every day, and secondly, by opinions of Poznań residents. There seem to be several reasons for such a high position of the company on the market, in particular:

- a favourable image of the firm in the region, - attractive wages, - the level of care for the employee, - large ou tlays for training, - a well-developed social and fringe benefit system, - innovative activity, - a high position among firms of the region on various ranking lists, and - titles and distinctions awarded ('caring employer', 'best employer').

Every economic entity sells not only a specified product or service, but also its own image. In the case of such institutions as a bank, an insurance company or a trust fund, the firm's suitable image is simply an indispensable condition of winning and keeping clients. An attractive image also contributes to the success of those firms that sell more material products and services than financial institutions. The image, a good financial condition, and conspicuous presence of a firm on the ads market can not only swell the number of customers, but significantly affect the decision to take up work in this rather than any other firm. The choice of a future employer can be influenced by a number of factors. Among the most important that determine the firm's global image are: its place on ranking lists in terms of economic performance and annual turnover, its presence and strong performance on the stock exchange, thinking big in undertaking new investments, and its image as seen against the competitors. For the local market, even more significant are such considerations as its presence in the awareness of the local community, identification of the firm with the region's tradition, a solid position on the labour market, and - perhaps most importantly for job seekers - the firm's current financial condition and the social and fringe benefit system it offers.

To illustrate how competitive GSK is among the other enterprises ofWielkopolska, use is made of a poll taken in 2004 among the Poznań population and the results of a 1999 survey research.

The poll was designed to find an answer to the question: "In what firm would you rather work?" It was conducted in July 2004 among a random sample of 474 respondents living in Poznań. They were of the working age, and the sex proportion was 50/50. The results are presented in Table 6. They show that some ofPoznań's major corporations have a well-established image in the awareness ofthe local

Table 16. Results of a poll concerning the desirability of a job in Poznań firms, July 2004

Firm Number of respondents

total % females % males %

Volkswagen Poznań Sp. z 0.0. 87 18.4 24 27.6 63 72.4

GlaxoSmithKline S.A. 69 14.6 60 87.0 9 13.0

Bank Zachodni WBK S.A. 48 10.1 27 56.3 21 43.8

Kompania Piwowarska S.A. Poznań 36 7.6 15 41.7 21 58.3

Telekomunikacja Polska S.A. 33 7.0 15 45.5 18 54.5

Nestle Polska S.A. 27 5.7 21 77.8 6 22.2

Beiersdorf-Lechia S.A. 27 5.7 24 88.9 3 11.1

ENEA Grupa Energetyczna S.A. 24 5.1 9 37.5 15 62.5

Skoda Auto Polska S.A. 21 4.4 O 0.0 21 100.0

BMW 18 3.8 12 66.7 6 33.3

Other 84 17.7 30 35.7 54 64.3

Total 474 100.0 237 50.0 237 50.0

Source: Own calculations on the basis of a poll taken in J uly 2004

community. There are primarily two firms with a distinctly favourable image in which the respondents would be most inclined to seek employment: Volkswagen Poznań and GlaxoSmithKline. The results are unambiguous in placing GSK high up in the list of firms the respondents found most desirable as employers. GSK received 15% of alI the responses, just 3% behind the top-ranked Volkswagen Poznań. The third most-sought-after employer, Bank Zachodni WBK, lost 50/0 to GSK. Significantly enough, as many as 870/0 of women opted for work in GSK, which is the highest percentage among the first five enterprises. GSK was most popular with respondents aged 28-40, Le. those with an established world view and precise career plans. At this age, people have a go od and detailed knowledge of the regional labour market, hence the high position of GSK in the poll may be interpreted as its strong, permanent position on this market in terms of desirability as a Wielkopolska employer.

A very similar ranking order of desirable employers was obtained by Dr KrzysztofPodemski from the Institute of Sociology, Adam Mickiewicz University, in his public-opinion survey of 1999. He polIed a ran dom sample of 624 residents of Poznań city and Poznań poviat. The survey concerned 25 high-ranking Poznań firms. The questionnaire included several questions among which was one about the respondents' willingness to seek potential employment in them. Although the two polIs are five years apart, their results largely coincide. In both, the first two places as most-sought-after employers went to WBK S.A. (now Bank Zachodni WBK S.A.), which got 49.90/0 of responses, and Volkswagen, a mere 0.1 % behind. Glaxo Wellcome (now GlaxoSmithKline) came third with a los s of 10.40/0. The concurrence of the top firms in polls conducted in 1999 and 2004 is highly significant. The first three positions are occupied by the same firms, except that they switched places over those five years (which is a fairly long period in the operation of an enterprise and its presence in an ever more demanding market). The results show that the firms' images in terms of the choice of a potential employer, and hence their high positions on the regionallabour market, remain stable.

The survey of the perception of GSK by its employees was conducted in October 2003 by the firm Profile on the company's order. The questionnaire consisted of 35 forced-choice and 3 free-answer type of questions, and the sample included 599 workers. In the present book only those of its elements have be en used that are connected with the subject matter of the project.

The respondents were generally satisfied with GSK as their workplace (840/0). Almost 700/0 would recommend the company as an employer. Surprisingly enough, only 500/0 regarded their wages as competitive in comparison with those in the other Wielkopolska firms, although the mean wage in GSK amounts to 100-1500/0 of the regional average. As many as 81 % respondents had no problems reconciling work with family life. A substantial majority (74%) appreciated training courses necessary for efficient work, while the opportunity to learn and develop was assessed a bit lower (670/0). The respondents emphasised that they would be glad to eliminate from their everyday work the stress caused by a tense atmosphere and a heavy workload.

To sum up, GSK can be confidently said to have a well-established, stable position on the Wielkopolska labour market, and as a consequence, that it has a significant influence on it; the results of various studies confirm it amply. Without any doubt, the company is one of the most competitive employers in the region.

In the global market economy, an increasingly important issue is the competitiveness of both, regions and enterprises. The key to an increase in competitiveness is innovation, and the rat e of technological change allows only an innovative business to survive on the market. In turn, innovative regions reach a higher level of sodo-economic development.

Competition is present on various categories of market, starting with local mini-markets, through regional ones within a country and those at a continental scale (European, North American, Asian), up to the world markets.

The pharmaceutical industry is one where the level of innovativeness is high, hence the factors indispensable for its growth - and thus its higher competitiveness - are research and development (R&D) activity, implementation of its results, and constant analysis of the needs and expectations of customers. The pharmaceutical industry depends on new products more than any other high-tech industry because new drugs are almost always more profitable than old ones, and the profit margin of new products can be very high (even up to 50% of a drug's price).

For the above reasons, innovativeness is also a characteristic feature of GlaxoSmithKline Pharmaceuticals S.A. The analysis of its innovative and R&D activity presented below is based on Cylwik (2002) and materials supplied by the company's various departments.

The corporation's Poznań R&D branch belongs to the worldwide network of its research units, which includes atotal of 16 centres located in the USA (4), Japan (2), and Europe (lO). The administrative centre directing GSK's R&D activity is headquartered in Greenford, UK. The R&D unit in Poznań employs 64 persons and its structure comprises a Research Department and a Product Development Department.

The equipment of the Poznań R&D unit presents the highest world level and meets even the most stringent standards (lab equipment is comparable to that in GSK's British centres) . This allows the unit to join international research projects conducted by the corporation. It also makes possible the export of Poznań-devised products to the European Union markets.

GSK's strategy leaves the local R&D activity considerable independence and possibilities of further development. The corporate strategy foresees two R&D areas. The first, centrally co-ordinated, whose European activity is based in the UK (in Ware and Harlow - Centres of Excellence for Drug Discovery, CEDDs), focuses on conducting research and developing innovative drugs (which does not preclude commissioning some parts of the projects to locallaboratories, like the one in Poznań). The other area of activity includes local R&D units, which concentrate on developing generic prescription drugs and OTC (non-prescription) ones designed to meet the needs, demand potential and characteristics of local markets.

The definition of the portfolio of products manufactured in the Poznań plant was one of the most crudal points of the privatisation agreement. On the one hand, the strategic investor undertook to maintain and continue the development of a large part of the Polfa portfolio of generic and OTC drugs. On the other, he contracted to transfer the production of new, innovative drugs to Poznań. AlI these obligations were fulfilled on time, except the production of Serevent, which was delayed two years (this resulted from a holdup in the research on the stability of the drug conducted in the UK).

It should be emphasised that after the privatisation of the Polfa plant its old range of products was expanded, even though the manufacture of some licensed preparations had to be given up. As a result, 500/0 of the portfolio of products of the Poznań plant are one s that have gone into production over the last four years, and more than 25% are innovative drugs.

The fields of activity of the R&D department in Poznań can be characterised as follows: - research on and development of new OTC drugs and new forms of such drugs; - research on and development of new generic prescription drugs and new forms of such drugs; and - participation in international research projects co-ordinated by the GSK head office concerning in-

novative medicines. The first two fields are a continuation of the old Polfa product development lines. The products are

intended for the domestic market and those ofCentral and Eastern Europe. Between 1998 and 2003, a total of 109 new products went into production in the Poznań plant, of which 52 were generic prescription drugs and OTC drugs designed by the Poznań R&D department (Table 17), while 57 we re transfers from GSK (Table 18).

Table 17. New generic and OTC drugs that went into production in the Poznań plant, designed by the Poznań R&D department in the years 1998-2003

Item: 1998 1999 2000 2001 2002 2003 Totał

Dry forms 2 2 6 5 4 3 22 Creams, ointments, gełs, suppositories l l l 4 3 O 10 Capsułes O 2 3 4 O O 9 Aerosołs l l 2 l O O 5 Pills 3 O l l l O 6 Totał 7 6 13 15 8 3 52

Source: GSK Pharmaceuticałs S.A.

Table 18. Corporation transfers and own designs that went into production in the GSK Poznań plant in the years 1998-2003

Item: 1998 1999 2000 2001 2002 2003 Totał

Dry forms 8 7 9 5 13 8 50 of which transferred from GSK 6 5 3 O 9 5 28

Creams, ointments, gełs, suppositories 5 2 l 12 4 l 25 of which transferred from GSK 4 l O 8 l l 15

Aerosołs l 6 3 4 4 l 19 of which transferred from GSK O 5 l 3 4 l 14

Pills 3 2 4 5 l O 15 of which transferred from GSK O O O O O O O

Totał 17 17 17 26 22 10 109 of which transferred from GSK 10 11 4 11 14 7 57

Source: GSK Pharmaceuticałs S.A.

The third field of activity of the Poznań R&D unit includes its participation in the research on new pills for malaria (a GSK-Ied project co-financed by the World Health Organisation and the British government).

At the close of our research period, there were five (mosdy OTC) preparations in the Poznań R&D department going through the experimental stage which were planned to be released on the market in 2005. The targeted annual production value of those drugs was estimated at 65 million zlotys, and the number of their packets, at 12 million.

The oudays for R&D of GlaxoSmithKline Pharmaceuticals S.A. in Poznań amounted to some 18 million zlotys in 2003.

The notion of innovation inherendy implies change, novelty, reform, or an idea perceived as new (Pomykało 1995). An innovation can be a fact, a process or a phenomenon of a technological, organi-

sational, sodalor psychological nature. That is why, to improve their competitiveness and productivi ty, enterprises introduce several modern organisational and manufacturing solutions. AIso GSK is engaged in such innovative activities as: (1) the setting up of the Operational Excellence Development Team, a group of full-time in-house

consultants responsible for the introduction of innovations designed to improve the effidency of business processes in the Poznań plant;

(2) training employees to be able and eager to come out with and implement innovations; (3) involving all employees in developing and introdudng innovations through: - Lean Sigma projects - introdudng changes in accordance with Lean Manufacturing4 and Six SigmaS

methodologies, and - the Ideas and Improvements Programme addressed to operational staff for innovations and im

provements made at individual work stations; and (4) sharing new solutions with the network of GSK plants and implementing innovations from this

network. GSK in Poland has also such targets as:

- the introduction of the Good Manufacturing Practice (GMP) and Quality Management System (QMS); and

- adjusting the registration of drugs produced and prepared for production in the Poznań plant to EU standards.

The GMP and QMS quality systems The Poznań factory is one of the most advanced plants in Poland meeting the standards of a quality

system based on GMP prindples - Good Manufacturing Practice ofPharmaceutical Products. In 1995 a new building which houses a GMP-based Qu ali t y Control Laboratory was constructed. The GMP standard was first granted to the surgical threads and aerosols departments. From 1998, other departments were given their own GMP standards accompanied by measures improving the quality of management and corporate order (cf. Table 19). By early 2002, all production areas had got appropriate GMP certificates. AlI certified departments undergo regular inspections in this respect.

Table 19. GMP certificates obtained by GlaxoSmithKline Pharmaceuticals S.A.

1996 Aerosols Department, certificate issued by Polish Health Ministry (HM)

1997 Dry Forms Department, certificate issued by Polish HM

1998 Ointments and Suppositories Department, certificate issued by Polish HM

2001 Gelatinous Capsules Department, certificate issued by Polish HM

2001 Ointments and Suppositories Department, Dry Forms Department, Aerosols Department, certificate issued by H ungarian NIP

Source: GSK Pharmaceuticals S.A.

After the merger of Glaxo Wellcome and SmithKline Beecham, a new Qu ali t y Management System (QMS) was devised. It is being introduced in all the GSK factories in the world, including the one in Poznań. Its implementation has enabled the plant to meet EU regulations even before Poland's accession to the Union.

4 Lean Manufacturing "is aimed at the elimination of was te in every area of production including customer relations, product design, supplier networks and factory management" (The MIT Production System Design Laboratory (PSD), http://lean2.mit.edu).

5 Six Sigma - a programme for the improvement of management designed to eliminate defects in any process -from manufacturing to transactional and from product to service (www.advancedmanufacturing.com).

Registration of drugs produced and prepared for production For quite a long time now the process of registration of pharmaceuticals has been governed not

only by the Polish law, but also by the stipulations of the Treaty of Accession and acquis communautaire, which came into force in Poland on 1 May 2004. The adjustment of the documentation to the new standards is a laborious and lasting proces s because it embraces several stages: an updating of chemical, pharmaceutical, biological, pre-dinical and dinical documents, together with the obligatory pre-dinical and dinical triaIs.

Work on completing the registration documents of the local Poznań preparations in accordance with the EU standards began in GSK as early as 1999. Soon after an electronic document filing system was launched, called the Marketed Product Maintenance Library, or Maintenance Library (ML) for short. It is used to create and keep registration documents and dossiers. It facilitates the work of people dealing with the submission of registration dossiers through the automation of this process. Besides, it supplies a lot of information necessary for an efficient creation and management of the registration documents.

The ML was designed and developed by Glaxo Wellcome Research & Development (R&D) and the World-Wide Regulatory Affairs and Compliance in London on the basis of years of experience in the field of drug registration. The system was implemented successfully at Glaxo Wellcome R&D in London in 1998, and in Poznań in 2000, which is an instance of a transfer ofknowledge to Wielkopolska. As in other systems of electronic document management in the GSK Group, the ML turns on the CORE SYSTEM based on a DB Orade database and the EDMS system of electronic document management by the firm Documentum. Work in the ML system consists in the use of templates which force those creating registration documentation to apply the same standard for all the papers. The adjustment of the documentation to EU standards under the ML system has been prepared in great detail: it embraces all the various fields of GSK activity, from dinical triaIs and toxicological tests to production-related validation studies and literature.

The development of the European Union's pharmaceuticallegislation involves a constant raising of requirements, also concerning the registration procedure. In 2003 registration documentation of new preparations had to switch into a completely new format called the Common Technical Document (CTD). Since April 2004, it has been the format adopted for the registration of new drugs developed locally by the R&D department in Poznań. The CTD-format documentation for preparations on the market facilitates their registration in other EU countries.

A dinical trial is a methodical testing of medical products on people conducted to check their effects and any possible side-effects they might have. Clinical triaIs are generally carried out in four phases:

Phase I - a preliminary assessment of the safety, pharmacokinetics and pharmacodynamics of a new drug in healthy volunteers, usually young men.

Phase II - controlled dinical studies conducted to evaluate the short-term effectiveness and safety of the drug. This phase involves patients with the disease or condition under study.

Phase III - expanded triaIs on a larger group of patients to determine the benefit-risk relationship of the drug in short- and long-term use and its total and relative therapeutic value.

Phase IV - studies taking place after the final form of the drug has been licensed and marketed. Clinical triaIs must have suitable documentation (a protocol, observation cards, daily records,

etc.). Before the research begins, it is necessary to define precisely the scope of responsibility of its author and the financing side (here GSK) as well as the research unit (a hospital, dinic, health centre, outpatient facility) and all persons involved in the tria!' Each dinical research conducted for GSK co nforms to the Good Clinical Practice guidelines set up by the International Conference on Harmonisation (ICH-GCP)6 and internal GSK rules (Standard Operating Procedures).

Organising and conducting dinical triais for GSK in Poland in all their phases is the task of the company's Medical Department. They are carried out in selected units: dinics, hospital wards, health centres, outpatient facilities, and surgeries. The unit s are chosen in accordance with the ICH-GCP requirements and internal GSK regulations. In Wielkopolska, GSK collaborates with six medical centres (cf. chapter 4.4). Its dinical triais here can be divided into two basic groups: - international research conducted under GSK Group projects and financed by the global corpora

tion,and - domestic research conducted by the GSK Medical Department to meet local needs.

International research conducted under GSK Group projects Over the years 1997-2003 there was a marked upward tendency in the number of international

dinical triais: in 1997, the medical departments of Glaxo Wellcome and SmithKline Beecham conducted atotal of 15 triais as against 38, or 2.5 times as many, carried out by GlaxoSmithKline in 2003 (Table 20). In 2001 their number dropped by 5 from the previous year (to 24), but this was a result of the merger of the two firms and rationalisation of the research projects. In 2002, however, the research picked up again and 2003 sawa record number of projects. The triais carried out by the GSK Medical Department in Poland involve phases II and III; it should be emphasised at this point that participation in phase II is regarded as highly advanced and requires the satisfaction of special criteria.

The international dinical research conducted in Poland has been done in a variety of medical fields. At SmithKline Beecham antibiotic treatment predominated, while at Glaxo Wellcome it was mainly virology, antibiotic treatment, neurology and psychiatry, and pulmonology. These are not fixed domains, however, and the GSKMedical Department in Poznań gets projects from other fields as well. In 2003, as in 2002, the largest proportion of projects (over 200/0) were in the field of pulmonology. The Medical Department keeps conducting many triais of virological drugs (the second largest field), but their proportion dropped to less than 200/0 (as against over 300/0 in 2000 and 2001). Not a single project was carried out in antibiotic treatment, which was the principal field in the late 1990s (30-40%) and started to lose significance in 200 l. Instead, there was an increase in proj ects in gastrology and oncology, and a new field appeared: vaccinology. The number of dinical triais kept growing with that ofprojects conducted, as a result ofwhich the mean number ofresearch units engaged in a project in the given year ranged between 4 and 5. It was only in the first post-merger year (2001) that the research was more concentrated (3 units per project). Greater engagement of GSK Pharmaceuticals in international research over the years 2002-2003 saw an increase in the number of units more than proportionately to the number of projects in the given year. In 2003 it was arecord 177 units, five per project on average. Differences in the concentration of the projects were small, it was dose to the average in most fields. The two exceptions were vaccinological research scattered over an average of seven units and a cardiological project conducted by a single unit.

From year to year (except 2001) there was also an increase in the number of patients involved in GSK's dinical triais. There were 2,342 people embraced by the 2003 international research, four times as many as in 1997. The figure grew faster than that ofprojects: the mean 2003 number ofparticipants rose from that of the two previous years (to 62). The mean number of patients per project depends on several factors (the phase of the trial, its field, etc.).

In 2003 the greatest increase in patients tested was in vaccinology research. In this field the number of persons per project was the highest (198), which is connected with the prophylactic natur e of this type of drugs (vaccines), i.e. addressed to healthy people. The people/project ratio was the smallest in neurology and psychiatry (17), and urology (19).

6 Good Clinical Practice (ICH-GCP) is an international medical, ethical and scientific quality standard for designing, conducting, recording, and reporting trials that involve the participation of human subjects. It defines and divides responsibility and obligations in a clinical trial among the researcher (physician/medical centre) , author and sponsor, ethical committee, and authorities (institutions) involved. Special requirements are imposed upon Independent Ethical Committees, which approve the protocol and possible changes in it as well as patients' informed consent documents, pass opinions on the qualifications of the researcher, and assess risk during the trial.

Table 20. Number of international clinical research projects with GSK as a participant in various fields

1997 1998 1999 2000 2001 2002 2003

GlaxoWellcome Polska

Antibiotic treatment 4 5 2 O 2 2 O

Gastrology and metabolic diseases O 1 O O 1 3 5

Intensive care O 1 O O O O O

Cardiology O O 1 1 2 2 1

N eurology and psychiatry 2 3 3 5 3 2 3

Oncology 1 1 1 O 2 2 5

Pulmonology 2 2 3 3 5 9 8

Urology O 1 1 1 1 2 3

Virology 4 4 5 9 8 7 7

Vaccinology O O O O O 6 6

Razem 13 18 16 19 24 35 38

SmithKline Beecham

Antibiotic treatment O 3 9 8

Metabolic diseases O O O 1

Cardiology O O 1 1

Oncology 2 2 2 O

TotaI 2 5 12 10

GSK totaI

(GlaxoWellcome+ SmithKline Beecham) 15 23 28 29 24 35 38

Note: The number ofprojects for the given year covers both new ones and those continued from the previous tears

Source: GSK Medical Department

2002 was a record year in terms of financial out1ays for the research units carrying out GSK international clinical triaIs in Poland (Table 21). They exceeded El million (6.3 million zlotys). This is almost seven times as much as in 1997 (the 1997 data do not include SmithKline Beecham's out1ays for two projects). The 2003 figure was a bit lower - EO.9 million (or 5.8 million zlotys). Over the entire period from 1997 to 2003, the units received more than E3.8 million (or 23.4 million zlotys, without SmithKline Beecham's out1ays up to 2000). At constant prices (i.e. after accommodating inflation), the 2003 out1ays for clinical research were almost five times as great as in 1997. Mean out1ays per research unit gr ew dynamically from E3,200 in 1997 to E6,900 in 2002 (or from 17,000 to 42,000 zlotys). In 2003 the distribution of the research among a greater number of units and a slight drop in outlays caused the figure to be somewhat lower than in the two previous years (E5,200, or 33,000 zlotys). The annual cost of a clinical trial in Poland changed from year to year. The cheapest were those implemented by Glaxo Wellcome in 1997 (E12,000 or 64,000 zlotys per year per project) and the most expensive in 1999 (E34,000 or 219,000 zlotys, more than a triple ofthe 1997 figure). The mean cost ofa GSK project in 2002 and 2003 was slight1y lower than this record, at E29,000 and E24,000, respectively. It should be kept in mind, however, that the total cost of a single project conducted over several years can be much higher and that the given yearly figure depends on the phase of the triaIs. In 2003 the most expensive studies were cardiological (E59,000 on average) and the cheapest, urological (E9,000). In pulmonology, where the largest number ofprojects we re under research, the mean cost was higher than the average (E36,000).

Table 21. Investment outlays for R&D centres in Poland engaged in GSK international clinical re-search projects in various fields

1997 1998 1999 2000 2001 2002 2003 Item

Glaxo Wellcome GSK

Antibiotic treatment 62,324 17,799 28,188 68,963 75,320

Gastrology and metabolic 9,600 1,866 23,156 127,057 diseases

In tensive care 38,969

Cardiology 7,335 48,366 12,993 59,364

Neurology and psychiatry 12,000 3,325 122,469 107,072 18,123 40,103 35,854

Oncology 2,700 91,000 67,800 13,259 238,327 101,493

Pulmonology 19,700 30,308 44,078 57,476 113,005 235,979 285,280

Urology 18,276 89,441 39,287 31,876 19,516 27,270

Virology 58,200 81,172 185,829 151,506 187,663 203,209 121,783

Vaccinology 184,921 156,709

Total (GBP) 154,924 290,449 545,140 403,707 447,748 1,020,531 914,810

- per research project 11,917 16,136 34,071 21,248 18,656 29,158 24,074

- per centre 2,671 3,090 4,008 3,421 6,396 6,895 5,168

Total (thous. new Polish 832 1,681 3,497 2,655 2,680 6,254 5,815

zlotys)**

- per research project 64 93 219 140 112 179 153

- per centre 14 18 26 22 38 42 33

Note: * in the years 1997-2000, only outlays of Glaxo Wellcome; ** at a mean annual exchange rate Source: GSK Medical Department

Local research conducted by the GSK Medical Department The other group of studies embraces national (local) clinical triais carried out by the Medical De-

partment from an idea to the publication of the results (Table 22). The ideas generated in Poland are very often a response to local medical problems, especially novel applications of an old substance.

Table 22. Local clinical research projects carried out by GSKPoland in individual therapeutic groups

Item 1997 1998 1999 2000 2001 2002 2003

Antibiotic treatment l l

Cardiology l l l

Neurology and psychiatry l l 2 2 2

Pulmonology 2 5 11 3

Dermatology l 3 2

Virology l 2 3 2 l

Vaccinology 4

Total l 3 10 12 17 9 l

Source: GSK Medical Department

At first there was a steady increase in the number oflocal projects implemented, from one in 1997 to 17 in 2001. In 2002, as the number of international triaIs climbed, that of local projects halved, with the greatest drop in pulmonology, but a new field was introduced - vaccinology. In 2003, only one project was under research, in virology, with a record number of international projects. In the clinical triaIs carried out on the initiative of GSK Poland there were more research centres involved than in the international projects, both in the particular years (with a record figure of 148 in 2000) and per project (with a record 20 units in 1997 and a mean for 1997-2003 of 10 units). This shows that the local research was less concentrated. The years 2001-2003 sawa greater decline in the number of units involved than in the number of projects. As a result, the concentration of the research grew (with 4 units per project in 2003), which made the mean for local studies approach the mean for international research (almost 5 in 2003).

There were more patients on average taking part in the local triaIs than in international ones, except in 2003. The mean grew from year to year to reach nearly 300 per project in 2002. The number of patients soared from 120 in 1997 to 2,638 in 2002. The reduction ofthe local projects to a single one in 2003 also brought about a drop in the number of people involved to an average of 45.

Benefits from the clinical research conducted by GSK in Poland There are a number ofbenefits to be derived from clinical research, both by those involved in it and

by the wider medical circles: (a) Clinical triaIs are an additional source of in com e for the research units (apart from the public

means they get) that can be spent on public health care and their statutory activity. (b) For many units, this is one of the few opportunities for conducting scientific research. This is es

pecially important in view of the growing number and advancement of the international research conducted.

(c) The requirements imposed by GSK as to the quality ofresearch (ICH-GCP and the company's internal standards) force the medical units to raise their standards ofwork too. Standard raising embraces not only the skilIs of personnel or the quality of equipment and more efficient organisation of the research work, but also the remaining aspects of the unit's activity.

(d) Medical staff gain access to modern technologies and the latest tendencies in medical treatment. (e) Having built a base for a clinical trial, the units can offer their services to other pharmaceutical

firms (not only GSK), and they do take this opportunity. (t) Patients participating in phases II and III of a trial have an opportunity to try out state-of-the-art

drugs. (g) The results of GSK triaIs are published in specialist medical press, thus contributing to the dis

semination ofknowledge about the use of modern medicines. They also enhance the image of the region or country where they are conducted: theyare evidence that it can me et the challenge of modern research.

GSK Pharmaceuticals in Poznań is an innovation-oriented enterprise: it conducts a wide range of R&D (or buys new products or technologies), earmarks substantial sums for this activity, systematically adopts new scientific and technological solutions, has a high proportion of novelties (products and technologies) in its total manufacturing and service output, and regularly introduces innovations into the market. In terms of organisational, technological and product innovativeness, the firm is a leader not only in Wielkopolska, but in the whole of Poland and East-Central Europe.

The modern equipment of the R&D department, large outlays for this activity, and a flexible corporat e R&D strategy enhance the innovativeness of the Poznań plant. The innovativeness manifests itself primarily in a research activity oriented towards developing new drugs, in implementing advanced quality systems, a permanent raising of the staff's innovative awareness, and a high organisational culture.

Internal co-operation (within the corporation) leads to the diffusion of innovations, i.e. popularisation of new solutions in successive production cycles, and allows an internal transfer ofknowledge embracing the flow of documentation and know-how indispensable for implementing the given innovation. This process reinforces the position of GSK Pharmaceuticals in the corporation, boosts it output and sales, and as a result ensures a higher income.

From the perspective of the regional economy, it is highly important that GSK carries out its research in collaboration with regional medical centres. This activity provides medical circles with an additional income, besides improving the quality of their research, their knowledge and skills. Another benefit is access to advanced technologies and development trends for medical personnel.

In turn, GSK's collaboration with external R&D and scientific institutions is limited. This is due, on the one hand, to the firm's having its own well-equipped and organised R&D department and its deep involvement in the corporation's inside R&D processes, and on the other, to the regional higher-education R&D sector being insufficiently prepared for such collaboration, with its often obsolete equipment and financial problems.

An initiative (based on EU Structural Funds) that could establish much closer links between GSK and higher schools in Wielkopolska would be a joint preparation of their educational offer as well as the organisation of student and doctoral practices and practical placements for graduates.

The last decade ofthe 20th century in Poland saw several changes in the country's social and economie spheres, such as a socio-politieal and economie transformation that required the establishment of new institutional systems, the privatisation ofbig state-run enterprises, explosive growth in the number of small and medium-sized private businesses, and the appearance ofhuge international corporations with their characteristie forms of management. These factors have stimulated interest in the institutional aspect of economy, including urban economies. There have appeared new tendencies in urban management, including the setting up of new institutions. The convietion underlying this development is that the city is no longer a provider of urban serviees, but a creator of strategie opportunities for social and economie interest groups. On this ground, attempts have been made to reinforce the influence of municipal authorities on the city as a system, Le. as a pattern of interactions. In this respect, however, eon troI of the urban serviee sector is not enough; a search is conducted for ways of infl uencing the sectors of enterprises and households. Efforts are also made to attract domestie and foreign investors in order to improve the economie structure of the city (R. Domański 1998).

At the local scal e, the principal object whose socio-economie development is steered is a city or a commune. However, the functions they perform do not cover the whole of economie life, and the gaps are filled by institutions forming the so-called business environment. There are all kinds of interactions holding between the local authorities and business environment institutions on the one hand, and economie units on the other. The nature of those relations affects the performance of both sides (Le. institutional and economie) and offers the possibility of achieving synergistie effects. That is why it is crucial first to identify and then to controI them.

Hence the next research target of the present project was to define the place and role of GlaxoSmithKline in the local and regional networks of institutionallinks. Since the relations between GSK and business-environment institutions are not intense, the main object of study was the operation of the institutions responsible for the development of the city and the region, Le. the authorities of Poznań and Wielkopolska.

This chapter presents the chief principles of operation of enterprises in the city and region, with partieular attention paid to foreign investors, followed by an analysis of activities of the local and regional development institutions concerning the foreign investors. This part of the book does not involve GSK directly, but can supply a valuable information material facilitating future contacts of GSK management with the local authorities and indieating areas of potential collaboration. This is the background on whieh the role of GSK in the institutional system of the city and region is presented in the closing part of the chapter.

It is estimated that by the end of the 1990s the total capital invested in Wielkopolska amounted to $3 billion (Województwo wielkopolskie ... 2000, p. 12), ofwhieh the Poznań metropolitan area accounted for 95% of foreign investment. That is why the spatial range of the analysis is largely confined to the city. Worth noting at this point might be the fact that the role of Poznań is not limited to that of the central city, but affects the entire metropolitan area. Even today one can observe the deconcentration of many functions ofPoznań (including manufacturing), and this process is likely to grow in intensity. Hence, when talking of Poznań, one should think in the broader functional terms of the larger area.

The sources of data for the analysis conducted can be divided into two groups: primary and secondary. The former are largely interviews with representatives of the local and regional institutions making up the economie environment. The interviews were conducted between May and July 2004 by Lucyna Wojtasiewiez, Tadeusz Stryjakiewiez, Krzysztof Stachowiak, and Jacek Wajda. Atotal of 12 persons were interviewed, mostly representing the local (City Hall) and the regional government

(Marshal's Office), and business-environment institutions (e.g. the Wielkopolska Chamber ofIndustry and Trade, and the Poznań Scientific-Technological Park). They were intended to supply information about the city's policy towards investors and the results of its implementation, and to elicit assessments of the performance of foreign investors (and GSK in particular) in Poznań and the region. A separate interview was conducted with the director of the Poznań GSK plant concerning its co-operation with the regional and local authorities and business-environment institutions.

The secondary sources include materials and studies prepared by the Poznań City Hall, the Marshal's Office, and Poznań communes' offices, as well as materials of other institutions (e.g. the Foreign Investors' Chamber ofIndustry and Trade, the Wielkopolska Chamber ofIndustry and Trade, and the Polish Information and Foreign Investment Agency).

The framework within which economic entities can act is set up by legal rules and the policy of regional and local authorities. For foreign investors operating in Wielkopolska at the regional and local levels, the most important are the strategy of development of the voivodeship, the programme for the strategic development ofthe city ofPoznań, and strategie s of development ofthe region' s communes; and besides, multi-year investment programmes and spatial development plans.

The strategy of development of Wielkopolska voivodeship has no direct proposaIs for foreign investors. The document suggests that more attention should be paid to innovative industries, generally thought to be carriers of progress, like electronics, telecommunications, the pharmaceutical industry based on biotechnology, and the high-tech chemical industry. A condition of their development is close co-operation with the R&D sector. Foreign capital is perceived as a challenge to less competitive enterprises and regions. The strategy foresees the use of local resources to create a general framework for the operation of global firms (both Polish and foreign). The framework should include business-environment institutions, partners, and subcontractors of the big firms.

!, In 1994 a Programme for the Strategie Development of the City of Poznań was adopted. It is the basic do cI ument defining the mission and targets of the city's development. The mission characterising the l strategy in a synthetic way assumes a balanced development of Poznań through efficient use of local l resources, stimulating entrepreneurship, and enhancing the city' s attractiveness. The main goal of ! the strategy is improving the quality of life in the city, as a result of which Poznań is intended to be-

'

l com e ta friendly city of opportunities'. Five targets have been established in the strategy on which efforts should concentrate: l. improving the state of the natural environment, the residents' living conditions, and public safety; 2. improving the performance of the city, its modernisation and growth; 3. creating a balanced, modern economy in a city open to investors, economic partners, and tourists; 4. stimulating the growth ofPoznań as a city of international importance by integrating its scientific,

economic and cul tural potential; and 5. reinforcing the position of Poznań as a centre of supra-regional ranko

Thus defined, those targets are supposed to ensure the city balanced development, with the balance being ecological, social, economic, and cultural.

The strategy set up a general framework for developmental efforts that had to be made more concrete to be realised. A year after the adoption of the strategy, a second stage started: its implementation. Four basic action teams were proposed that focused on: (1) the environment for the population, (2) the environment for the economy, (3) creating the city's image for the outside, and (4) action in the city's key places.

In turn, measures planned to create a suitable environment for the economy went in five directions: - research and information: encouraging studies of quantitative and qualitative aspects of the city's

economic growth and development of economic information; - development of co-operation with independent local economic authorities;

- economie serviees; - new technologies and the commercialisation of technology and science: devising a local technolog-

ieal poliey and business investment (in the Poznań International Fair, the A2 motorway, air connections, and telecommunieations); and

- development of entrepreneurship: setting up business-supporting programmes and institutions. Of no small importance for creating an investment-friendly climate in the city is its image pre

sented outside. That is why several measures have been planned to promote the city, establish and maintain international contacts, and guarantee a proper serviee of visitors, both tourists and investors.

To accommodate constant changes occurring in the nearer and farther surroundings as well as quantitative and qualitative changes within the city itself, efforts have been made to revise the Poznań strategy (Weryfikacja przedsięwzięć ... 2002). As a result of a wide-ranging debate embracing scholars, experts, and citizens, the basie factors affecting the future of the city have been updated. The mission and goals of its development strategy are a basis for all kinds of measures taken as part of the city's strategie management system. They provide reference for several detailed strategies, polieies and programmes of development of the partieular sectors of its life. That is why in 2004 work started on the Plan of Development of the City of Poznań for the Years 2005-2010. It was assumed to be a document midway between a development strategy, aplanning document of a general nature and long temporaI horizon, and a yearly plan of activities to be undertaken within a task-oriented budget. What was crucial in devising it was maintaining coherence with the document fundamental for strategie management, viz. the Programme for the Strategie Development ofthe City ofPoznań adopted in 1994 and updated at the start of the 21 st century.

To ensure an efficient implementation of the strategy, several tools are necessary to translate general strategie goals into concrete projects and tasks. Poznań has a Multi-year Financial Plan (MFP), a Multi-year Investment Programme (MIP) , yearly plans of undertakings, and a task-oriented budget. These tools are indispensable for the implementation of the strategy. Of key importance is especially long-term investment planning. The MIP adopted in 1999 defines the investment policy of the city authorities. It is an auxiliary document in negotiations for financial investment means from outside sources. The MIP is a useful instrument of communieation between the city authorities and society, both the economie circles (since it speaks of planned investments financed or co-financed by the city over several years, whieh can have a significant effect on the condition of firms) , and the local community interested in the quality of serviees provided by the city. The MIP is a rolling programme augmented annually by the ta sks scheduled for the successive calendar year and updated in substantive and financial terms.

Significant for the location of investment are formaI regulations. Until 2004, the most important document regulating the city' s spatial poliey was the Local General Plan of Spatial Development of the City of Poznań adopted in 1994. The situation changed when the Spatial Planning and Development Act of 27 March 2003 came into force, because it made invalid all plans adopted before 1995. This brought about administrative and legal confusion, potentially detrimental to investment location. True enough, 18local spatial development plans were passed between 1998 and 2002, but they only cover about 50/0 of the city area (as of the end of 2003).

Investment promotion The basie role in the city' s economie promotion is played by the Investment Promotion Bureau

(formerly the City Promotion Bureau) . It eon duet s multi-directional activity to attract domestie and foreign investors and to create favourable conditions for entrepreneurship. One of its major tasks is advertising the city's investment offers. Potential investors are informed about the location procedure, technieal conditions of investment implementation, and the legal acts in force. In some cases the Bureau employees 'guide' the affairs of an investor through the successive stages of the administrative procedure.

There is much interest on the part of firms in locating investment in Poznań. Each year an average of 250 meetings with developers and investors are held.

City representatives also help to promote Poznań and investment opportunities it offers by attending international and domestie investment fairs, e.g. the International Real-Estate Fair MIPM in Cannes, the Construction Fair BATlMAT in Paris, the International Real-Estate Fair "Barcelona Meeting Point", and the Investment Fair of Polish Cities INVESTCITY in Poznań.

In contact with investors, specialised publications come in useful. Each year the Investment Promotion Bureau publishes a guide for investors, Location oflnvestment in Poznań. The first issue appeared in 1993. It is published in paper form in Polish, English and German, and since 2003 also as a CD-ROM. The guide presents in a detailed, step-by-step form the stages of the investment process and how to arrange formaI procedures required at each step.

Investment and economic information The Investment Promotion Bureau also plays a big role in economie information. As has been men

tioned, it prepares several kinds of material supplying exhaustive information about the city and its investment offer, and the investment process itself. Some materials are prepared by outside firms and institutions. Thus, the Statistieal Office publishes a brochure Poznań: the Figures whieh appears yearly, while consulting institutions like PrieewaterhouseCoopers or Knight Frank prepare pamphlets on, e.g. real estate. J The information about the city and its investment offer is included in the Multimedia City Guide (MIM) and local teletexts. The MIM is one of the riehest sources of information about Poznań and one of the biggest local-government servers in Poland. It offers information from all the fields of economie, social and culturallife of the city as well as about current events. The serviee also includes a catalogue of investment offers in Poznań. In 2002, the mean number of visits to the site and MIM databases was about 25,000 daily.

The city authorities support units providing information serviees and often participate in the establishment of new ones using state-of-the-art communieation tools. Among such units are the City Centre for Economie Information, Economie Information Centre ofthe Wielkopolska Chamber oflndustry and Trade, Centre for the Electronie Support ofTrade, Centre for Economie Education and Information of the "Sami Sobie" Private Property Foundation, and Economie Information Point (Poznań. Wiedza ... 2003, pp. 19-21).

Worth noting amon g those units is the Centre for the Electronie Support ofTrade, or Trade Point Poznań. It has been established as a joint venture of R&D institutes, city authorities, local and voivodeship government administration, independent local economie authorities, financial institutions, and private businesses. The mission of the information service ofTrade Point Poznań, which is part of the Global Trade Point Network (GTPN) developed under a United Nations programme, is electronie support of domestic and foreign trade. Trade Point Poznań provides information about market and economie offers and performs the function of an economie serviee centre whose partners execute domestie and foreign transactions while supplying the information and serviees necessary to complete them. A Trade Point customer can probe a market for his products and execute a transaction at one place, in a shorter time, and at a lower cost than when he folIowed the traditional method.

The GTPN network has been set up according to the latest technology available in network and multimedia communieations. A characteristie feature of this solution is websites. With the help of the Trade Point Network links, all countries and firms connected to it can exchange electronie offers using an Electronie Trading Opportunity platform, and other kinds of data, e.g. legal, bank and market regulations. The GTPN network substantially reduces the cost of collecting, formatting, transmitting and processing such data. The Trade Point plays an important role in helping smalI firms to make transactions in the region and also in allowing them to expand their business at an international scale.

A typieallocal-government information institution is the Economie Information Point which operates as part of the Economie Activity Department of the Poznań City Hall; it serves economie entities waiting for their registration certificates. It provides updated information about legal acts controlling

economic activity and a body of knowledge about issues connected with the activity pursued that are the responsibility of the individual City Hall departments, organisational units of the city, and the remaining public administration units. It also supplies complete information about the service and support ofbusiness and the labour market in Poznań, the services and forms ofhelp provided by those institutions, available sources of financing economic activity, and government and EU assistance programmes.

Service of the investor During the implementation of an investment, the Investment Promotion Bureau takes care of the

investor by advising and helping him to go through the investment proces s without any problems. Opening the investment concludes the service of the investor involving the arrangement of formaI matters. Since then post-investment, or after-care, service begins. It is intended to ensure the investor a suitable level of satisfaction and prevent him from planning any change in location and escape from the city; and on the other hand, to draw the satisfied investor into the everyday life of the city. A satisfied investor is predisposed to perform much work for the city that is not directly connected with his investment, or to sponsor various local events. In practice, contacts with investors are limited to arranging current organisational matters or possibly courtesy meetings (on such occasions as, e.g. holidays or ceremonies). Still, local government should be prepared for such a challenge. In Poznań, this happened only in 2004 when the first issue of an information bulletin, You Are in Poznań, came out. It was distributed among foreigners living in Poznań on the day of the city's patron saints, Peter and Paul (29 June). The publication (in English) offers information about where to look for help, how to arrange matters in an office, and how, where and when to spend leisure time in Poznań. The bulletin is sent every two we eks to recipients who have agreed to get it. The first issue was distributed among more than 50 foreigners, including persons employed in Poznań-based firms and those listed by consulates in the city. The bulletin is also available in an electronic form (at www.YouAreln.poznan.pl) . Poznań is the permanent domicile of nearly 600 foreigners and a temporary one of about 4,500. Each of them can visit the website and apply for a regular delivery.

As has been mentioned, the institution serving investors during (but also before and after) the implementation of an investment is the Investment Promotion Bureau. Those seeking contact with it are usually major investors; small-scale ones generally restrict themselves to arranging matters in the Economic Activity Department and the Architecture and City-Planning Department. SmalI investors usually find the required premises on their own, making use of contacts with the local businesses. Big investors, in turn, enter the city market as 'newcomers', and are of special interest to the city because of the substantial means involved and their great significance for, and impact on, the local economy. The Bureau guides an investor 'by the hand', advising him on what, where and how suitable arrangements have to be made. Depending on the investment, conditions of his operation in the city are negotiated. One can look at the proces s from two perspectives: of the city and the investor. The city has at its disposal certain sites that should be developed in a specified way in accordance with the adopted development priorities. On the other hand, the investor has his own preferences and demands concerning the location; the future location of the firm is established through negotiations of both parties. However, there may happen a situation when an investor cannot be fitted into the city' s development priorities in any way, or when the city cannot meet all his conditions. Then the city suggests an alternative solution by seeking a convenient location nearby (within the metropolitan area or in the region). This has been the case with MAN. MAN had very precise requirements that the city was unable to satisfy (lack of suita~le premises for such a big factory). To keep the firm in the region, the city contacted the authorities of suburban Tarnowo Podgórne, which not only had the right plot ofland at hand but also an already approved development plan. As a result, the whole procedure was speedy and MAN remained in the metropolitan area. City representatives emphasise the role of the city as the initiator of the entire process. Matsushita has been another case: the firm, having found no suitable conditions in Poznań, was 'directed' to Gniezno (since 1995 the factory that the company has built there has be en producing dry carbon-zinc batteries).

When there are no conditions for an investor in the city, other locations are offered him in agreement with the authorities of the territorial units involved. For in stance, the voivodeship's Marshal's Office, in collaboration with the appropriate poviat and communal organs, delineates areas of preferred investment within the impact zones of motorway junctions. An impact zones of a junction is estimated at 30-60 km, and this is the area where an investment should be located.

Thus, basically, the city's help consists mainly in information and assistance with the implementation of the investment process. The city does not use tax reliefs or any other similar measures. In fact, the only incentives are full and reliable information and professional service. The investor has complete knowledge ofthe location and future conditions of operation, which gives him confidence in his actions.

Support of investment There are many business institutions in the city operating with the support or participation of the

City Hall. They include: the MIKRO Fund, the Poznań Credit Guarantee Fund, the Poznań Centre for Entrepreneurship, and the Entrepreneurship and Employment Support Network (Poznań. Wiedza ... 2003, pp. 21-23).

The MIKRO Fund has been present on the Poznań market since 1996. It was set up by the Polish-American Enterprise Fund with the organisational and technical support of the city. Its aim is to grant loans to small businesses for the development of an economic activity. The Fund loans capital to those firms whose owners have an idea for a business and can convince the Fund that they are going to use the money in the right way. The borrowers are usually self-employed: they run small shops, points of sale, and manufacturing and service workshops.

The Poznań Credit Guarantee Fund was established in 2000 to facilitate access to capital for small and medium-sized businesses, and thus to help them develop. Its shareholders are the bank PKO BP and the city ofPoznań. It was the first bank-municipal institution in Poland to take on credit risk. Th~ Fund also organises educational and training courses, and performs services for PKO BP as well as the city and other local government units.

The Poznań Centre for Entrepreneurship was set up in 1993 on the strength of an agreement between the city of Poznań and the then Voivodeship Employment Agency. Its aim is to support the growth of small and medium-sized firms through providing free information, advisory and training services for people preparing to run or running their own businesses, and to be an open labour exchange.

The Entrepreneurship and Employment Support Network was launched in 2003 on the basis of a co-operation agreement signed by Poznań-based institutions supporting business people. The aim of co-operation within the network is to improve the accessibility, range and quality of services offered to entrepreneurs and employers in small and medium-sized enterprises, people planning to start their own business, and job-seekers, all so far dispersed. The institutions and organisations offering their services in the network include: the city of Poznań, the Adam Mickiewicz University Bureau for the Occupational Promotion of Students and Graduates, the Youth Vocational Guidance Centre, the Polish Chamber ofExporters, Importers and Co-operation, the PoviatJob Centre in Poznań, the Poznań Scientific-Technological Park of the AMU Foundation, the Wielkopolska Chamber of Industry and Trade, and the Voivodeship Job Centre.

Effects of the policy towards foreign investors The city pursues a general policy towards investors. Foreign investors are not privileged in it, al

though they are the ones whose contacts with the local authorities are more frequent (owing to the scale of investment on the one hand and unfamiliarity with the scene on the other). The effects of such a policy are hard to assess because there may be a host of factors affecting investment in the city, both external of a general economic nature and internal, following from its specificity. Still, the city's level of economic development and its attitude towards potential investors certainly figure significantly among them.

One of the measures of the effects of investment policy can be the city's place in all kinds of ranking lists. As early as 1992 Poznań was judged by the weekly "WirtschaftsWoche" to be one of the most

attractive cities for investors in Eastern Europe: the capital ofWielkopolska was fifth on its list of 150 East-Central European towns. In a ranking prepared by the Gdańsk Institute for Market Economics in 2001, Poznań was found by investors to be second only to Warsaw as the most attractive city in Poland (Swianiewicz, Dziemianowicz 2001).

Starting with 200 l, the Foundation for Local Democracy, acting under the aegis of the Speaker of the Sejm (Parliament), has been organising rankings assessing the quality of management in communes, including the level of investor service. The ranking was designed with a view to improving communal management. Its winner is granted the title of "A Professional Commune Friendly to Investors". In the years 2003 and 2004 Poznań was ranked first in the category of communes with more than 100,000 population. In 2001 the city was second to Gdynia.

At the start of2001, the independent ratings agency, Moody's Investor Service, granted Poznań the Baa1 grade. It means that the city's creditworthiness was judged to be high - it was the highest grade that a town in Poland could receive in accordance with the principles of the agency.

In 2003 Poznań took first place in the Grand Ranking ofTowns designed by the Centre for Regional Studies, in the category ofbig, poviat-ranking cities. The Grand Ranking Board assessed towns on the basis of four criteria: economic activity, citizen activity, infrastructure, and ability to attract residents. Poznań beat Wrocław and Cracow, which took second and third places, respectively.

A measurable effect of the policy towards foreign investors is the value of capital invested so far. Over the years 1990-2002, the total stock ofFDI in Poznań was $2.6 billi on (Table 23), or $4,500 in per capita terms, while Poznań's share of foreign investment in Poland amounted to 4.2%. At the Table 23. Foreign investment in Poznań in the end of 2002, the input of the biggest investors years 1990-2002 -(Le. one s that had invested more than $50 million) 9 exceeded 50% of total FDI invested in E~hań. Foreign investment accounted for 26% of alI investment outlays made in Poznań between 1990-2002.

It should be kept in mind that the effects an investment policy brings can only be observed over a longer period of time. And there can be no certainty that the factors activated were actualIy the result of any measures taken by the local authorities. That is why surveys are often made

Year

1990-1997

1997-1999

2000

2001

2002

Total 1990-2002

Foreign investment in US$

0.8

0.8

0.4

0.3

0.3

2.6

among investors to establish their motives and Source: Polish Agency for Foreign Investment, Deelicit their assessment of the performance of the partment of City Development of the Poznań City

economic system. Despite the city' s many eco-nornic successes, Poznań has certainly still much to do to improve its business environment, especially in an innovative and knowledge-based economy. In particular, the level of produet and technological innovativeness of smalI and medium-sized firms is low and their condition too poor to allow them to implement innovations, the potential of the Poznań scientific and R&D sector not used in fulI, and the involvement of those circles in the transfer of modern technologies to economic practice inadequate. The last is connected with a smalI number of organisations mediating in the transfer of technology between science and economy. Among significant factors discouraging the inflow of investment are also the lack of local spatial development plans for some economic activation areas and their often unclear ownership status, as well as unequal access to infrastructure within the city. Despite the criticism that the implementation of the city's development plans might give rise to (cf. e.g. Parysek 1998, pp. 78-82), Poznań seems to enjoy go od prospects for future growth, including the attracting of foreign investment and building up co-operation with investors welI established in the city's economy, like GSK.

9 This group inc1ude: GlaxoSmithKline, Allied Irish Bank, Bridgestone-Firestone, Volkswagen, Metro, Alcatel, Pernod Ricard, Beiersdorf, Nestle, SABMiller, and Wrigley.

The business-supporting measures taken by Wielkopolska's local and regional authorities are largely oriented towards smalI and medium-sized enterprises because by nature they have a smalI er potential and possibilities than large corporations. The basic aim is to improve the competitiveness of the economy, and it is not going to be competitive without a robust sector of smalI and medium-sized enterprises. In this situation, the relations between local government and big investors are usually restricted to formaI contacts involving the location and then implementation of the investment process. There are few cases when the relations are more intensive (and then they usually get publicity in the media, hence the impression that the relations are doser than in reality) .

Two kinds of contact between investors and local government can be distinguished: lhard', involving the arrangement of the formalities inherent in the investment proces s, and l sof t' , or talks/negotiations before and during the investment proces s, or social meetings intended to enhance integration and provide an opportunity to exchange opinions and experiences after the investment process has been completed. Usually, investors get in touch with city representatives in the course of an investment, the relations being rarely maintained after its completion. This perhaps results from the very nature of operation of the local authorities. Local government is an institution obliged to ensure go od conditions for business; apart from that, it should not interfere in the market (these are also EU requirements in this respect). Thus, apart from the investment process itself when the investor arranges several formalities 'with the City Hall and/or negotiates future conditions of operation in the city eco'nomy, the contacts are usually limited to formaI events like Christmas meetings, city festivities, or invitations to major occasions, e.g. in the case of GSK, the opening of the Centre for Drug Individualisation and Distribution in Poznań in June 2004. That is why GSK's contacts with the regional and local institutions are usually of the lsoft' type. GSK has not made any major expansion of the plant requiring new premises; its investment has largely consisted in technological modernisation or the purchase of modern equipment, which does not require much City Hall involvement. Co-operation has been limited to building permits and similar procedures (as in the case of the construction of a high-storage warehouse on GSK premises in the years 1998-2000). It has been the same with other foreign investors that have taken over existing plants, e.g. CPC (Amino) or Nestle (Goplana). GSK investment has not re qui red the city authorities to intervene (as has been the case with Volkswagen).

In 2001 the Foreign Investors' Chamber ofIndustry and Trade carried out a survey amon g its members concerning investment barriers in Poland (Główne bariery ... 2001). For all respondents, a major barrier was inefficient forms of co-operation ofPolish partners with foreign investors (e.g. inability to conduct negotiations and correspondence, hardly attractive forms of presentation of the investment offer, and excessive expectations towards foreign investors). According to the Chamber's report, the two sides hardly know each other. The Polish side, especially local-government officials, seem to have trouble realising that a potential investor is not a philanthropist but a businessman, which means that he undertakes a venture mainly to derive a profit. And although the interviews with representatives of the regional and local authorities ofWielkopolska conducted under the present project show that they do realise the fact, still their contact with investors (especially foreign) is usually restricted to requests for support of various kinds of undertakings. AIso to GSK the authorities turn for material help. Among other things, the company participated in the celebration of the 750th anniversary of Poznań being chartered as a town. Generally, GSK's charity focuses on organisations and associations ofpatients. Between 1997 and 2001 the corporation spend 8.3 million zlotys on such bodies in Poland (Cylwik 2002). In 2001 alone GSK spent 2.8 million zlotys on charity, the bulk (860/0) going to hospitaIs and other health-care institutions. Through this type of activity an investor builds up his presence in a region, but the local and regional authorities also have a part in it. For such actions to take place, it is necessary to plan them. An efficient solution in this respect is public-private partnership practised in West European countries. Firms are more indined to participate in long-term projects with dearly defined aims, other participants, and financing sources. In other words, far-reaching aims and trans-

parency ofthe projects are ofkey importance for enlisting further partners. This also seems to be the standpoint of GSK management. The undertaking of such projects by the authorities of Poznań and Wielkopolska could expand the involvement of firms, also foreign, in actions for the city and the region. The interviews conducted leave no doubt that GSK management is willing to participate in this kind of projects. Irrespective of the attitude and actions undertaken by the city authorities, GSK management proposes to build up its presence in the region' s economy by such measures as setting up an educational centre for physicians and health-care personnel, students, and young people. Its go al will be a broadly understood health education, i.e. dissemination of information about new treatment methods, promotion of prophylactic measures, etc.

Despite the low intensity of relations between the local and regional authorities with GSK so far, the operation of the corporation in Poznań has to be assessed as beneficial. Although the 1998 decision to sell Poznań's Polfa Pharmaceutical Works raised doubts as to the future of the plant, the awareness that the step had been necessary grew with time. Undoubtedly, Polfa required restructuring, so from the point of view of the plant the decision was right. Still, at the scale of the city, the restructuring of the plant involved not only investment, but also a loss of jobs. At the dose of the 1990s, Poznań boasted the second lowest unemployment figure (after Warsaw): in 1998 the unemployment rat e in the poviat and city of Poznań was 1.20/0. While the activity of the new Polfa owner and other firms in this field did not upset the labour market, unemployment figures started to dimb (to 2.60/0 in 1999 and 3.80/0 in 2000). However, people made redundant found work in other places, hence the restructuring measures did not harm the city's overall economy, and GSK has since become one of its major elements (Table 24).

The project interviews have shown that for the authorities of the city and region the presence of GSK in Poznań is of no smalI importance. The importance can be described on several planes. The first is the creation of the general image of the city, its promotion and popularisation of its name. The location of GSK in Poznań shows other investors that the city is a place where major global corporations can conduct business, and do it successfully, too. Such enterprises are a sort of flagship firm s that the city can 'boast' about to others.

Another advantage of GSK's presence in Poznań is associated with management, i.e. the introduction of new forms of labour organisation and a new management culture, which has a favourable effect on other enterprises located in the city and region.

The third pIane of the city-GSK links has to do with interpersonal contacts. The city authorities make efforts (e.g. at official or informal meetings) to facilitate the establishment of contacts among representatives ofthe various Poznań-based firms and between the firms and other institutions (e.g. higher schools), and to meet the needs arising from the presence of foreign firms and their employees in the city. This involves the development of the so-called corporate citizenship. So far, such contacts have largely been developed with such firms as Volkswagen, Bridgestone and Wrigley. With respect to GSK, the potential for contacts does not seem to have been made fulI use of yet. This may result from two facts: (a) the separation ofmanufacturing functions (Poznań) and management functions (Warsaw), and (b) lack of an occasion, a 'pretext', for making the contacts doser (acquisition of new land often pro-

vides one, but GSK does not need any). Still, there have been talks with GSK about the possibility of drawing partners to Poznań and the

Wielkopolska region. The city authorities also see a good chance of co-operation in the implementation of the 'Poznań - a conference city' idea. It is the venue of many a medical conference to which GSK could contribute more than it has so far.

One of the goals of the city's socio-economic policy is to check its depopulation tendency. In this context, the GSK plant is perceived as a particularly interesting potential workplace for young, educated people who will see it as an opportunity to promote their career (and hence to remain in the city) - cf. chapter 5. It is to them that the city authorities address the yearly competition for the best master's and doctoral dissertations in a variety of fields connected with Poznań (the preferred ones are those that can find direct practical application in the city, induding the firms and institutions 10-

Table 24. GSK investment among major foreign investments in Poznań implemented in the years 1998-2004

Year Investment

1998 privatisation ofPolfa Pharmaceutieal Works (with Glaxo Wellcome as strategie investor) Niku recreation centre 6 filling stations (BP, Conaco, Shell) McDonald's restaurant MI shopping centre Castorama store

1999 9 filling stations (Aral, BP, Shell, DEA) IKEA store McDona1d's restaurant

2000 supermarkets: Hit (2), Tesco and Netto Hotel Ibis 2 filling stations (Aral) McDona1d's restaurant modernisation of GlaxoSmithKline pharmaceutieal plant 1st stage of expansion of Bridgestone-Firestone tyre factory

2001 Beiersdorf cosmetics plant Poznan Financial Centre building Kinepolis multiplex cinema Auchan shopping centr e privatisation of Polmos Spirits Works (with Pernod Ricard as strategic investor) expansion of Kompania Piwowarska brewery expansion ofVolkswagen car factory (new paint shop)

2002 AlupIast casement section factory new production lines in Exide and Kimball Electronics plants Winogrady Business Center office building Leroy Merlin hypermarket 3 filling stations (Esso, Statoil, Neste) strategic investor (Da1kia Termika) in Poznan Thermal Power Plant

2003 Globis office centre launching expanded part of Volkswagen car factory Ahold supermarket modernisation of Hotel Mercure construction of 2 shopping-recreational centres (Plaza, Casino) construction of Beiersdorf office building

2004 building of Andersia Tower opening of Regional Centre for Drug Individualisation and Distribution by GlaxoSmithKline

eated here). One may wonder if some of those dissertations eould not be prepared at GlaxoSmithKline Pharmaeeutieals and serve the plant' s needs as well.

The eontaets to date between GSK and the city authorities ean be assessed as promising, but not making full use of all the possibilities of eo-operation and joint aetion. Their greater intensity would eontribute to an even deeper embeddedness of the GSK's Poznań plant in the loeal eeonomy.

Expectations of the local and regional milieu concerning large economie entities located in the region are complex and diversified.They usually include: - creating jobs, reducing unemployment, improving the quality and structure of employment; - generating income for local government units (charge s for a purchase or lease of property, other

charges and taxes) and for the population (wages from direct employment and from jobs created by the multiplier effect in the economy);

- promoting the growth of the regional economy through broadly understood co-operative links (with suppliers, subcontractors, customers, and the so-called business environment);

- investment in the fields of infrastructure and environmental protection (especially made jointly with local government units);

- being a patron and a sponsor, especially of spectacular events organised by local government); and - facilitating contacts with the external world (especially foreign contacts).

In concrete cases, the expectations depend on the rank, nature and location of the economie entity, on the characteristies of the place and region where it is situated, and on the development plans that the region has included in its strategy.

The remarks on the long-term role of GSK in Wielkopolska and the city of Poznań that will be presented below are based on growth assumptions laid out in four documents: (a) Strategy for the Development of Wielkopolska Voivodeship, Wielkopolska Voivodeship Diet, Poznań,

July 2000; (b) RegionalInnovation Strategy, Marshal's Office ofWielkopolska Voivodeship andAMU Foundation's

Poznań Scientific-Technologieal Park, Poznań, January 2004; (c) Plan for the Development ofPoznań City for the Years 2005-2010. Priorities and Programmes, Poznań City

Hall, September 2004; and (d) Strategy for the Development of Information Society in Wielkopolska Voivodeship, Marshal's Office of

Wielkopolska Voivodeship, Poznań, April 2004.

The strategie goals of the voivodeship's development include: (a) ensuring the residents conditions for improving their standards of living, (b) making the region's economy more and mor e competitive with other regions ofEurope, (c) increasing the region's internal integration, and (d) adjusting the voivodeship's potential, structure and organisation to the challenges of the 21st cen

tury and the requirements of the uniting Europe. Without a doubt, the supreme goal is a rise in the standards of living. The means to achieve it is

work (adequate earnings that it brings and that ensure the satisfaction of material and spiritual needs). The creation of a suitable number of jobs (and their proper distribution) re qui re s entrepreneurship, and this crucially depends on infrastructure and the education of society. Thus, there is a set of priorities in the development of the voivodeship presented in Fig. 44.

The implementation of the tasks rests on three guidelines: (1) not to waste the voivodeship's possibilities resulting from its location, tradition, environmental

potential, social and economie assets, and the Wielkopolska image; (2) to make efficient use of the assets possessed while protecting them and, whenever possible, mul

tiplying them and improving their quality; and

ENTREPRENEURSHIP

EDUCATION

QUALITY OF LIFE

INFRASTRUCTURE

Fig. 44. Priorities in the development of Wielkopolska voivodeship

(3) to give all the residents and all economic entities an opportunity to take advantage of the region' s developmental possibilities and thus to participate in its growth-oriented tasks and savour the effects of the growth.

With these guidelines in mind, two directions of economic development have been adopted: - preservation ofWielkopolska' s present leading functions characteristic of the region and ensuring

it an important place in the economy of the country and in international contacts, and - creation of new development links in the form of innovative ventures (markers of progres s in the

economy) and modernisation of its structure. The dilemma of which direction to favour in regional practice is not an easy one to solve. This is

due to the fact that, while areas showing relatively good performance are richer, they still have their needs and wants (in the fields of infrastructure, environmental protection, and, very importantly, the restructuring and modernisation of manufacturing, i.e. in the permanent drive towards higher competitiveness). On the other hand, lack of support for less-favoured areas is not only in conflict with the idea of social justice, but also deprives them of a chance to activate the resources at their disposal (especially human, but also other, often unique), which slows down their growth and worsens their situation as well as the situation of the entire region. When giving preference to more advanced areas, mean economic indicators may improve, but internal differences in development and disparities in people' s quality of life may widen.

That is why the vision ofWielkopolska's development has com e to rest on a compromise: a combination of a further acceleration of growth of the most advanced areas in the economy of the region (mostly the Poznań metropolitan area) and the overcoming of the economic stagnation in the parts of the region that are in need of activation (in terms of unemployment figures and deficiencies in infrastructure, these are eastern and northern poviats of the voivodeship). The future of the voivodeship to strive for can be summed up by the slogan: Wielkopolska - a modern region.

In making the slogan a reality, an important role is played by the development of Poznań. The city and its immediate surroundings (metropolitan area) are known to be a strong economic centre offering also higher-order services (like science and technological progress). Today it can be considered a major growth pole, i.e. a hub influencing the surrounding areas, even those lying farther. The last featur e is very important considering the wide internal differences in the development of the voivodeship's individual areas and the already-mentioned need to activate the lagging ones.

This situation and the adopted assumptions of the region's development clearly affect the expectations of residents and local authorities concerning economic organisations, especially big, modern, and progress-carrying (and it is usually foreign firms that are regarded as such).

Two sets of expectations can be distinguished. In the case ofPoznań city and its metropolitan area, theyare: - introduction of modern technologies and management systems; - creation ofnew high-quality jobs, which is expected to give employment to graduates ofPoznań's

higher schools; - investment in human capi tal and improvement of the work culture; - co-operation with the Poznań research and scientific units; and

- contributing to the creation of a favourable image of the city, especially abroad (potential investors, foreign tourists and students, etc.). In the case ofless developed areas and those farther away from the region's hub, expectations con

cerning foreign enterprises located there include: - use of resources existing in those areas (land, property) ; - job creation at a scale significantly reducing unemployment; - creating conditions for the growth of co-operating businesses, usually SMEs (subcontractors,

ou tsourcing); and - participation in infrastructural investment.

The less developed outlying areas also express expectations concerning large social organisations based in Poznań. Today, it is easy to travel a geographical distance; much more difficult to cover is a distance at the economic, technological or other level. Especially intent on reducing the developmental distance are subregional centres (poviat towns); they expect branches and contractors of Poznań-based firms to be located in their territory.

In development strategies (both of the region as a whole and those of the particular towns and communes, including Poznań) tasks are listed that can help to attract foreign investors and amplify regional and local effects of their investment. The list includes the following tasks: 1. increasing the activity rat e of the population, especially through the development of the service sec

tor, 2. increasing human capital per product unit through a greater input of intellectual work (better train-

ing of employees at alllevels), 3. a better combination of work and education (com mon programmes of employers and 'trainers'), 4. efforts to reduce taxes for job-creating employers, and 5. motivating people to greater activity and enterprise (stimulating the local initiative).

The level of entrepreneurship is determined by: - internal factors of enterprises (e.g. their manufacturing potential, growth dynamics, profitability,

inclination to make investments, and innovativeness in the fields of products, technology, organisation, and management),

- local and regional factors (potential resources available for the development of entrepreneurship, infrastructure, locational advantage, etc.),

- macro-economic factors (e.g. institutional and legal solutions, the government's global policy, and the financial, monetary/credit and tax systems). The programme of entrepreneurship promotion in Wielkopolska embraces the following mea

sures: 1. Promotion of entrepreneurship as a guarantee of the ereation of new jobs and the use of loeal resourees. This in

volves the development of business-environment institutions, including financial support; various forms of education (including adult education and lifelong learning) designed to form creative and entrepreneurial attitudes correlated with the expectations of employers and investors; and incubators of entrepreneurship to enhance the chances of small businesses to enter and stay in the market.

2. Beonomie promotion of the voivodeship and ereation of eonditions favourable to capital inflow. This involves establishing a database of investment offers, characteristics of local units, facilities offered, and property available; and more intensive use of events like fairs to promote this goal as well as business-environment institutions.

3. Restructuring of the region 's food management and multifunetional development of rural areas. Conditions necessary to develop entrepreneurship in the country include: greater outlays on infrastructure to reduce, indirectly, the cost of setting up a business; establishment of a system of education and consultancy geared to the needs of food management in its attempts at vertical and horizontal integration; and an improvement in the investment climate to enhance faster growth of non-agricultural ventures in rural areas.

4. Inereasing the number of enterprises of the leading industries and boosting the eompetitiveness of the existing firms. This involves setting up a database of new technologies and how to obtain them; an information network promoting the new technologies and management methods; and establishing tech-

nological parks to facilitate the implementation of the new technologie s and modernisation of the existing ones with the help of mobile advisory groups working in consultation centres.

Owing to its potential as well as the scope and nature of its operation, GSK is an economic organisation that can be of great significance in the development plans of the Wielkopolska region and the local milieu (the city of Poznań and its metropolitan area).

On the basi s of our interviews with the high local government officials responsible for the economie development of the city and region, we can formulate the following set of expectations which we think involve the corporation: l. A further steady improvement ofthe city's image as a site ofbig foreign investment, modern tech

nological thought, and high-quality jobs; meeting this expectation is treated as a direct consequence of further development of the firm' s Poznań plant;

2. Creating jobs in Poznań, especially for graduates ofPoznań's higher schools; meeting this expectation may involve the organisation of student practices and placements, collaboration with Student Scientific Cirdes, and awarding distinctions to master's and doctoral theses on subjects useful to GSK or written 'to its order'.

3. Creating jobs outside Poznań, but in Wielkopolska voivodeship; meeting this expectation may involve deconcentration of the firm's activity and location of its branches or contractors resting on the information contained in the databases ofWielkopolska communes (information from the Association of Communes and Poviats ofWielkopolska Voivodeship or the Regional Statistics Centre of the U niversi ty of Economics in Poznań).

4. Creating and transmitting growth impulses in the field of work and management culture; meeting this expectation may rest on building up the contacts and exchange of experience among Poznań-based enterprises (in various form s) .

5. Expanding links with Poznań in the field of developmental undertakings (a 'Poznań citizen' attitude); meeting this expectation involves many relations between GSK management and the Poznań authorities, induding an exchange of information about the city's undertakings and the possibility of GSK participating in them, e.g. a joint organisation of conferences in the field of medical science, pharmacy, health care, etc.; also the participation of GSK representatives in school and educational activities in the city and voivodeship can be welcome. Apart from the above general expectations, it seems desirable for the firm' s management to devote

more effort to its social perception in the city and region. It may well turn to profit the esteem that the old Polfa used to enjoy, but of course in the new conditions. What may count here are the quality of work and employee training, presence in the regional media, contacts with Poznań higher schools and, if possible, sponsoring and patronage in the social sphere (hospices, children's homes, nursing homes) as well as cultural and sporting events.

From the perspective of the regional effect of the location of GlaxoSmithKline Pharmaceuticals S.A. in Wielkopolska, especially desirable seem to be such measures as the handing over of a production to be terminated in its Poznań plant to other entities in the voivodeship. A good example is the private business in Krotoszyn which has taken over the production of some sore-throat lozenges. As a result, 115 people have found jobs in a less developed part of the region, and a transfer ofknowledge and information has taken place. Another example worth. imitating has been the transfer of know-how and equipment for the manufacture of surgical threads to one ofPoznań's sheltered workshops in 2000 (to this day GSK has been responsible for technological supervision and produet sterility tests).

Worth noting among initiatives that can bind GSK doser to the entities of the local milieu is the Centre for Advanced Chemical Technologies project, which is designed to provide a platform for co-operation between chemists and pharmacists working at Poznań's higher schools on the one hand and chemical and pharmaceutical firms on the other, and which is financed from the European Union' s means.

In the literature (Schamp 1988, Stryjakiewicz 1999), a distinction is made among three types of spatial expansion of multinational corporations from the point of view of their impact on regional and local economies: (a) the type oriented towards the use oflocal resources (e.g. cheap labour, raw materials and energy)

with only slight multiplier effects; (b) the 'export platform' type: the location of an establishment abroad is primarily intended to take

over the local markets; and (c) the type combining global strategies of a corporation with its embeddedness in the regional and

local economies. The research reported here indicates that GlaxoSmithKline Pharmaceuticals seems to be the clos

est to type three above, although there are still many possibilities of its even deeper regional embeddedness.

The most important conclusions about the impact of GSK on the economic development of Wielkopolska voivodeship that can be drawn from the research can be formulated as follows: l. The sale of the Poznań Polfa Pharmaceutical Works to the British concern Glaxo Wellcome was the

biggest capital transaction of the State Treasury during the transformation period between 1989 and 1998. The investor has met his privatisation obligations fully, having invested more than $106 million over the years 1998-2002. Thanks to the investment and the transfer of technology, the GSK establishment in Poznań has become the only producer of Freon-free aerosols in this part of Europe and one of the four in the world, and the leading manufacturer of gelatine capsules in the entire GSK group. In June 2004 a Regional Centre for Drug Individualisation and Distribution was opened in the Poznań plant, which has enhanced the status ofWielkopolska's capital as one ofthe major European GSK centres responsible for the manufacturing, preparation and distribution of drugs on East-Central European markets. Over the years 2001-2003, GSK was 7th or 8th on the list of the biggest firms in Poznań and 9th or 12th in Wielkopolska.

2. GSK' s network of spatiallinks in the production chain covers the entire Wielkopolska voivodeship with a dominant contribution of Poznań. The network of suppliers providing GSK with raw materials, production components and semi-finished goods embraces 79 economic entities in Wielkopolska. The network is based primarily on long-term contacts (58.20/0). In the field ofproduction supply, the regional multiplier effect of GSK location in Poznań is felt mainly in the Poznań metropolitan area and the southern part of the voivodeship. Predominant among the Wielkopolska consumers of the goods manufactured by the GSK plant in Poznań are hospitals (71.80/0), which results from the specialised nature ofits output. The remaining recipients are pharmaceutical warehouses. The distribution of the consumers is even - there is at least one in each poviat of the voivodeship. Following its outsourcing strategy, the Poznań GSK factory also co-operates with 48 service providers from Wielkopolska. Here the change in the spatial patternoflinks from that of the old Polfa plant has been most conspicuous. The GSK Medical Department is engaged in clinical triaIs carried out in 11 units located in the Poznań metropolitan area.

3. The results of the survey analysis show co-operation with GSK to be the most important for service providers (as many as 450/0 of their employees are associated with GSK activity). Among the strong points and advantages of co-operation with GSK, most respondents list the reliability and innovation-oriented attitude of the partner as well as favourable prices; the we ak points mentioned are logistic difficulties and bureaucratisation of procedures. The respondents see an increase in investment as the biggest chance for the development of their co-operation with GSK, while what they

perceive as the greatest threats to it are stiffer competition and an unfavourable government policy towards pharmaceutical firms. As manyas 61 % of the economic entities polled can see the advantages of GSK location in Poznań, while only 7.30/0 perceive its disadvantages. In view of the steady decline in employment in the GSK plant, worth noting is the fact that among the most commonly listed advantages of the location was an increase in job opportunities in the region (360/0 of respondents). This may indicate that the drop in employment in GSK is offset to some extent by its rise in co-operating firms.

4. The effect that GSK has had on the regionallabour market manifests itself, on the one hand, in a reduction in employment, and on the other, in significant qualitative changes in that market (an increase in the proportion of employees with higher education, large outlays for training). GSK wages are higher than the regional mean, and the range of the plant' s social activity keeps expanding. In polls concerning attractive employers on the regionallabour market, GSK comes second or third.

5. In the light of interviews conducted with officials from local government and business-environment institutions, the importance of GSK for the economy of the city and region is associated with the creation of their favourable image and the popularisation of modern technologie s and management systems. What does not seem to be used in full are the possibilities of GSK's co-operation with the Poznań scientific and R&D sector.

Understandablyenough, in aglobal corporation's strategie s the regional and local dimensions are only of secondary significance (in this case, in comparison with, e.g. the government policy towards health car e and the pharmaceutical sector), and those strategies give scant attention to the expectations and preferences oftowns and regions. Experience to dat e (as described, e.g. in Gaebe 2002) has shown that stronger embeddedness of a foreign enterprise in its local milieu may be a source of advantages, or even growth impulses, for both the firm and the region.

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Appendix - a sample questionnaire

QUESTIONNAIRE

concerning links of GlaxoSmithKline Pharmaceuticals S.A. (GSK) with enterprises and institutions in Wielkopolska voivodeship

The questionnaire refers to various forms of links. Please fiU in only those points that are relevant to your firm or institution (e.g. some questions marked * do not concern hospitals) and are not business secrets.

Please put an X in the squares D.

I. General information

1. Name and address of firm / hospital .

2. Telephone number . . . . . . . . . ,fax number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,

e-mail address .

website address

3. Established .

II. Links with GlaxoSmithKline Pharmaceuticals S.A. (GSK)

1. Since when has your firm / hospital been co-operating with GSK - please give the year .

2. Legal foundations ofyour co-operation with GSK: • long-term contracts D (the contract period. . . . . . . . . . . . . . . . ) • task-work contracts D (the average number of such contracts per year . ) • other D (please specify . . . . . . . . . . . . . . . . . . . )

3. How has contact with GSK been established: • continuation of our earlier contacts with the Polfa plant in Poznań • GSK's initiative ... . • our initiative ..... . • other (please specify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.0

.0 D

. ....... ) D

If you think it worthwhile, please supply more details as to how you have established the co-operation. . . .

L

4. What are the major forms oflinks ofyour firm / hospital with GSK:

• supply of materials or semi-finished products (please specify) . D • services (please specify) . . . . . . . . . . . . . . . . . . . . . D • purchase of GSK products D • sale of GSK products D • research on (please specify) ....................................... D • drug triaIs • other (please specify) . . .

5. *How many persons does your firm employ: .

How many among them are involved, in whatever form, in contacts with GSK (if possible to estimate):

or alternatively: How many jobs would be lost if there were no links with GSK

6. * What is the mean percentage that GSK contributes to your turnover/sales:

Which place does GSK occupy on your list of partners: .

D .D

Since contact with GSK was established, has your turnover (or scope of co-operation in the case of a hospital): • increased. . . . . . . . . . . . . . . . . D • decreased ............... . D • has maintained roughly the same level D • hard to tell (owing to big fluctuations) . D

7. Please specify: Strong points /advantages /benefits of co-operation with GSK:

(l) .............................. .

(2) ....................................................... .

(3) ................................... .

Weak points /difficulties in /disadvantages of co-operation with GSK

(l) ................................... .

(2) ....................................................... .

(3) ....................................................... .

8. Does your firm / hospital derive other benefits from co-operation with GSK apart from direct material effects (e.g. access to knowledge and information, opportunity for international contacts, participation in training, etc.):

yes D no D

If so, what kind: . . . . . . . .

9. What prospects do you see for your firm / hospital to develop co-operation with GSK: the links will maintain their present level and form D the links will intensify D the links will regress D the links will change their nature (if possible, please specify how: . . . . . . . . . . . . . . . . . . . . . . ........................................................ ) D

What factors may affect the links most: (a) positively (chances) ......... .

(b) negatively (threats)

Are there initiatives to increase the co-operation: (a) on the part of GSK yes D no D

If so, what kind:

(b) on your part yes D noD

If so, what kind:.

III. Perception of GSK' s place in the region' s economy

1. Was the decision to sell the Polfa Pharmaceutical Works in Poznań to the British investor in 1998 correct from the point ofview ofthe region's economy?

yes D no D don't know D Please justify your answer: . . . . . . . . . . . . . . .

2. Please list the most important advantages / disadvantages of GSK location in Poznań:

Advantages

(l) ....................................................... .

(2) ....................................................... .

(3) ..... .

Disadvantages

(l) ............................................ .

(2) ....................................................... .

(3) ..................................................... .

3. Can you give concrete examples of GSK activity for the city of Poznań and Wielkopolska voivodeship? yes D no D

If so, what? . . . . . . . . . . . . . . . . . .

4. Other comments, remarks, proposaIs:

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