Poland: EIB backs growth strategy of furniture company Sits

• PLN 67m loan under Juncker Plan for Sit’s new production facility with the most innovative technologies available in the furniture industry

In its aim to support fast-growing companies and job creation, the European Investment Bank (EIB) has provided PLN 67m (some EUR 16m) loan to Sits for the construction of a new production facility for upholstered furniture. This investment is expected to create several hundred new jobs and is part of the growth plans of the company, which exports 95% of its production.

Sits is a successful Polish upholstered furniture producer – it is one of Ikea’s five European upholstered furniture suppliers and Ikea’s development centre for the launch of new furniture models. As the current capacity and space available in Brodnica does not allow for the forecast production volumes, the company plans to grow by increasing its manufacturing and warehousing capacity in Grudziądz. The new factory will be located on a 13 ha plot in the Special Economic Zone and developed using the most innovative technologies available in the furniture industry.

This investment will significantly boost employment in a region which has an unemployment rate above the national average (some 16% in Grudziądz compared with 4.8% nationally according to Eurostat data at April 2017). The first production workers will be employed in autumn 2017 and several hundred new jobs in the production process will be created by 2019. A further employment multiplier effect is expected, with new indirect jobs during the construction works and the operational stage (suppliers and logistics services).

EIB Vice-President Vazil Hudák, responsible for the Bank’s activities in Poland, said: “Supporting job creation and the investment activities of fast-growing companies are high on the EIB’s agenda, so we are glad to team up with Sits to support its growth plans. They will benefit the local economy and make Poland more competitive, while also using the most innovative technologies available”.

The EIB facility is guaranteed under the European Fund for Strategic Investments (EFSI), a central element of the Juncker Commission’s Investment Plan for Europe. One of EFSI’s goals is to overcome the current investment gap by providing financial support to midcaps – entities employing up to 3 000 people – such as Sits.

Commissioner Elżbieta Bieńkowska, responsible for Internal Market, Industry, Entrepreneurship and SMEs, said: "Investment helps companies to upgrade their production and expand operations across Europe. I am glad that today's Juncker Plan-backed loan agreement will help the Polish furniture maker Sits to expand their facilities in Poland, grow its range of high-quality products and create new jobs along the way."                                                

Sits CEO Marek Dobrzeniecki said: “The new investment in Grudziądz will allow us to increase production capacity, increase work efficiency, and use the most modern technologies in furniture production. The company's assets and production capacities will be significantly expanded. The new investment also means new, safe and comfortable working conditions for employees who will be employed in Grudziądz and the surrounding area. As a Scandinavian company, Sits places a particular focus on the surrounding environment. The company’s construction work and later the production process take care of the environment as well as local residents; we want to be a good neighbour to all”. He added: “The EIB loan aims to co-finance a very important investment for us. Of course, the most important thing is to acquire the necessary resources and ensure smooth financing for the whole project. But we also appreciate the quality of the cooperation with the EIB, which is based on professionalism and reliability on the one hand, and openness and understanding on the other”.

Sits’ new plant will be environmentally friendly and respect the local community. The company has developed a “Green by Sits” programme, which includes initiatives such as recycling 100% of waste generated, purchasing environmentally friendly materials (of which at least 20% are from recycling) and prioritising energy-efficient solutions. Sits also adheres to the IWAY Standard, which outlines minimum requirements in the area of environmental protection, social and workplace conditions.

The EIB loan provides Sits with the long-term financing necessary for the implementation of its strategic investment plan. The maturity profile and attractive interest rates of the EIB’s financing are in line with the economic life of the investment and its cash flow generation capacity.