Despite Poland's significant economic progress since the 1990s, much of Polish industry is hampered by less and lower quality machinery and equipment than most other countries in the European Union, and insufficient capital investment. Most of all, however, Poland's cost advantage is not sustainable. There is a clear gap between rising labor costs and increasing productivity, and this gap is rapidly getting wider. Businesses and the government must face the fact – Poland's labor cost advantage is fading.

This publication sketches, how Poland can remain competitive, as Industry 4.0 is bringing new competitive gains and challenges. Having thoroughly analyzed Industry 4.0, Roland Berger is ready to advise and assist Polish companies keen to embrace the opportunities offered by this fourth industrial revolution. In particular we can help companies gain large and sustained increases in productivity and competitiveness in international markets.

In a base case scenario, meaning all things remain unchanged, the gap between labor costs and productivity can be expected to widen further, and Poland's labor cost advantage would simply vanish within the next 10 to 15 years. Much more optimistically, there is another scenario for the Polish industrial sector. If companies take action by improving the key pillars of business performance and exploring the opportunities offered by Industry 4.0, they should be able to improve productivity enough to offset the adverse trends.

The type and range of possible measures vary from company to company. High-potential exporters are well positioned for focusing on value creation, Industry 4.0 deployment, and developing new business models. Companies who struggle to realize their potential need to take care of the basics first, like a thorough transformation program focused on increasing financial and operational performance. Others may even require a redefinition of their strategic orientation and core business models. And yet another group will have to prepare for a mix of both transformation and value creation initiatives. Specific recommendations must be developed on a case-by-case basis.