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Further Reading

Poland - Defense Industry

From the early days of Poland's new existence the leading circles have realized that the creation of an industry, which would supply the Polish army with explosives, was imperative, for it is an indispensable means for defense, and one of the main necessities for the maintenance of Polish independence. The first step taken in this direction was the creating in 1921 of the munitions plant "Pocisk," the second was taken in the reorganization of the chemical works "Nitrat," which manufactured explosives covering the requirements for the army as well as the mining industry. This enterprise at the same time further advanced the chemical industry in the country. The plant "Nitrat" found an outlet for its products both in the military and industrial needs of the country. By-products were manufactured into super-phosphates for agricultural fertilizers and will also supply the dye industry with various products.

The technical staff of this plant cooperated with the technicians of the artificial silk factory in Tomaszow. The entire equipment of the nine factories, composing the Italian concern "Societa Italiana Prodotti Esplodenti" in Milan was acquired. This company supplied explosives, not only to the Italian army, but also to the other Allied armies during the World War. The Italian concern undertook to put the whole plant into operation by the middle of 1922.

After the fall of communism, the changes in political and economic systems also began affecting defense industry factories. The process, started in 1989, is still occurring today as the defense industry seeks new paths of development. The financial state of many Polish factories producing for the country's defense is far from adequate. This situation is, first and foremost, a result of the protracted process of restructuring this sector of the economy. Poland has lost its former markets, to which it successfully exported arms in the past. Poland's armed forces have thus been faced to adjust to the new situation, and, following accession to NATO, bring military equipment up to NATO standards. In practice, that meant doing away with outdated weapons and acquiring modern ones. At this point, however, the weakness inherent in Poland's defense industry was revealed: Polish factories were unable to bridge the technological gap dividing them from the world's leading arms producers, and therefore could not purchase such things as multi-purpose aircraft, modern tanks and armored personnel carriers.

At present, the Polish defense industry comprises 38 manufacturing companies, 12 renovation and manufacturing military enterprises, 10 research-and-development establishments, and three companies specializing in trading arms. Revenue from this sector of the economy amounted to zl.3.7 billion in 1999, while the sector's corporate assets are estimated at over zl.5 billion. Up to now, out of the 38 companies recognized as strategically important for the country, only two have been successfully privatized.

The first of them is PZL Okecie, acquired by the EADS corporation, which consists of German, French and Spanish companies and is one of the largest aircraft fleet producers in Europe. The other one, also active in the aircraft industry, is the WSK Rzeszów engine maker, which was bought by United Technology of the United States. The remaining plants await their turn. Unfortunately, there are not many prospective buyers.

An important factor in Poland joining the research and production programs implemented within the European defense industry's framework is Poland's participation in the Western European Armaments Group (WEAG). Poland also wishes to take part in the OCCAR. Since Poland's entry into NATO, considerable interest to cooperate with Poland has been shown by both member states of NATO and the EU. The interests find expression in the form of fact-finding and promotional missions.

The government's adoption of the "Program of Restructuring the Industrial Defense Capacity and Supporting the Technological Modernization of Poland's Armed Forces" in 1999 was an important factor fostering the development of Poland's defense industry. The program's authors-in view of limited budgetary resources-believe that new technology and capital funds can be acquired using offset contracts. Thanks to the introduction of this program, the supplier of new multi-function aircraft will also have to invest a certain amount of money in Poland's defense industry. This is all the more important as Poland's armed forces were required to make major purchases of modern equipment after joining NATO. Money from offset contracts will accelerate the privatization of the sector and the importation of state-of-the-art technology to Poland. Certainly, this program is not a Polish invention. Most developed countries use offset contracts when purchasing arms. U.S. Department of Trade data shows that out of 25 major trade contracts with Europe concluded in 1995, twenty-one involved an offset contract.

The Strategy of Consolidation and Supporting the Development of Polish Defense Industry in 2007-2012 was adopted by the government on 31st August 2007. The government's strategy for the defense sector provides for consolidation within the Bumar Group, and launching privatisation processes to make defense industry competitive in the struggle for international contracts. Under the strategy, the purpose of consolidation is to ensure easier access to investors on third party markets. Several countries of Southeast Asia are seriously interested in Polish products, and in cooperating to develop technology. The strategy also provides for partial consolidation of the research and development sector. The ministries of economy and national defense pronounced themselves in favor of consolidating around Bumar only those R&D units, that are associated with the defense industry.