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Hungarian Military Industry

Minister of Defence I István Simicskó said March 29, 2018 that during the revival of Hungarian defence industry, they intend to shape the defence industry capacities primarily in cooperation with the V4 countries, and to develop their military capabilities by multiplying each other’s strength. The minister said that a working group of experts was also involved in making the decision to enter into an agreement with the Czech Republic on the manufacturing of small arms. The weapons produced under this licence have already been tested by soldiers and policemen.

Minister of Defence Simicskó and Czech Defence Minister Karla Slechtová announced March 29, 2018 that Hungary will manufacture small arms for the infantry. The corresponding licence agreement was signed in Budapest by David Höfer, the CEO of Ceská Zbrojovka Export, and Roland Kránicz, the CEO of MoD ARZENÁL Co. István Simicskó said that based on a Czech licence, Hungary will initially only assemble the weapons, and then, from January 2019, the full production will start in Hungary. This will create some 200 new jobs, he added.

Speaking at the opening of a professional conference March 2, 2018 , Minister of Defence Simicskó emphasized that in accordance with the armed forces development plan of the Hungarian Defence Forces, the Hungarian defence industry, too, has several possibilities and tasks. István Simicskó told his audience that the various force majeures of the 20th century, the two world wars accelerated the Hungarian defence industry. Due to the occupation, however, the defence industry was almost completely “dismantled” and, among others, the weapons and ammunition were taken away. Since then, the Hungarian defence industry has tried to get back on its feet several times, and still exists, the minister noted, pointing out that the government is doing its best to provide the Hungarian defence industry with possibilities again.

He said that the dependence of the country must be reduced, as part of the Zrínyi 2026 National Defence and Armed Forces Development Program, and the manufacture of weapons, ammunition and gunpowder is also needed. In this regard too, a new era – the period of development – has started in the Hungarian Defence Forces, the minister emphasized.

On 17 December 2018 Airbus Helicopters and Hungary signed a Memorandum of Agreement to create an industrial cooperation for long-term aviation projects that will initially focus on the production of certain high precision mechanical parts for helicopter dynamic systems. This project is part of the 'Zrinyi 2026' armed forces development program supporting Hungary’s national security goals of developing independent defence capabilities. “This partnership is in line with our European cooperation strategy at Airbus and a demonstration of our commitment to accelerate our collaboration with one of Europe’s fastest growing economies,” said Bruno Even, Chief Executive Officer of Airbus Helicopters. “This project has been made possible thanks to Hungary’s industrial expertise and commitment to innovation, which will now thrive in Airbus´ global supply chain.”

The agreement intends to create a sustainable and integrated plant within Airbus. The green field production unit will start by manufacturing mechanical parts that will then be delivered to the major component assembly centre for dynamic parts to be fitted on to the various helicopters of the Airbus range that are operated in more than 150 countries worldwide. The agreement will also rely on a local supply chain being qualified to perform certain tasks such as surface treatment.

Hungary had been a long-standing supporter of Airbus’ civil and military products, which found a home in a wide range of defense and civil applications. The Hungarian Ministry of Defence has recently purchased 36 helicopters, among which 20 H145Ms and 16 H225Ms, and it also operates two A319 aircraft. Wizz Air, one of the largest European airlines and an all-Airbus customer, operates a large fleet of more than 100 aircraft, with over 260 in the order book.

In the late 1980s, the government's defense industry produced only a small amount of the HPA's needs. Major weapons were obtained from the Soviet Union. Communications and instrumentation equipment made up about three-quarters of the country's military production, while artillery and infantry weapons and ammunition made up another 12 percent. The production of vehicles and aviation components contributed about 8 percent, while chemicals and light industrial products formed the remaining 5 percent.

Compared to other countries in the region, Hungary had a relatively small defence industry within the Warsaw Treaty Organisation (WTO), even during the ‘boom’ years of the late 1980s. At its peak in 1988, Hungarian factories had a total military output of $370 million, representing only 3 percent of Hungarian industrial production, as compared to Czechoslovakia, where 11 percent of total industrial production was military-related.8 The Hungarian defence industry’s structure, size and production pattern was determined by the defence needs of the WTO, which gave priority to the telecommunication, transport and chemical industries. This situation shielded military production from economic realities.

In early 1989, military industries anticipated a 31 percent decline in production compared with the previous year because of the slashed military budget and a drop in exports. Factories that produced mostly military equipment were expected to be hard hit. Military orders, mostly long-range microwave equipment and accessories, made up about 80 percent of the production of the Precision Mechanics Enterprise. Military orders for handguns made up 35 percent of the Weapon and Gas Appliance Factory's production and 25 percent of the orders for the Diosgyor Engineering Factory. The Machine Factory at Godollö, which produced components for military vehicles and tanks and repaired army equipment, was owned by the Ministry of Defense and operated by soldiers. In January 1989, it was operating at 50 percent of capacity because orders from the other Warsaw Pact countries dropped by 50 percent and a cut in sales to the HPA was anticipated.

After the dissolution of the Warsaw Pact in 1991, tough external market conditions and a sharp fall in the number of orders caused the country’s defence industry to shrink considerably. Hungary’s defense industry lost its main markets: the Soviet Union and the Warsaw Pact countries. The defense industry also lost its domestic market since defence procurement expenditure diminished substantially as a direct consequence of the dramatic downsizing of the Hungarian armed forces. In the 1990s, the workforce of Hungarian defence production dropped from 18,000–20,000 employees to only 1,500–1,600.

The military production of the Videoton telecommunications factory, valued at US$132 million in 1988, was expected to fall to US$84.9 million in 1991, and more than 2,000 of its 7,000 workers were expected to be released, resulting in a 40 percent idle manufacturing capacity. The effects of cutbacks in military procurement on the euphemistically named "Lamp Factory" (Lampagyar), which produced pistols and automatic rifles, and the Danuvia Factory, which manufactured machine guns, was not known.

The Hungarian defence and security industry has seen a great many changes in recent years- changes to which it has worked very hard to adapt. Over time, even understanding of the terms „defence” and „security” have evolved to meet new challenges. On one hand, changing demands have led to an increasing diversification of product portfolios. On the other, a growing market has seen a broadening of the customer base to include not only the military, but also a wide variety of state and non-profit organisations. Nowadays when the defence industry market is becoming smaller, the collaboration has more importance. As a consequence of the crisis, it will be shortly proved which companies are that ones who are able to live on this tough market.

According to a 1999 report by the Ministry of Economic Affairs, there were about 60 arms industry-related companies operating in Hungary. Dr Géza Péter Kovács, chairman of the Defence Industry Association, comments that of these 60, only about ten are true defence companies (these account for more than 90 percent of the industry’s turnover) and only ten to fifteen companies consistently receive orders from the Ministry of Defence in any single year. By 1998, only fifteen companies remained in majority state ownership, nine of them supervised by the Ministry of Defence.

By 2014 there are about 480 -500 corporations registered for defence industry activities, (2012 : 493, 169 only for trading), with 1,726 employee direct involment. Some 3-400 companies could take part in defence, high-tech, or dual use industry. Approximately 120 companies take part in defence industry in real. Continuous direct involvment included 10 - 20 companies, occasional defence industry participation were 20 companies at most. Expected (virtual) defence industry participation with 10-15 companies more.

The Defence Industry Association of Hungary (MVSZ) represents Hungarian companies with a common interest in developing and selling goods and services into the defence and security markets. The MVSZ is a not for profit association, to improve the business possibilities of our members in Hungary and internationally. It organizes industry specific seminars, regular meetings, conferences and trade shows, for our members locally and internationally, and try to explore new business opportunities worldwide, through foreign companies, agents, associations, exhibitions. The MVSZ represents the Hungarian defence industry in NIAG, in addition to co-operating with other defence industry associations in several countries. It is looking for partners interested in Hungarian defence industry products, services, and/or collaboration with the developers, producers.

It builds relationships with NATO to work in the projects of the international organization. It provides advice and technical knowledge by teamworking with NIAG, which is an organization inside the NATO with 19 members including technicians and pressure groups. It develops relationships with foreign organizations. It has seminar with the Defense Industry Export Association of Dutch and ABM AMRO Bank, with some members of Ministry of Defense and Ministry of Economy. It holds discussion on private defense sphere and financial sources for the development of military technologies. Its members list includes Az ACIS Benzinkuttechnika Kft, Aerotechnika M&T Zrt, ARNITEL Radiotechnikai Ipari es Kereskedelmi Zrt, Atlantisz-Hungaria Tanacsado es Biztositasi Alkusz Kft, B-Consulting Service Vagyonvedelmi Kft, Cisco Systems Magyarorszag, Detektor Plussz 11 Loszermentesito Kft, etc.

In Hungary, the Soviet-made Mi-8 and Mi-17 helicopters were modernized by the Hungarian airplane manufacturer, Dunai Repulogepgyarto, or the Danube Aircraft Company, with the installation of the "friend-or-foe identification system, a navigation system used only by NATO. Also the same company is planning to cooperate with international contractors to upgrade the country's 28 MiG-29 fighters. The main problem lies, on the other hand, in the deprived economic situation of Hungary. Although its per capita GDP is nearly twice the figure for Turkey, the 10 million nation's economy is in such a bad shape, that it is not able to adequately pay its troops.

By 1997 a number of the world's leading aircraft manufacturers had tightened their grip on Hungary as well as on the Czech Republic and Poland, promising to help these countries gain a smooth entry to both NATO and the EU, the "European" newspaper announced in November 1997. While the US firm, Lockheed Martin, was pushing this newly evolving market with its own F-16 jet fighters, another U.S. consortium, Boeing-McDonnel Douglas was racing with its F/A-18 models, the French Dassault with its Mirage 2000-5, and the consortium of Swedish Saab and British Aerospace with its Gripen fighters.

Hungarian defense industry companies established a network in April 2012 they hoped would help them win big state tenders. The network, dubbed Hungarian Defense Business Cluster, was established with the participation of four defense industry companies owned by Hungary's Defense Ministry.

  • Danubian Aircraft Company
  • Danubian Aircraft Company
    Dunai Repülőgépgyár RT

    Danubian Aircraft CompanyDanubian Aircraft Company is mainly active in the overhaul and upgrade of helicopters and fighters. Also manufactures metallic components and tools by milling, cutting and griding. Danubian Aircraft Co (Dunai Repülőgépgyár RT) was formed in July 1992 as part of the process of privatisation of the state aircraft overhaul facilities (Pestvidéki Gepgyár - PVG). Pestvideki Gepgyar (Pestvidék Machine Factory - predecessor of Danubian Aircraft Co.) depot was located on the island of Csepel, near the village of Selgethalem, approximately 16 kilometers SSW of Budapest.

    It was the largest defense company in Hungary, maintaining, overhauling and modifying Hungary’s Soviet-era MiG-21 aircraft, in addition to Hungary’s Mi helicopters (Mi-2, Mi-8, Mi-17 and Mi-24) and Aero Vodochody L-39 aircraft. Danubian also negotiated a contract to support the Swedish Gripen aircraft during the preparation of the Swedish bid to the Hungarian Government, and the company was involved in the military’s 12-year lease of 14 fighter aircraft.

    The Pest Area Kaehine Pactory (Pestvidéki Gepgyár) was a repair depot engaged in overhauls of jet engines and jet aircraft for the Hungarian Air Force. Types of aircraft which the facility overhauled were? MIG-15. UTI-MIG-15, and MIG-15-BIS, Engines overhauled were; RD-45, VX-1, and VK-1A. The overhaul of MiG-17 aircraft and VK-1P engines was in the planning stage by 1957. In October 1956 the depot received a MiG-17 aircraft and an VX-1P jet engine; these new types were under study. The actual overhaul program was scheduled to begin in late 1957 or early 1958.

    Aircraft overhaul consisted of washing, thorough dismantling, determination of defects, necessary repairs of airframe and skin according to previous analysis, necessary repairs of separate aircraft systems, levelling of aircraft, painting, general check, testing on the ground, first flight, test inspection, and final examination in the air.

    Necessary repair equipment was ordered from the USSR. The quantity of aircraft and engines to be overhauled at the depot was determined by the Ministry of Defense in conjunction with Hungarian Air Porce Headquarters. The Ministry of Machine Building, to whom the repair facility was immediately subordinated, was required to make necessary arrangements in order to fulfill a quota prescribed by the Ministry of Defense.

    Imedlately upon acceptance of aircraft and engines for overhaul, they were attached to the depot. After completion of repairs, they were delivered to the representative of the Hungarian Air Porce, who was responsible for their shipment. Presumably, the overhauled products were to be delivered to their units of origin; however, the exact destination was unknown.

    The facility could not fulfill assigned quotas for overhaul of aircraft and engines, nor could it maintain a "pool” or provide substitutes for products in overhaul. The main reasons for not meeting the assigned quotas were insufficient deliveries of spare parts from the USSR. It was quite usual that in order to get one delivery of spare parts, two to three orders had to be submitted, or that delivery of spare parts for the year 1955 arrived during the second half of 1958. At the end of 1956 there was no hope of receiving any spare-part shipments ordered during the same year. During the last months of 1956 there was a ten- dency to arrange deliveries of spare parts from Poland and Czechoslovakia, rather than from the USSR; this improved the possibilities of more complete and speedier deliveries.

    Spare parts arrived mainly from the USSR; some shipments arrived also from Poland and Czechoslovakia. There was a shortage of almost all spare parts, the most common being rear and middle ballbearings, ratchet clutches, fastening elements for turbine casings, turbine nozzles, turbine blades, rubber hoses for fuel systems, accessory components of fuel systems, and combustion chamber liners. Surprisingly, there was no production stoppage because of nonavailability of spare parts. If necessary, parts were removed from other engines, which resulted in some engines being completely dismantled for parts and existing only "on paper".

    Complete anarchy dominated the repair plant due to a lack of special education of personnel in the Ministry of Machine Building and in the Ministry of Internal Commerce, who were responsible for securing neccessary materials for the operation of the depot. Administrative personnel of the depot responsible for production were incompetent and until November 1956 were not able to determine needs and requirements for spare parts and materials. They also could not organise the efficient repair process required for uninterrupted production.

    In some fields of production there were absolute indifference and lack of interest among the workers. They were unconcerned and were trying to work as little as possible. In general, discipline was on a very low level.

    The labor force consisted of about 600 - 700 workers, 80 percent, of whom were women. About 32 percent of the total labor force were "white-collar" employees, l.e. administrative personnel and engineers) the remaining 68 percent were actual workers. Eighty peroent of the actual workers were highly skilled. The majority of the skilled workers and most of the administrative and engineering staff resided In Budapest) unskilled workers and other common laborers lived In nearby villages.

    In addition to fuel tanks delivered with the MiG-21 aircraft both PTB 800 and PTB 490 tanks were also manufactured in Hungary by Pestvideki Gepgyar.

    Danubian Aircraft Danubian Aircraft Danubian Aircraft Danubian Aircraft Danubian Aircraft

    Industrial offsets required to allow Hungary to buy Gripen fighters from Sweden were in line for discussion by the two countries following the signing of an agreement in September 1995. The agreement, a memorandum of understanding between Hungary and Sweden's Wallenburg group, involves a broad economic program that includes "evaluation and possible procurement" of the fighter for Hungary, according to Saab, a unit of Wallenburg and manufacturer of the Gripen.

    Hungary's Danubian Aircraft Company signed an agreement In November 1995 with Sweden's Saab Military Aircraft to supply parts for the JAS-39 Gripen fighter, marking an important step in settling offsets needed for Hungary to buy Sweden's newest fighter. The purchase order agreement between Saab and Budapest-based Danubian was signed Nov. 16, Saab said. The collaboration program between Hungary and Saab will create broad economical and industrial cooperation.

    Danubian Aircraft Co. signed a purchase order agreement with Saab Military Aircraft of Sweden in nOvember 1995 for production of components for the JAS 39 Gripen multirole fighter. So far, 140 Gripens have been ordered by the Swedish air force, and a follow-on order is expected during 1996. This is the first step to a broader agreement between Danubian and Saab for cooperative production of the Gripen. Through this order, Danubian will be qualified to European and world aviation industry.

    The Hungarian air force was handed its first overhauled and upgraded Aero Vodochody L-39ZO Albatros trainer by Danubian Aircraft in April 1998. The air force's longer-term hopes of reaching a part exchange deal with Vodochody to swap the aircraft for new-build L-39ZAs appear to have hit financing difficulties, however.

    In 1999, DaimlerChrysler Aerospace proposed updating the Fulcrum fleet to Western standard. The Hungarians demanded that more than half of the work be performed by Danubian Aircraft at Tököl, to save costs.

    In 1995, the Danubian Aircraft Company had 35 hectares of undivided industrial area with full, but aging infrastructure, operating for decades. In order to increase the efficiency of asset management, the company has made a new Regulatory Plan, approved by the competent authority in 2002.

    Danubian Aircraft Company ceased operations in December 2001, and was liquidated 28 November 2002. In accordance with the Regulatory Plan, the area was divided into a separate areas of 0.5 to 3.5 hectares with own parcel number, and the outdated infrastructure (internal road and utility network) was completely rebuilt. Obtained in this way, land plots were partially sold, and partly were leased out. In the industrial area there was an opportunity for further acquisition of the site, and/or for leasing of buildings and free sites.

    By decision of the owners the 25-year experience of business and markets of Danubian Aircraft Company jsc. have since been integrated. In the current activity of the company play a major role engineering, production and modernization of vehicles.To ensure the efficient use of resources, Danubian Aircraft Company strives to minimize its own human and physical resources and to implement individual production and service tasks (projects) with external resources. The strengthening of this operating model has resulted that cooperation, project management and operation by the main contractor have leading role in the company's activities. Trade and logistics activities, project management and the main contractor also appeared as an independent service in the company's operations.The company presents high production culture and tradition. The company's management, internal and external human resources necessary continue all the traditions of the former activity and profiles of organizations.

    The joint project of Danubian Aircraft Company and Sedulitas-Pro Ltd. for the development of a battery-powered electrical midbus. The first model of vehicle was realized in 2016 by the transformation of the original E-91 Ikarus midbus with Diesel engine.

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