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Poland - Defense Industry Markets

A possible solution to the critical condition of Poland's arms industry is increased exports. A 1992 study rated Poland twentieth in world arms exports in the period 1985-91, with an estimated total export value of more than US$1.6 billion. Between 60 and 70 percent of Poland's arms exports involved servicing and spare parts. At that point, three large companies--Bumar Labedy, Cenzin, and Cenrex--had government licenses for arms export, as did fifty small firms. In the transition period, regulations governing arms export were often murky, leading to a series of scandals when the extralegal activities of Polish exporters were disclosed. In 1991 high-ranking defense officials were arrested for selling US$96 million worth of arms to Iraq, and a number of smaller export deals were uncovered.

Despite the imperfect situation facing the defense industry in Poland, domestic producers do have some equipment that sells well abroad. One example is the Krab 155-mm howitzer, designed jointly with the British, and meeting NATO standards. Another modern piece of equipment is the Loara anti-aircraft unit. Also of value is the Bryza marine reconnaissance system based on made in Mielec M-28 Skytruck aircraft. The system is a product of several Polish companies, and its fundamental electronics were developed at the Warsaw Industrial Institute of Telecommunications. Another Warsaw-based company, Centrum Optyki, produces artillery fire control systems of very high quality.

Poland has exported small 3501 Series radio transmitters for sub-unit commanders in Lithuania and the Czech Republic. These transmitters were made at the Radmor factory in Gdynia. The two countries later decided to buy the license for their production. The transmitters are also of interest to the other Baltic states, such as Latvia and Estonia. Radmor now intends to seek further markets. Research work also continues on several other defense systems, which, if soon completed, may also prove to be an excellent export item.

Although Poland can successfully export its defense equipment to other Central and Eastern European countries, getting a foothold in Western Europe is much more difficult. Problems do not arise with the quality of Polish products, however. The problems arise because the EU's markets have long been dominated by reputable Western firms possessing enormous financial potential, usually far transcending those of Polish producers. Polish plants are incapable of coping with the competition. The costs-including promotion, testing equipment and participation in auctions-constitute a considerable burden for Polish manufacturers. Although there are possibilities of selling certain radar systems and radio transmitters to Western European countries, the success of such an undertaking depends on whether Poland can establish activities within the Western European defense industry.

Poland's defense industry also wants to export its products to countries of the former Soviet Union, but this is a difficult market. First of all, with the exception of the Baltic states, Russian-made weapons still dominate this area, a situation expected to continue into the near future. Moreover, Russia surpasses Poland in modern equipment and is more flexible financially. Russia also has political advantages. Ukraine may be the best country in which to establish business activities, especially those sectors of industry in which the country does not produce its own defense equipment. Two main drawbacks should be considered when thinking about Eastern European markets, however. First, Russia practically bars all competition from those territories; second, the countries of the former Soviet Union are for the most part poor and cannot afford to buy military equipment. At the same time, Polish producers, due to their poor financial condition, are unable to provide lending for major transactions.

Poland had no option but to look for new markets. The Middle East may hold some possibilities in this respect. Polish producers certainly have to give up their sentiments towards Libya and Iraq because international trade restrictions are in effect with these countries. New markets can be found in Southern and Southeastern Asia-from India, through Malaysia and Thailand, to Indonesia. Central America could be equally beneficial for Polish arms producers; so far, except for the sale of aircraft to Mielec to Venezuela, Polish products have yet entered any of these markets.

Evidently, what was needed was to define the areas in which Poland had a chance to develop its technological potential. According to Krystian Piatkowski, director of the Polish Chamber of Producers for the Country's Defense (PIPnROK), Poland's focus should be on communicational devices and radar equipment. "Beyond doubt, Poland can be present in world markets as a producer of light combat weapons, small arms, team-operated weapons, mortars and grenade launchers," said Piatkowski. Production of heavy-duty weaponry such as tanks and multi-purpose aircraft is unrealistic. In this field, Polish factories can only participate in large-scale European projects as component suppliers.

The establishment of the PIPnROK was an interesting initiative launched by arms producers. The chamber is a national, voluntary, self-managing organization of Polish economic entities, engaged in activities connected with defense and security. The chamber, having over 180 corporate members at the moment, is one of the largest self-managed organizations in Poland, and has influential statutory powers by representing the economic interests of its members from state authorities and local governments of all levels. Since January 1998, the chamber has also enjoyed the status of representing the national defense industry within NATO-NIAG (NATO-Industrial Advisory Group).

Increasing numbers of world trade leaders are participating in Poland's largest and most important defense industry show organized in Kielce. A total of 263 producers from 19 countries, including many from Europe and North America, took part in the 8th International Defense Industry Show. Nearly 400 exhibitors from 25 countries showed their latest-generation military hardware at the 16th International Defense Industry Exhibition in Kielce, south-central Poland, Sept. 8-11, 2008. The Kielce exhibition has strong ties to the Polish armed forces and defense industry. Its main aim is to show the latest hardware, logistics and security systems for defense, security and rescue applications. The exhibition provides an overview of what global arms corporations have to offer in these areas. The International Defense Industry Exhibition maintains the status of the largest exhibition of its type in this part of Europe.