Arms Industry Polish arms industry driven by domestic orders

The growth of military expenditure – observed in recent years and planned in the near future – is, in theory, very good news for arms industry enterprises. Unfortunately, a large proportion of the contracts go to international companies, manly American ones, which results from the political conditions as well as technological capability of Polish defence industry

According to the Stockholm International Peace Research Institute (SIPRI), Poland’s expenditure on defence in 2018 amounted to almost 12 billion dollars, i.e. 8.9 % more than the year before. Poland spent 2.05 % on defence and is one of seven NATO countries which exceeded the assumed 2 % expenditure threshold, whilst the average for all NATO countries (except for USA which significantly increase the average) was 1.48 %.

Such expenditure encompasses various aims related to defence – including remunerations and current maintenance of military bases. Last year, Poland spent 26.5 % of its military budget on arms and military equipment. In terms of that, amongst the treaty countries, Luxemburg (41.8 %) is the leader, whilst Slovenia (8.2 %) directs the smallest percentage amount on its army’s equipment.

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USA is the biggest beneficiary

The United States is currently Poland’s biggest military partner. From the funds allocated for the modernization of military equipment up to 2026, agreements totalling PLN 32.5 billion have already been contracted. Out of this amount, 43 % (PLN 13.9 billion) has been allocated or will be allocated to the domestic arms manufacturers, whilst from the remaining 57 % (18.6 %), manufacturers from USA will receive as much as PLN 16.6 billion. Such a big amount is the result of, amongst other things, signing a contract for the purchase of anti-aircraft and anti-missile Patriot packages and the IBCS system for the Polish ‘Wisła’ (Vistula) programme. Because of this, Poland will become the second country after USA with this modern defence system. Another large investment was the purchase of one squadron of M142 Himars system multiple missile launchers. An important contract from the point of view of Polish arms industry was the delivery of four S-70i Black Hawk helicopters which will be produced by Polskie Zakłady Lotnicze Mielec, employing 1700 people.

Domestic orders

Even though the Polish arms industry has no current prospects of receiving such orders, in the recent years Polish companies could not complain of boredom. Many contracts for the delivery of modern military equipment are being executed – from combat vehicles, through small planes and helicopters, ships, artillery to soldier personal equipment. An example of such an investment is self-propelled tracked howitzers ‘Krab’ manufactured in Stalowa Wola Steelworks. The Polish Army will have five squadrons of this equipment at their disposal. Also, at the Centre of Military Production of Stalowa Wola Steelworks, self-propelled RAK howitzers have been designed which are assembled on KTO Rosomak chassis. In May, another batch of nine self-propelled anti-aircraft packages produced by PIT-RADWAR which is a part of Polska Grupa Zbrojeniowa were delivered. An important element of Poland’s Wisła (‘Vistual’) defence system are Jelcz vehicles which will perform the function of Oshkosh vehicles used in the American IBCS/Patriot system. The agreement signed with Jelcz assumes delivery of 73 such vehicles until 2022. At the same time, Remontowa Shipbuilding in Gdańsk is executing the agreement signed in 2017 which relates to the delivery of six tug boats B860 for the Polish Navy. An example of military equipment of lower calibre are light howitzers LMP-2017 which were designed by Zakłady Mechaniczne Tarnów. Last year, an agreement was signed for the delivery of 780 of them. At the end of 2018, Fabryka Broni ‘Łucznik’ Radom signed a contract for the delivery of 20 thousand 9-millimiter semi-automatic pistols VIS 100 for the Territorial Defence Forces.

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Poor export results

Unfortunately, the growing number of orders does not translate into strengthening of Polish arms industry on international markets. According to the latest SIPRI report for the years 2013-2017, Poland, in terms of its arms’ export value, fell from the 25th to the 29th position with share of 0.13 % of sales within the researched period. In the ranking, countries such as Ukraine, Belarus or even Portugal are ahead of Poland. The aviation sector has dominated the Polish arms industry’s export structure and in 2017 it constituted almost 45 % of international sales. Unfortunately, the biggest companies from this sector – PZL Mielec and PZL Świdnik – belong to foreign entities and the Polish export mainly includes the components manufactured in Poland and the value of ready parts assembly. However, the most valuable elements are manufactured abroad.

Other categories which are important to export include land vehicles and their components, specialist equipment for training and war game simulations, armoured and protective equipment as well as smooth-bore weapons of calibre greater than 12.7 mm and howitzers and their components.

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