Consolidation of the polish arms industry

Polish Treasury Minister Włodzimierz Karpiński said on Monday that the final structure of the Polish Amrs Group (PGZ), which would comprise several arms companies, should be known by the end of Q3 2014.

“Today, we re at the beginning of factual consolidation and structurization of the Polish Arms Group,” Karpiński said during the conference organized in the Military Mechanical Works in Siemianowice Śląskie. “Today we face the challenge of how to build an effective structure and fit it to the needs of the Polish Army, to ensure that the success of the Polish Army will translate into the economic success and the success of Poland.”

“We need a strong, consolidated partner, which will not compete with itself, but which can undertake, organize and execute big projects,” the Polish Minister of Defense (MON) Tomasz Siemoniak said. He added that the consolidation of the arms industry was long awaited and needed.

Intensification of the work leading to consolidation has been motivated by planned spending on the modernization of the Polish Army and need of creating an entity, that could participate in possible offsets.

The main points of modernization were introduced in 2012 by the Polish President Bronisław Komorowski, in the Plan of the Technical Modernization for the Polish Army. According to the plan, by 2022 the Polish government plans to spend more than PLN 130 bln on new equipment, Polish weekly Wprost reported.

The Polish Ministry of Defense has prioritized the purchase of multi-task helicopters, trainer aircraft and mid-range land-air missile system. According to the plan, modernization of the Polish land-air missile systems, would consume not less than 20 percent of the modernization budget. The plan also includes the purchase of a new type of a submarine as well as attack helicopters, transport planes and modernization of currently used equipment.

Since 1989 the Polish arms sector underwent few reforms. The last consolidation program introduced in 2007 did not end with a success. Planned consolidation of the state owned arms companies in Bumar Group, collapsed due to poor financial situation of the leading companies in the group. As a result the WPRPs and the Stalowa Wola Foundry were against further consolidation, according to the news site TVN 24. In 2013, Bumar Group was renamed Polish Defense Holding.

The consolidation of the industry will first include 11 of the military repair-production works (WPRP) subordinated to MON and the Stalowa Wola Foundry. Ultimately, the consolidation will include companies from Polish Defense Holding, the Center of the Maritime Technique and some of the companies controlled by the Industrial Development Agency, the Polish online news portal TVN 24 reported.

PGZ was officially registered in December 2013. According to Forsal.pl, experts valuated PGZ at PLN 2.3 bln.

Photo courtesy of R. Olejniczak / MON