Dziennik Gazeta Prawna - Special Edition: World Economic Forum Davos 2022
Based in Ożarów near Warsaw, WB Electronics is set to make over PLN 2 billion, or USD 500 million: such is the value of the Gladius System delivery contract entered into on 6 May 2022. Of several hundred UAVs, some will be used as surveillance devices, others as kamikaze strike drones. “This is the largest contract in our firm’s history,” said WB Group’s CEO Piotr Wojciechowski during a press conference following the contract signing ceremony. In recent years, the Group had been recording annual revenue of approximately USD 100 million.
This is not the only large contract entered into recently by the Polish Ministry of Defence. In mid-April, a contract worth just under USD 400 million was signed for the first components of the Narew short-range anti-aircraft defence system, with the prime contractor comprising the state-owned Polish Armaments Group (with annual revenue of approximately USD 1.5 billion) and the British missile system manufacturer MBDA working in partnership. On 5 April, an intergovernmental agreement was signed with the United States of America for the delivery of 250 Abrams tanks to be manufactured by General Dynamics and delivered to Poland by the end of 2026. The latter is a contract of considerably greater value, with the amount involved reaching nearly USD 5 billion.
Reklama
Contracts entered into in recent weeks are ample proof that the Polish defence sector has gone shopping, the many years of indecisiveness resolved by Russian aggression against Ukraine. Next year, the Ministry of Defence will have greater funds at its disposal: the Homeland Defence Law recently passed by the Sejm (lower house of the Polish Parliament) assumes an increase in defence spendings up to no less than 3% of GDP. According to North Atlantic Alliance data, Warsaw’s 2021 defence spending reached 2.34% of GDP, placing Poland third among NATO’s 30 Member States. In absolute terms, this translates into approximately USD 15 billion.
Recent contracts allow a number of conclusions. Firstly, over the coming years, the Polish defence industry will be able to count on an increase in revenue. Dragging out for years in the past, negotiations are now picking up speed due to the war in Ukraine. The aforesaid deals aside, in all probability a contract worth approximately USD 15 billion will be signed for the entire Narew system. Collaboration between the Polish Armaments Group and MBDA is to become a springboard: the Polish corporation will be able to secure state-of-the-art missile technologies as well as any lacking project management skills. Purchase contracts for Badger Infantry Combat Vehicles should also be signed by year-end 2023, with the Polish Armed Forces set to acquire over a thousand such vehicles as a result.
Secondly, foreign armaments corporations will earn at least as much, if not more. It may well be expected that another contract worth approximately USD 5 billion will be entered into with the American Raytheon Technologies Corporation for the delivery of a further four Patriot anti-missile batteries. The purchase of strike helicopters has been planned as well, the ultimate choice being between the Boeing and Bell corporations.
Thirdly, Polish firms are faced with an opportunity to introduce truly innovative solutions to the Polish market, such as the aforementioned Gladius System by the WB Group, or the Badger Infantry Combat Vehicle, with serial production to kick off in 2025.
The aforementioned puzzle has to be expanded to take into account the fact that the Ukrainian defence industry has been largely destroyed by Russia. Consequently, repair works on Ukrainian heavy-duty military equipment will have to be handled, i.a. in the Czech Republic and probably in Poland. This will be an opportunity for BUMAR-Łabędy, an arms manufacturer that forms part of the Polish Armaments Group and has suffered from a long-standing crisis.
In view of the above, Polish defence firms’ revenue will most certainly grow over the next few years, as will their competencies. Polish arms industry exports are rather moderate: less than USD 500 million in 2020, and they were largely associated with operations engaged in by the Mielec-based helicopter and helicopter parts manufacturer, a Lockheed Martin company. Over the coming years, this will probably change as well: new export stars may well include the Thunderbolt anti-aircraft system, already proven efficient and manufactured by Mesko (another Polish Armaments Group company), or WB Group’s aforementioned UAVs.
Yet the distant horizon seems to be suggesting that black clouds are gathering over the Polish defence industry, as the Polish Ministry of National Defence has not been commissioning any large-scale research-and-development works in the sector. Works on the Badger Infantry Combat Vehicle began in 2014. This means that roughly 10 years will have passed from the day these works began until the launch of serial production. The Crab self-propelled gun-howitzer, now manufactured by Stalowa Wola Steelworks (of the Polish Armaments Group), was faced with a similar situation.
“Unless this changes fast, the Polish defence industry may run out of proprietary, relatively modern products in a few years,” a source from the industry told us. In order to avoid another crisis in the industry once orders specified in today’s contracts have been delivered, contracts for new products to be implemented in the 2030s have to be signed soon. ©℗