Poland

According to official data provided by Poland’s parliamentary committee of national defence, the defence budget of 2016, was to reach 35.89 billion Polish Zloty -PLN- (approximately 8.5 billion US dollars), a rise of 8.6%, compared to the previous year. As of 2016, Polish authorities are committed to spend 2% of the country’s Gross Domestic Product (GDP) on defence, instead of 1.95% spent until 2016. With the implementation of the 2016 defence budget, Poland is set to join a handful of NATO members, who meet the alliance's target of investing at least 2% of national GDP on defence. Expenses on military and civilian personnel, represent 23.4% of the total military budget, accounting for 8.281 billion PLN (approximately 2 billion US dollars), while capital investment represents 28.9%, hence some 10.247 billion PLN (approximately 2.4 billion US dollars). Pensions and other Operational and Maintenance (O&M) expenditures, as well as training expenses, represent 20.7% and 17.4% of the total military budget, respectively.

The Polish Aerospace and Defence (A&D) industry has a wide span of technological competencies and a broad portfolio of products, ranging from air defence systems, radars, Unmanned Air Vehicles (UAVs), armoured personnel carriers, artillery systems and assault rifles, to electronic systems, sensors and training equipment. Additionally, the Polish defence industry exhibits competences in the fields of design, construction, and the equipping of military vessels, in the production and overhaul of aircraft (agricultural, training, etc.) as well as in modernising and maintaining vehicles, fixed-wing aerial platforms and various types of helicopters.  

After the fall of the communist regime, the Polish defence industry had to adjust to a completely different environment, as it lost its main trade partners and had to serve different geostrategic needs. Local defence industry was structured with the aim of covering the demands of armed forces, designed for a high intensity war, while after the 1990s this possibility diminished, until it eventually vanished. Therefore, the defence industry had to adjust its production output to the shifting needs of the new environment, to search for new sales markets, and to orient a part of the production towards the civil sector, since orders for arms and military equipment dropped dramatically.  

In Poland, defence industrial ‘reconstruction’, began latter that in other countries of the Eastern Bloc, as only at the end of the 90s, local authorities initiated related initiatives. However, this initiative had limited success and the government adopted a new strategy in the beginning of the new millennium, aimed at completely transforming the structure of the local defence industrial base. Currently, the indigenous defence industry is dominated by the Polska Grupa Zbrojeniowa - Polish Armament Group (PGZ SA), under the umbrella of which reside some 60 companies, with 17,500 employees and an annual turnover of 5 billion Polish Zloty -PLN- (approximately 1.2 billion US dollars).

 

Value of arms and military equipment exports in 2013 (in Millions of Euros)

Value of arms and military equipment exports in 2014 (in Millions of Euros)

North America

240.4

173.5

European Union

11.9

31.3

North Africa

19.2

87.4

Other European states

13.1

54.8

South-East Asia

23.3

14.7

South Asia

7.7

8.3

Middle East

7.4

19.4

Sub-Saharan Africa

3.2

2.4

South America

6.5

2.3

Central America and the Caribbean

1.4

0.0

North-East Asia

0.1

0.7

Central Asia

2.2

0.2

Oceania

0.0

0.0

Total

336.4

395

Source: www.mfa.gov.pl

In 2014, Polish defence exports were significantly (17.4%) increased in relation to 2013, reaching 395 million Euros. Traditionally, aircraft and related equipment generate the largest export value. In 2014, the abovementioned category’s export values amounted to 294.7 million Euros, including sales of equipment from the army’s stock and re-exports. Regarding the geographical dispersion of Polish defence exports, North America held the lion’s share in 2014, with a total exported value of 173.5 million Euros. Nevertheless, it should be noted that exports to North America dropped significantly, mainly due to the fact that the volume of exports to the US decreased. In other words, exports to Canada remained more or less at the same level. North America, was followed by North Africa (87.4 billion Euros), in terms of absolute figures, mainly due to the exports to Algeria increasing significantly, resulting in the African country being the second largest importer of Polish arms for the year.

Since its accession to the European Union, Poland has actively engaged in EDA’s (European Defence Agency) programs, such as the Research & Technology Joint Investment Programme (JIP) on RPAS (“Remotely Piloted Aircraft Systems”), that was launched in November of 2013. Additionally, Poland has been part of the “Modular Lightweight Minesweeping” (MLM) project, which is a part of the EDA’s Defence Research and Technology Programme “European Unmanned Maritime Systems (UMS) for Mine-Counter-Measures and other Naval Applications”.

The defence industry is regarded by local authorities as an important ‘catalyst’ to the Polish economy. Towards this direction, Polish authorities have promoted the creation of cooperative schemes with foreign partners, as a tool for further promoting the local defence industry. Under this context, in September of 2016, Leonardo-Finmeccanica and PGZ signed a Letter of Intent (LoI) for a long term strategic partnership in the Defence and Security market. Under the LoI, a significant technology transfer to PGZ will take place. In the same month, PGZ singed a second LoI with Lockheed Martin, which actually paves the way for the Polish company to be involved in the manufacture of satellite systems, aircraft, helicopters, weapons and combat systems, training devices and simulators.
 
Moreover in August 2016, PGZ MESKO and THALES announced that they will work together for manufacturing induction rockets in Poland, for both potential domestic and export markets. The Induction Rocket System (IRS) is a new generation of intelligence rocket systems, using electronics and wireless technology. Production will take place at MESKO’s plant.

Additionally, Poland has a rather developed aerospace industry, as according to a report released by PwC, the country is the 5th best investment destination for aerospace manufacturing projects in Europe, and 8th in the world. The main ‘strengths’ of the local aerospace industry, lie in the high quality of products delivered, as well as the competitive associated labour costs. Currently there are some 200 aerospace and aerospace-related companies in the country, the majority of which are small and medium-sized enterprises (SMEs). Overall, the Polish aerospace industry employs more than 30,000 people and its annual sales amount to some 1.3 billion Euros, while 90% of aviation-related production is exported to countries such as the US, Italy, Canada, China, Ukraine, Australia, the UK, France and Germany. Around 80% of aerospace production plants of the country are located in the South-Eastern Poland.