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The Warsaw Voice » Business » July 29, 2009
The International Defense Industry Exhibition
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Innovation in Arms Industry
July 29, 2009   
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Despite stiff international competition, Polish arms producers are cranking up exports to countries such as India, to Asia and Arab countries, and they are also steadily gaining a foothold on European markets. To attract and keep customers, they are heavily investing in research and innovation.

Most innovative defense industry companies are doing well financially. Bumar, the biggest Polish holding company in the arms sector, recorded a sales revenue of zl.2.3 billion on the domestic market and zl.907 million abroad last year. Its total sales were zl.3.2 billion, an all-time high for the company and far more than planned.

Bumar offers a range of innovative products that include a mobile rifle range for training firearm shooting.

Bumar recently made a deal with French arms corporation MBDA to build a national anti-aircraft missile system. The deal provides for long-term strategic cooperation in research, production, delivery and marketing of anti-aircraft missile systems. The project will be carried out using radar systems supplied by the Bumar group's Radwar plant in Warsaw; anti-aircraft defense command systems from Przemysłowy Instytut Telekomunikacji telecommunications institute in Warsaw; GROM missiles manufactured by ZM Mesko in Skarżysko-Kamienna; and short-range MICA VL missiles and medium-range Aster 30 missiles produced by MBDA. "Owing to this cooperation, the Bumar group will gain access to new MBDA missile technology, while MBDA will get a reliable partner on the Polish market," said Bumar CEO Edward Nowak.

Last year, the most profitable Polish arms producers included Warsaw-based Przemysłowe Centrum Optyki, which posted a net profit of zl.23.1 million. Recently the company secured an order to supply the Polish army with night-vision devices, aiming sights and binoculars worth a total of zl.115 million. In the near future, PCO will spend zl.90 million to build third-generation thermovision cameras. It will use technology from Italian company Galileo and research ideas from the Military University of Technology in Warsaw. The products will include laser range finders, new fire warning systems for vehicles, a range of night vision aiming sights, and observation platforms for combat vehicles.

Radwar, which makes radar, electronic command support systems and anti-aircraft units, posted a net profit of zl.14 million last year. Gdynia-based Radmor, a supplier of innovative radio communication systems, reported nearly zl.11 million in net profit.

The Mesko company has taken advantage of an offset program accompanying Poland's purchase of Israeli-made Spike missiles. The plant, in financial dire straits just a few years ago, has recently strengthened its position in the production of modern munitions. The company supplies GROM anti-aircraft missiles, which are popular with foreign buyers including the Indonesian army. Indonesia has also bought Kobra anti-aircraft systems manufactured by Radwar. Radmor, which specializes in producing military radio systems, has made headway in the Baltic states and sold licenses to partners in the Czech Republic.

WB Electronics, a private company from Ożarów, is working to develop a command support system for the computer analysis of data from radar systems, cameras, and acoustic and seismic sensors. Centrum Techniki Morskiej (CTM) in Gdynia is working on projects involving underwater mine laying and detection equipment. The Military Production Center at the Stalowa Wola Steelworks manufactures an innovative missile launcher called the Langusta.

Other new products include a new version of the RAD military gun from the Łucznik company in Radom. The new firearm complements the company's product range, which also includes the Walther P-99 pistol used by the Polish police and Border Guard.

One of the biggest arms deals secured by Polish producers in recent years was a $370 million contract between Bumar and the Malaysian army. The contract, completed earlier this year, involved the supply of equipment including 48 PT-91M Twardy tanks, six WZT-4 technical support vehicles, three MID-M engineering vehicles, and five PNC Leguan heavy bridges, in addition to the supply of documentation and spare parts and training.

All these products were tested on exercise grounds and in tropical jungle conditions under the watchful eye of Malaysian experts. The Twardy tank delivered to Malaysia features state-of-the-art Erawa-3 armor plating and can fire at targets 3.5 kilometers away; the interior is air-conditioned, and the tank is equipped with a fire control system from French company Sagem and a 1,000 hp engine manufactured by PZL Wola in Warsaw.

It also comes with state-of-the-art optoelectronic devices produced by the Przemysłowe Centrum Optyki SA company, including the PNK-72 Driver's Night Vision Periscope, the POD-72 Commander's Night Vision Periscope and the SSP-1 OBRA-3 Self-Covering Laser Warning System.

Israeli companies are also interested in working with Polish arms producers. According to experts, this could benefit the plants in Stalowa Wola and Tarnów, for example. The Israeli proposal, still a preliminary one, involves production of reconnaissance equipment, particularly unmanned vehicles, said defense minister Bogdan Klich. Other interesting options for cooperation with Israeli partners include production of a turret for the Rosomak wheeled armored personnel carrier, modernization of armored personnel carriers, and technology for air defense systems, Klich said.

The development of the Polish defense industry is stimulated by what are called offset contracts. Foreign suppliers selling equipment to Poland are expected to carry out a range of investment projects in this country, matching or exceeding the value of the order. Since 2001, eleven offset contracts with a total value of $6.87 billion and 1.1 billion euros (zl.18.9 billion) have been signed. The most important offset deals were those related to the purchase of F-16 multi-task aircraft, CASA transport aircraft, Rosomak wheeled armored personnel carrier, and Spike guided anti-tank missiles. Last year, a contract was signed with Italian corporation Avio for the supply of engines for Gawron corvettes, with an offset program worth 9.76 million euros.

However, the arms industry remains predominately driven by government orders for the Polish armed forces. The fact that the Polish army is buying Polish-made equipment is a good recommendation for foreign customers, experts say. But the latest financial crisis has also affected the arms industry. The defense ministry has cut its spending on arms by zl.2 billion this year. As a result, companies whose core business is in manufacturing military equipment may have to reorient some of their operations toward civilian production. Such a scenario is hardly new. For example, Radom-based Łucznik manufactured not only weapons, but also typewriters, sewing machines and ovens for many years under communism.

Michał Jeziorski

Key Event for Defense Industry
The International Defense Industry Exhibition (MSPO), one of the largest events organized by the Targi Kielce company, is one of the most important and largest events of its kind in Europe. For years, the exhibition has been supported by the ministries of Defense, Treasury, Economy, Internal Affairs and Administration and Science and Higher Education, in addition to being supported by the Polish Chamber of Commerce (KIG) and the Polish Chamber of Manufacturers for the Defense Industry. This year's 17th International Defense Industry Exhibition will be held under the auspices of Bogdan Klich, the minister of defense. The 15th "Logistyka" International Logistics Fair will be held alongside the exhibition.

As well as helping global defense industry leaders land lucrative contracts, the International Defense Industry Exhibition is an opportunity for various countries to show their military equipment to larger audiences. After Germany, France, Israel and the United States, last year's exhibition focused on Sweden, which displayed its latest missile systems.

Every year, the fair is accompanied by international conferences and trade meetings. This year will mark the first National Conference on the Defense Industry entitled 21st Century-Technologies, Defense, Politics organized by the Armia military magazine.

The above are just a fraction of the events taking place during the 17th International Defense Industry Exhibition, which every year draws hundreds of exhibitors and thousands of visitors to Kielce. Last year, the 16th exhibition brought together 400 exhibitors from over 20 countries and almost 12,500 visitors and journalists from around the world. The exhibition is a key event for the Polish defense sector.

Mark your diary: Nov. 26-27, 2009, at the Warsaw Stock Exchange
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