Real Partnership Needed
April 30, 2014
Ryszard Kardasz, CEO of PCO S.A. and of PIT-RADWAR S.A., talks to Andrzej Jonas and Witold Żygulski.
For many years you have been managing major businesses in the Polish defense industry. To what extent are your companies able to handle contracts for equipment needed by the Polish government?
For five years I was president of Huta Stalowa Wola, which produces many components for Polish artillery equipment. For 10 years I have been president of PCO S.A., a company dealing with night vision equipment, thermal imaging equipment, and many other devices used on the modern battlefield. For a year I have also been the president of the PIT-RADWAR company (former Bumar-Elektronika S.A.). We deal with radar, command and air defense systems.
The companies I represent are in a position to independently carry out orders associated with night vision equipment, thermal imaging and radar equipment. In these areas, we have many years of experience and excellent competences. In the communist era, the armaments industry was based primarily on Soviet technology. The Russians supplied documentation and supervised production. But in terms of radar equipment, Polish specialists managed to create their own technologies and designs that were among the best in the world.
The Telecommunications Research Institute (PIT) was established in 1934 to carry out radar projects and develop related technologies, including Identification Friend or Foe (IFF) systems. Radwar began to operate in the same area 20 years later, in 1954. It was largely linked to industry, but it also maintained extensive R&D facilities. We have developed a number of designs for short-, medium- and long-range radar systems. Polish radar systems are capable of identifying not only large aircraft. We even have radar sets that are able to identify a flying artillery shell. We are also able to effectively identify small flying objects, such as drones. Generally, Polish radar systems meet average international level. My company carries out projects financed by the National Center for Research and Development (NCBiR)—for nearly zl.300 million. These will be the most modern systems in the world today. The company is carrying out contracts for the supply of radar systems for around zl.600 million net. All of them will go to the Polish armed forces. I will be negotiating a contract for the next three years—involving a total of 77 Poprad systems, consisting of radar, command vehicles, and very short-range Grom missiles. We have also sold two such sets abroad—to Indonesia.
The most important part of the program to modernize the Polish armed forces is the so-called anti-missile shield. Will your companies be taking part in the program?
PIT-RADWAR is completing work on the very short-range Poprad system, which is scheduled to be ready by the end of this year. We have also developed a number of command systems. In terms of radar we have all the necessary expertise and experience. We have launched research and development work to provide our armed forces with state-of-the-art radar—the most modern available today. Perhaps no one else in the world has such a system as of now.
PIT-RADWAR also wants to secure some radar and optoelectronic technologies for missiles.
PCO, in turn, is able to handle all the necessary optoelectronic systems, including those for missiles of the future, if such solutions are selected. This technology can be developed, implemented and systematically upgraded by PCO if the need arises.
In terms of the future missile shield project, so-called technical dialog are currently in progress. The military is examining its needs and capabilities, and considering cooperation with domestic and foreign partners. The first realistic time frame, in my opinion, is 2019. The Polish Shield involves four levels: very short, short, medium range, and long range. The long-range level will not be handled on the basis of domestic capacity at all. The Defense Ministry has prioritized the medium-range level, which means missiles with a range of up to 100 kilometers. We are talking about radar, an integrated system and the missile itself. The very short range Poprad system is ready; no further work is needed in this area. Mesko SA is working to upgrade the Grom-missile interceptor system into the Piorun version—with a longer range and perhaps greater accuracy. Most likely these missiles will feature a proximity fuse, something that is not yet available in the Grom system.
In addition to the missile shield project, PCO has a wide range of night vision equipment for the individual soldier as well as for military vehicles and aircraft. The company also offers thermal imaging equipment. From all this, integrated systems are created for the modern battlefield.
Finally, PCO today is also the leader of the Future Soldier Program consortium focusing on equipment for the soldier of the future. For this system it will primarily supply all the optoelectronic sensors and integrate the entire system. Negotiations on the definitive contract are in progress; I think the first units of the Future Soldier Program may appear at the end of 2016 or in early 2017.
Huge funds have been set aside for the program for the modernization of the Polish armed forces...
There is no single path to modernizing the army. Sometimes Polish companies are able to carry out orders from the army in full, but at other times it happens that specific components need to be purchased abroad, and then Polish companies do not expand their own production capacity and research competence. Certain types of equipment are simply too expensive and require too long a wait for the end result. There is no point in trying to domestically produce something for which the army would have to wait 20 years. We must buy such weaponry and equipment from our partners.
It is therefore difficult to protest against the purchase of multi-role aircraft for the Polish air force, for example, because we will not manufacture such a jet on our own in a timely fashion.
However, when making all these big purchases for the military, it is necessary to give Polish industry a chance to profit from this as well. I’m talking about issues such as the supply of new technologies or after-sales service. After all, equipment needs to be serviced and repaired, and we should have also the chance to modernize it as far as that’s possible.
We have many areas in which Polish arms plants are very competent. In such a situation, orders from the armed forces should go to these domestic companies.
Practically speaking, average defense spending in Poland is lower than the 1.95 percent of GDP enshrined under law. There were years when the figure was only 1.6 percent. Of the zl.30 billion we are theoretically supposed to spend on the army a year, roughly 20-25 percent is designated for armaments.
As a man who has been dealing with arms and military equipment for years, I always expected that long-term plans to modernize the army would be drawn up and that these plans would be consistently implemented, regardless of what political party happens to be in power. In recent times, there have been changes for the better when it comes to planning the development of the Polish armed forces. A set of priorities has been identified; and we know in which direction the changes should be heading.
In my opinion, the Defense Ministry should have its own R&D budget without intermediation from institutions such as the Scientific Research Committee in the past or the NCBiR today.
What are the main problems for the defense industry when dealing with the military?
When in 1997-2002 I was president of Huta Stalowa Wola I worked hard to secure a government order for designing a Polish armored personnel carrier. At the time, we were developing many modern wheeled chassis systems, often with far more complicated mechanisms than those used in military vehicles. Unfortunately, the procedure at the time involved a quick invitation to tender, and the need for almost immediate presentation of a fully developed or—better yet—already implemented prototype. There was no time for research and development work. So we were not given a chance.
In most cases, such an approach eliminates Polish producers from the race for orders from the Defense Ministry. Polish science also loses out because new designs are developed in close cooperation with research institutes. In this way, we are deprived of the chance to create our own, valuable technology.
I also remember another example from when I worked at Huta Stalowa Wola; I got the opportunity to develop the Krab artillery system. A deadline was set, I got some money and could conduct research and go about building the system. I was even able to choose a foreign partner.
Unfortunately, in many cases, projects ordered by the Defense Ministry were suddenly interrupted when, for example, new people took over at the ministry. This is what happened with the Krab; a new minister came in from another political party who did not want to benefit from the experience of his predecessors and had other ideas. The Krab project was shelved for five years. It’s hard to describe that as anything other than lamentable. We had built at HSW SA a team of excellent professionals, experts on electronics, computers, aiming systems, and experts in other fields, without whom modern artillery cannot exist. All for nothing. And it is no secret that if you shelve a project, even a very good one, for several years and then try to get it going again, you’ll encounter all kinds of problems: the experts will be working on other projects; the plant will have to organize everything from scratch; the consequences of bad decisions will be severe and long lasting.
Over my decade of work at PCO I could—at my own risk—carry out some of my own projects, because they were quicker in terms of the time frame involved and required less financing than projects such as the Krab system.
As an industry we are not in a comfortable situation. Every year we have to fight for survival on the market. To do that we need to have excellent contact with customers (which means the armed forces) who determine their needs precisely and on an ongoing basis. I would put this permanent dialogue very high on our list of needs.
It should also be pointed out that military technologies can be used for civilian products. We have one such tangible example at PIT-RADWAR, where we are now launching production of equipment for non-invasive measurement of human blood glucose level. This glucose meter is based on microlocation technology used in radar systems.
We expect a partner-like approach of the kind that I constantly observe in defense sector practice in countries such as Germany, France or Italy. These countries’ good arms plants operate in an incredibly comfortable environment by our standards. Often, they not only have a five-year package of government orders, but also a 10-year time frame for research based on a well-defined projection of what the army will be needing in the next decade. The CEO of such a company has no problems at all when communicating with military partners and customers.
What the defense industry expects from the military is cooperation based on partnership and mutual trust.