Poland to Spend Billions to Support Defence Industry PGZ

The Minister of State Assets mentioned the support for the defence industry at the Miecznik frigate steel-cutting ceremony. Sasin mentioned the fact that PGZ War Shipyard received PLN 300 million of extra capital back in 2017, which allowed the facility to continue manufacturing efforts.

During the ceremony, Sasin also mentioned support for other companies, including HSW, Mesko, or Bumar-Łabędy, and a broader financing scheme to support the defence industries.

HSW S.A. received PLN 600 million. Further funds will also be provided to Stalowa Wola and Bumar. 800 million zlotys are expected to be provided to launch a second production line for the Krab howitzers. The Ministry of State Assets has prepared legal solutions needed to provide extra PLN 13 bn. to PGZ, in order to boost the recovery in the defence industry, creating circumstances in which the Polish Armed Forces would be receiving weapons manufactured at domestic factories.
Jacek Sasin, Minister of State Assets

"Rzeczpospolita" wrote that the assets destined to provide extra capital for the PGZ would come from the Reprivatization Fund. So far, that Fund does not have amounts as such available. Extra money needs to be provided (for instance through issuing of state bonds). Alternatively, it shall be just one of the sources for financing, with other sources possibly involved as well.

As Minister Sasin said, the extra capital will be used to boost the potential to produce Polish equipment, such as the Krab howitzers, Piorun MANPADS, and Grot rifles, and also to launch license-manufacturing of Korean equipment in Poland, such as the K2PL main battle tanks that are expected to be manufactured at WZM in Poznan (extra capital for that company had been previously announced), and K9PL howitzers.

One should add that procurement involving the Polish defence industry planned (including 1,000 Borsuk IFVs, several hundred heavy IFVs, more than 2,000 ZSSW-30 turrets, 820 K2PL main battle tanks, 500 of which to be manufactured in Poland, at least several hundred howitzers and MLRS systems including K9A1, Krab, HIMARS and K239) calls for a significant increase in the manufacturing capacity. Not only does the above refer to deliveries of the equipment, but also the life-cycle maintenance. This, especially in the case of equipment procured in large batches, and delivered during periods of 10 years, may annually be as costly as the deliveries alone.

Whether the Polish industry will be able to handle the lifecycle, and manufacturing would be decisive for the success of the Polish modernization programme. Maintaining so much equipment based on external help from foreign partners would not be possible. This matter will be discussed in the future, by Defence24.pl.

So far, the provision of extra capital for Polish businesses is ongoing, with different stages of advancement. In some companies we would see undertakings underway, that have been underway already, waiting for financing. Once the funds are provided, it would be relatively easy to launch the works. On the other hand, in some cases, extra conceptual and analytical efforts will be required.

For instance, when it comes to the 800 million zlotys-worth investment announced by PM Morawiecki, needed to launch the manufacturing of the Krab howitzers at ZM Bumar Łabędy, the PGZ Group told us the following: "The extra financing announced by PM Mateusz Morawiecki will be used, in its entirety, to fund the activities related to the launch of a new Krab howitzer production line at ZM Bumar-Łabędy S.A. Given the scale of this undertaking, this is a very complex, multi-staged process, that is expected to be spread across a longer timeline, and both the Gliwice-based company, as well as other PGZ Group entities, are getting ready to begin that process. Currently, technical and analytical-conceptual arrangements are being made, related to the implementation of this undertaking. We will be informing you on the further stages of this project in an ongoing manner".