- E.Europe arms companies are ramping up production for Ukraine
- Hope to find new markets as defense spending rises
- Can manufacture and service Soviet-era and NATO-standard weapons for Poles, Czechs and major suppliers of military aid to Kiev
- The history of the industry stretches from 1800 to the Cold War
PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is producing arms, artillery shells and other military supplies at a rate not seen since the Cold War, as governments in the region lead efforts to de-clutter Ukraine. help in his fight against Russia.
Allies have been supplying Kiev with weapons and military equipment since Russia invaded its neighbor on February 24, exhausting their own supplies along the way.
The United States and Britain provided the most direct military aid to Ukraine between January 24 and October 3, according to a tracker from the Kiel Institute for the World Economy, with Poland third and the Czech Republic ninth.
Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries view helping Ukraine as a matter of regional security.
But nearly a dozen government and corporate officials and analysts who spoke to Reuters said the conflict also opened up new opportunities for the region’s arms industry.
“Taking into account the reality of the ongoing war in Ukraine and the visible attitude of many countries towards higher spending on defense budgets, there is a real opportunity to enter new markets and increase export earnings in the coming years the statement said. Sebastian Chwalek, CEO of the Polish PGZ.
State-owned PGZ controls more than 50 companies that make weapons and munitions – from armored transporters to unmanned aerial systems – and has interests in dozens more.
It now plans to invest up to 8 billion zlotys ($1.8 billion) over the next decade, more than double its pre-war goal, Chwalek told Reuters. That includes new facilities located further from the border with Russia’s ally Belarus for security reasons, he said.
Other manufacturers are also increasing production capacity and are rushing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic.
Immediately after the Russian attack, some Eastern European armies and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition familiar to Ukrainians, while Kiev waited for NATO standard equipment from the West.
As those supplies dwindled, gun manufacturers ramped up production of both older and modern equipment to keep supplies going. The flow of weapons has helped Ukraine push back Russian troops and reclaim large swaths of territory.
Chwalek said PGZ would now produce 1,000 portable Piorun manpad air defense systems in 2023 – not all for Ukraine – compared to 600 in 2022 and 300 to 350 in previous years.
The company, which he said also supplied artillery and mortar systems, howitzers, body armor, small arms and ammunition to Ukraine, is likely to surpass a pre-war revenue target of 6.74 billion zlotys for 2022.
Companies and officials who spoke to Reuters declined to give specific details about military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities.
The weapons industry in Eastern Europe dates back to the 19th century, when the Czech Emil Skoda started producing weapons for the Austro-Hungarian Empire.
Under communism, huge factories in Czechoslovakia, the Warsaw Pact’s second largest arms producer, Poland and elsewhere in the region kept people employed and produced weapons for Cold War conflicts that Moscow inflamed around the world.
“The Czech Republic was one of the largest arms exporters and we have the personnel, material base and production lines needed to increase capacity,” NATO ambassador Jakub Landovsky told Reuters.
“This is a great opportunity for the Czechs to increase what we need after giving the Ukrainians the old stocks from the Soviet era. This can show other countries that we can be a reliable partner in the arms industry.”
The collapse of the Soviet Union in 1991 and NATO’s expansion in the region forced companies to modernize, but “they can still quickly produce things like munitions that fit the Soviet systems,” said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute.
Deliveries to Ukraine include artillery shells of “eastern” calibers, such as 152mm howitzer shells and 122mm rockets not produced by Western companies, officials and companies said.
They said Ukraine had obtained weapons and equipment through government donations and direct commercial contracts between Kiev and the manufacturers.
NOT JUST BUSINESS
“Eastern European countries are substantially supporting Ukraine,” said Christoph Trebesch, a professor at the Kiel Institute. “At the same time, it is an opportunity for them to build their military manufacturing industry.”
Ukraine has received nearly 50 billion kroner ($2.1 billion) in weapons and equipment from Czech companies, about 95% of which were commercial supplies, Czech Deputy Defense Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, he said, with many companies in the sector adding jobs and capacity.
“For the Czech defense industry, the conflict in Ukraine and the aid it provides is clearly a boost we haven’t seen in the last 30 years,” Kopecny said.
STV Group CEO David Hac told Reuters plans to add new production lines for small caliber ammunition and said it is considering expanding its capacity for large calibers. In a tight labor market, the company is trying to poach workers from a slowing auto industry, he said.
Defense sales helped the Czechoslovak Group, which owns companies such as Excalibur Army, Tatra Trucks and Tatra Defense, nearly double its first-half revenue from a year earlier to 13.8 billion kroner.
The company is increasing production of both 155mm NATO and 152mm Eastern shells and is refurbishing Soviet-era infantry fighting vehicles and T-72 tanks, spokesman Andrej Cirtek told Reuters.
He said supplying Ukraine was more than just good business.
“After the Russian aggression started, our supplies for the Ukrainian army multiplied,” Cirtek said.
“The majority of the Czech population still remembers the times of a Russian occupation of our country before 1990 and we do not want Russian troops closer to our borders.”
($1 = 4.5165 zloty)
($1 = 23.3850 Czech Crowns)
Reportage by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Edited by Catherine Evans
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