In “Poland’s Balancing Act: A Briefing for the Defense Sector – Part 1” Avascent Principal and Director of European operations Christina Balis analyzes the Polish defense market, in light of the ongoing crisis in Ukraine. Writing for Defense Industry Daily, Ms. Balis discusses the likely acceleration of Poland’s 2013-2022 Technical Modernization Program (TMP), its chaotic industrial consolidation under the Polish Armaments Group (PGZ), and upcoming strategic procurement decisions that will pit European against American suppliers.
At PLN 32 billion ($10 billion), Poland’s current defense budget is a fraction of Europe’s biggest spenders, but outlays are set to grow faster than any other country on the continent.”
Avascent’s defense market forecast covering Poland’s TMP estimates that while the Program was worth $2.7 billion annually at its inception, that number will grow to $4.8 billion by 2022. A healthy Polish economy, and a solid commitment to allocating 1.95% of the previous year’s GDP for the defense budget, make Poland an attractive market. However due to its modernization efforts, aka “Polonization,” any international defense contractors looking to do business will have to understand the offests environment; “25% (is) often seen as the minimum threshold for Polish participation in the production process.”
There is an element of geo-strategy behind Poland’s decision making as well. Three of the largest defense purchases it will make under the TMP are approaching in the next 18 months. Partnering with European companies makes historic sense, and reinforces current EU ties. However, Europe was slow to respond to Putin’s annexation of Crimea, and France has not cancelled the first of “2 Vladivostok Class amphibious assault ships sold to Russia.” Both examples indicate that sole reliance on neighbors is an unwise strategy. Buying American strengthens the NATO relationship—and Poland assuredly feels that it needs all the support it can get when facing mother Russia.
Read the full article here.