- Eastern European arms companies step up production for Ukraine
- Hopes to find new markets as defense spending rises
- Can produce and service Soviet-era and NATO-standard weapons Poland, Czech Republic are major suppliers of military aid to Kyiv
- The history of the industry stretches from the 1800s to the Cold War
PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is churning out guns, shells and other military materiel at a pace not seen since the Cold War, as the region’s governments spearhead efforts to aid Ukraine against Russia.
The allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbor on Feb. 8. 24. Deplete your inventory along the way.
The United States and Britain have pledged the most direct military aid to Ukraine between January 1 and January. On 24 and October 3, the Kiel Institute for World Economics tracker showed Poland in third place and the Czech Republic in ninth.
Some former Warsaw Pact countries remain wary of Soviet-era master Russia, viewing helping Ukraine as a matter of regional security.
But the conflict also presents new opportunities for the region’s arms industry, according to nearly a dozen government and company officials and analysts who spoke to Reuters.
“Given the reality of the ongoing war in Ukraine and the apparent attitude of many countries aiming to increase spending in this area of the defense budget, there are real opportunities in the coming years to enter new markets and increase export revenue,” said Sebastian Chwalek, chief executive of Poland’s PGZ.
The state-owned PGZ controls more than 50 companies that manufacture weapons and ammunition — from armored transport vehicles to unmanned aerial systems — and holds stakes in dozens more.
Chwalek told Reuters it now plans to invest as much as 8 billion zlotys ($1.8 billion) over the next decade, more than double the pre-war target. That includes new facilities further from the border with Russia’s ally Belarus for security reasons, he said.
Other manufacturers are also ramping up capacity and racing to recruit workers, companies and government officials from Poland, Slovakia and the Czech Republic.
Immediately after the Russian attack, some Eastern European militaries and manufacturers began emptying warehouses of Soviet-era weapons and ammunition familiar to Ukrainians as Kyiv awaited standard NATO equipment from the West.
As those inventories dwindle, weapons manufacturers have ramped up production of both old and modern equipment to keep supplies flowing. The flow of weapons helped Ukraine repel Russian forces and regain large swathes of territory.
PGZ will now produce 1,000 man-portable Piorun man-portable air defense systems in 2023 — not all for Ukraine — compared with 600 in 2022 and 300 to 350 in previous years, Chwalek said.
The company also supplies Ukraine with artillery and mortar systems, howitzers, bulletproof vests, small arms and ammunition, and is likely to exceed its pre-war revenue target of 6.74 billion zlotys for 2022, he said.
The companies and officials that Reuters spoke to declined to disclose specific details on the supply of military supplies to Ukraine, some on condition of anonymity, citing security and commercial sensitivities.
The arms industry in Eastern Europe dates back to the 19th century, when Czech Emil Skoda began manufacturing weapons for the Austro-Hungarian Empire.
Under communism, huge factories in Czechoslovakia, the second-largest arms producer in the Warsaw Pact, Poland and elsewhere in the region provided jobs and produced weapons for the Cold War conflicts that Moscow sparked around the world.
“The Czech Republic is one of the big arms exporters and we have the personnel, material bases and production lines needed to increase our capacity,” its NATO envoy Jakubrendowski told Reuters.
“This is a great opportunity for the Czechs to increase what we need after supplying the Ukrainians with old Soviet-era stockpiles. This can show other countries that we can be reliable partners in the arms industry.”
The collapse of the Soviet Union in 1991 and NATO’s expansion into the region prompted companies to modernize, but “they can still quickly produce products such as munitions suitable for Soviet systems,” said Simon Weitzman, a fellow at the Stockholm International Peace Research Institute.
The deliveries to Ukraine included shells of “Oriental” calibers, such as 152mm howitzer shells and 122mm rockets produced by non-Western companies, officials and companies said.
Ukraine received the weapons and equipment through government donations and direct commercial contracts between Kyiv and manufacturers, they said.
not just business
“Eastern European countries strongly support Ukraine,” said Christoph Trebesch, a professor at the Kiel Institute. “At the same time, it’s an opportunity for them to build a military production industry.”
Ukraine has received nearly 50 billion crowns ($2.1 billion) in weapons and equipment from Czech companies, about 95 percent of which were commercial deliveries, Czech Deputy Defense Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, and many companies in the sector are adding jobs and capacity, he said.
“For the Czech defense industry, the conflict in Ukraine and the assistance it provides is clearly a driving force that has not been seen in the past 30 years,” Kopecny said.
Czech STV Group CEO David Hack outlined to Reuters plans to add a new production line for small-caliber ammunition and said it was considering expanding its capacity for large-caliber ammunition. The company is trying to poach people from a slowing auto industry amid a tight labor market, he said.
Defense sales helped the Czechoslovakian group, which owns companies such as Excalibur Army, Tatra Trucks and Tatra Defense, almost double its first-half revenue to 13.8 billion crowns.
Spokesman Andrej Cirtek told Reuters the company was increasing production of 155mm NATO and 152mm Orient caliber rounds, and refurbishing infantry fighting vehicles and Soviet-era T-72 tanks.
Supplying Ukraine is not just good business, he said.
“After the Russian aggression, our supplies to the Ukrainian military multiplied,” Cirtek said.
“Most Czechs still remember the time when Russia occupied our country before 1990, and we don’t want Russian troops near our borders.”
($1 = PLN 4.5165)
($1 = 23.3850 CZK)
Reporting by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Editing by Catherine Evans
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