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Compared with state-owned PGZ Group, the Polish WB Group is one of the largest private defence companies in the European defence sector. PGZ is domestic-based and ready for co-operation with the EU and the US, whereas WB Group already expanded its operations beyond the Atlantic and opened a subsidiary, WB America, in Alexandria, VA in May 2018.

The WB Group said at the time that the offer of the new company would be shaped to reach US markets as well as the global market through the Foreign Military Sales procedure, with a particular emphasis placed on the requirements that could potentially emerge in case of Special Operation Forces. The last section of this article focuses on the Polish defence co-operation under the umbrella of the EU and the defence industrial co-operation between the US and Poland. Both forms of co-operations underline the interest of the Polish defence industry to share its expertise with European partners and to learn new skills from its US partners.

PGZ Group and its Members

In 2019, PGZ consists of 63 companies and holds shares in 40 additional industries: defence, shipyard and new technologies. It has some 17,500 employees and revenues of PLN5.5Bn (about US$2Bn) in 2018. The audited net profit recorded by PGZ Group in 2018 was PLN 37.5M.

The company HSW has built a new production facility to manufacture the tracked platforms for the KRAB self-propelled howitzers. (Photo: Wikipedia)

In 2017, PGZ exported PLN798M (US$228M), a figure that represented a 43% increase in deliveries, up from PLN560M in 2016. This increase in PGZ’s sales is linked to many projects run by the Polish Government to modernise its military. The overall budget spending increased and favouring locally made equipment helped to gain a larger market share in Poland. In 2018, PGZ exported PLN730M, close to the mark set in 2017.

In September 2018, PGZ decided to reacquire the Rzeszow-based Wytwornia Sprzetu Komunikacyjnego (WSK PZL) aviation company from Pratt & Whitney (P&W), a subsidiary of United Technologies Corporation (UTC). As a result, PGZ has signed a Letter of Intent (LoI). Jakub Skiba, PGZ President of the Management Board, said back then that “the acquisition was a step towards Poland regaining control over its aviation industry once again, and is in line with a plan to reindustrialise the economy by taking control of Polish capital in line with the country’s Strategy for Responsible Development. It will also facilitate PGZ to support the needs of the Polish armed forces with spare parts and the servicing of aircraft over coming decades, and expanding the control of PGZ with the various elements of the Rzeszow site will allow it to simplify and control the business lines, including the modernisation of production and technology.” In an e-mail to the author, Justyna Moson, PGZ Communication and Marketing Department Director, noted that despite the LoI, “the WSK PZL has not yet been reacquired but PGZ is committed to this acquisition and is progressing with obtaining permissions from supervisory authorities and internal approvals from the company shareholders.”

In December 2018, it was reported that the Polish Armed Forces has ordered 40 Orlik PGZ-19R tactical short-range unmanned aerial vehicles (UAV) for a range of support operations. The deal, announced by the Ministry of National Defence (MoND) on 30 November, is valued at some PLN789,7M (US$209M) and includes options for 20 Orlik UAVs. The first UAV and simulators are to be delivered by a consortium led by PGZ, involving Bydgoszcz-based WZL-2 facility and the Warsaw-based PIT-Radwar company, members of PGZ, in 2021.

Huta Stalowa Wola (HSW) SA

One member of the PGZ Group that deserves particular attention is the HSW SA that employs around 760 workers. In 2017, HSW earned PLN570M in income and PLN14M in profit. Bartlomiej Zajac, President of the Management Board at the HSW SA, said in February 2019 “Until the moment when full and official financial results summary for 2018 is published, we may only speak of certain estimations and assumptions. Nevertheless, we could mention an unprecedented income of about PLN700M and about PLN37M of profit in 2018. The results show that HSW, as of today, is in a good financial shape. We are one of the PGZ companies that can be ranked at the top.”

The success of HSW is linked to the restructure of the company and investments in infrastructure since 2016. For instance, over the summer of 2018, the company invested more than PLN50M in infrastructure. A new hall has been erected with an automated welding line and installation of the milling machine to manufacture the tracked platforms for the KRAB self-propelled howitzers (SPH) that has been completed in July 2019 at a cost of PLN13.5M. HSW emphasises the fact that the investment is to accelerate and enhance the manufacturing process of the KRAB SPH and RAK 120mm self-propelled mortar system. Beside HSW, WB Electronics (a member of the WB Group) is involved in the KRAB manufacture. The TOPAZ artillery command and fire-control system made by WB Electronic controls the turret, gun layer computer and other subsystems. Zajac said “Manufacture of both systems is the bloodstream of the company as a whole.” In the future, the new facilities will allow manufacture hulls for other HSW products, including the new generation of BORSUK amphibious IFV. Therefore, it can be said without exaggeration that HSW SA has gained a ‘lions share’ in the success of PGZ.

During the MSPO Kielce 2018, HSW showcased its NPBWP BORSUK platform. The amphibious IFV and its development are being co-financed by the Warsaw-based National Centre for Research and Development (NCRD). This project is being worked out under the guidance of the NCRD and not the MoND. Zajac said “the NCRD provides less than PLN100M. The matter that the project is not pursued under the aegis of the MoND has been brought up many times. We suggested that the NPBWP programme shall become a development project monitored by the MoND via the Armament Inspectorate. It is a serious undertaking. It bears a significant meaning for safety of the soldiers and for the combat capabilities of our armed forces.” Despite his suggestion to change the status of the programme Moson has informed the author that “no change has occurred, but the programme is listed as one of sixteen priorities in the new Technical Modernisation Programme for 2019-26 and HSW is working on a BORSUK prototype.”

The company is also involved in an advanced Research and Development initiative related to the ZSSW-30 unmanned turret, which has been developed and designed in co-operation with a consortium formed with PGZ members and partners: PCO SA, KTO ROSOMAK and the WB Electronics. The system is going to be integrated on the ROSOMAK APCs and BORSUK IFVs. The lunch production of the unmanned turret is likely to begin in 2020. Zajac said “The ZSSW-30 and BORSUK IFVs are going to become the driving wheels of the company for many years to come.”

Finally, the memorandum of understanding (MoU) on co-operation between HSW and Rheinmetall Waffe Munition was signed in Warsaw in June 2019. Jowita Jajdelska, spokesperson for HSW, confirmed the fact that scope of the memorandum covers manufacturing of the 120 mm gun barrels, among other domains, including the manufacture of the breach mechanism elements and elements of the gun mount. 120 mm L44 guns are used in the Polish Leopard 2A4 (an upgraded to the 2PL variant) and Leopard 2A5 main battle tanks (MBTs).

Return to the Civil Market

At the same time, Zajac said “One of the weaknesses of the Polish defence industry is the weak civil manufacturing market. HSW left this market in 2012, after selling the construction equipment business (HSW Dressta) to the Chinese LiuGong firm (officially known as Guangxi LiuGong Machinery Corporation Limited). At the moment, while the situation the situation at the company is different, we are working towards returning to the civil market. The main goal is to diversify the income sources, currently based around military products and the budget allocated by the MoND. The establishment of this second pillar is perceived as one of the challenges that HSW faces, starting from 2019.”

ZM Bumar-Labedy (ZMBL) SA

Another important member of the PGZ is ZMBL SA. The company is a partner of Rheinmetall Landsysteme (RLS) in the upgrading of the German-built LEOPARD 2A4 MBTs to the LEOPARD 2PL standards. Otmar Schultheis, Managing Director of Rheinmetall Defence Polska, said in June 2018 “in February 2018, a group of Polish workers from ZMBL were sent to Germany for training.” ZMBL will acquire the capacities to maintain and upgrade the MBTs to the LEOPARD 2PL standard and will become the repair and support centre with ownership rights to modernise the MBT on the Polish market. In June 2019, it was reported that PGZ, following the rule of optimising the use of its assets and meeting the requirements of the Polish military, divides its product competencies without breaching the rule of equal treatment for the companies in the Group. As a result, the LEOPARD 2A5 tanks and powerpacks for the LEOPARD 2A4/2PL and 2A5 MBTs are placed within the expertise of the Poznan-based WZM SA facility. Meanwhile, ZMBL SA facility is responsible for the LEOPARD 2A4/2PL MBTs.

A prototype of a BORSUK IFV manufactured by HSW (Photo: Wikipedia)

OBRUM Gliwice (Research and Development Centre of Mechanical Appliances)

Besides ZMBL, an additional member of PGZ in the armoured business is OBRUM Gliwice. The plant specialises mainly in the manufacturing of engineering equipment, as well as research and development work of mechanized and armoured equipment. A consortium of Polish companies led by OBRUM acts as the contractor for development of the GEPARD [Cheetah] Close Support Vehicle that is financially supported by the NCRD. The current GEPARD-related operational concept is not yet known. However, it is known that the work should be completed by 2024.

Two additional state defence institutions need to be mentioned here: the WITU (Military Institute of Armament Technology) in Zielonka and WITPiS (Military Institute of Armoured and Automotive Technology) in Sulejowek.

Military Institute of Armament Technology (WITU)

The Military Institute of Armament Technology, supervised by the Armament Inspectorate of the MoND, is responsible for Research and Development of new technologies for use by the military. The institute designed the KRAB SPH that is manufactured by HSW SA. Zajac said “In the area of IED/mine protection we are working closely together with WITU and WITPiS. We are jointly creating an invaluable body of know-how and experience. Never before has the Polish industry been working on IED/mines protection for tracked and amphibious platforms.” Whether this new line of business will be further pursued by HSW or not is not known to the author.

Military Institute of Armoured and Automotive Technology (WITPiS)

The Military Institute of Armoured and Automotive Technology operates under the aegis of the MoND. It offers testing, development and manufacture services for military vehicles, military vehicle equipment and armoured equipment. Schultheis said in June 2018: “The first (upgraded) LEOPARD 2PL has passed all of Rheinmetall’s factory tests in Germany. Now it is to be transported to WITPiS for additional qualifications.” No further information about the date of the LEOPARD 2PL transport to WITPIS was published and there is no information whether they conduct factory tests.

It can be said that PGZ Group includes the crème de la crème of the Polish defence industry. They engage in the manufacturing of mortars, SPHs and IFVs and in case of ZMBL, in the upgrade of the German-built LEOPARD tank. Three additional research facilities provide a necessary expertise in the field of Research and Development and, in case of WITPiS, offering testing facilities. Therefore, Poland managed to preserve, maintain, and and expand its defence industrial infrastructure in the field of artillery and armour.

WB Group

The WB Group contributes in the military aviation field that was partially taken over by France (formerly EADS, known today as Airbus Industries), (Leonardo), and US (Sikorsky/Lockheed Martin) in the early 2000s.

WB Group currently employs more than 800 people, more than a half of whom are engineers and R&D staff. It is known for its products such as FlyEye UAVs and WARMATE loitering munitions. The FlyEye is a proven system that has been field tested around the world and used operationally by the Polish Artillery and Special Operation Forces and the Ukrainian Military. The Armament Inspectorate of the MoND signed an agreement in December 2018 with the WB Electronics to procure three modernised sets of FlyEye UAV for the Polish Territorial Defence Component. The agreement also covers optional procurement of another nine sets of FlyEye UAV.

WARMATE loitering munitions produced by WB Group have been procured by Poland and Ukraine. (Photo: Wikipedia)

Poland and Ukraine also procured the WARMATE system. For instance, in November 2017, MoND signed an agreement to purchase 1000 WARMATE loitering munition systems. In addition, Polish Territorial Defence Component procured WARMATE systems, which can be used for reconnaissance, to destroy targets in a guided mode, to independently detect and attack targets in an autonomous mode or combined with FlyEye UAVs to operate in swarms. Another known system is the FONET Internal communications system, which has been integrated onto the US Army Stryker and joint light tactical vehicles (JTLV) and TOPAZ artillery command and fire-control system integrated into KRAB.

In addition to WB Electronics, in 2010, the WB Group acquired communications specialist Radmor, removing it from government ownership. Although the author contacted Tomasz Badowski, the WB Group Communications and Promotion Department Director, no financial details of the company were made available.

The section below shows that despite PGZ Group focus on domestic procurement orders, some members of the group are also open for the EU and US-Polish co-operation.

EU Co-operation

In January 2018, PGZ and OBR CTM SA (Research and Development Centre of Maritime Technology) in Gdynia joined 40 European companies lead by Leonardo in the OCEAN 2020 programme. OCEAN 2020 is the first pan-European military research project financed by the European Defence Fund. The objective of the programme is to test unmanned aerial, surface, and submersible platforms coupled with naval situation monitoring systems that are already used within EU maritime borders.

In April 2019, OBR CTM SA also became involved in the lead by Italy European Harbour & Maritime Surveillance and Protection (HARMSPRO) project to create a system that would facilitate monitoring and protection of harbour and coastal waters. The project is one of several EU undertakings implemented within the framework of Permanent Structured Co-operation (PESCO). This initiative is also going to concern maritime routes and the so-called choke points – straits and channels. All of this is aimed at ensuring security for marine traffic and structures. The system would be making use of sensors, surface, submersible and air platforms, coupled with a special purpose software suite. The target solution is going to be developed in stationary and portable variants and will be designed for monitoring harbours, anchorages and coastal waters.

US-Polish Co-operation

Gene Cunningham, Vice-President, Global Sales for Boeing Defence, Space & Security, said in September 2018 “PGZ is our principal defence industrial co-operation partner. The LoI validates our long-term commitment to working with Polish industry, while demonstrating industrial co-operation that supports Poland’s national security goals of developing independent defence capabilities.” Jakub Skiba, President of the PGZ Management Board, described the signature of LoI as “Another step aimed at building a service and modernisation base for the combat helicopter that might be selected in the Kruk programme.” Under the agreement, Boeing and PGZ will explore opportunities to support, sustain and upgrade equipment and integrate unique Polish systems onto the AH-64E APACHE helicopter. It also seeks to incorporate PGZ companies into the US manufacturer’s supply chain and strengthen their manufacturing capabilities.

Other likely contenders for the Kruk requirement include the Airbus Helicopters TIGER, Bell AH-1Z and Turkish Aerospace T129. In January 2019, it was reported that the deadline for choosing a new attack helicopter platform has been postponed and remains uncertain due to the armed forces’ many requirements in terms of weapons modernisation. It currently appears that a purchase could take place, at the earliest sometime before 2025.

Due to uncertainties, back on the 10th of July July 2018, Leonardo and PGZ signed a LoI specifying the principles of co-operation in the design, production, final assembly, sale and after-sales support of the brand new AW249 helicopter. It was the result of Leonardo’s talks with PGZ, as well as other representatives of the Polish defence industry, concerning the potential participation of Poland in the AW249 programme. Leonardo emphasises that this LoI confirms their will to share tasks not only during the production stage, but even earlier than this too. Poland is an attractive partner for the Italians – it is just about to invest in the above-mentioned combat helicopters programme. In addition, there is the PZL Swidnik plant, owned by Leonardo, as well as scientific and industrial facilities.

In March 2019, HSW SA and Raytheon IDS signed a MoU that makes it possible to prepare manufacturing and integration of 16 M903 launchers – the basic building block for the WISLA air-defence system. The agreement is perceived by PGZ as a ‘milestone’, since HSW is concluding a contract with Raytheon, covering the process for the integration and manufacture of 16 Patriot system missile launchers. All of that is to happen within the scope of Phase One of the Polish WISLA Air-Defence Programme. It was in October 2018 when a request was placed by Raytheon with HSW SA, with regards to this agreement – one of many business agreements related to the WISLA system.

The FlyEye UAV developed by WB Group (Photo: Wikipedia)

The representative of the Raytheon also stated that the agreement signed with HSW is the first of the manufacturing contracts that is to be awarded to the PGZ Group, within the framework of the effort related to Phase One One of the WISLA programme.

PGZ claims that, over the course of Phase One, HSW and others of the Group’s companies would be obtaining technologies and ‘know-how’ that would consequently enable them to manufacture launchers and components of the launchers. The batteries delivered to Poland would utilise Polish-made launchers. In PGZ’s opinion the aforementioned transfer of ‘know-how’ would make it possible to reduce the launcher life-cycle management costs. The PGZ Group would be responsible for operational use and further upgrades of the M903 systems. The launcher in question is also going to be used by Patriot systems operated by other states, which paves the way for PGZ and HSW to get more orders.


The scope of work of the defence industry domestically and internationally is indeed very impressive. The Polish defence industry has retained the necessary skills and ‘know-how’ for manufacturing military products for the armed forces and it appears that the industry will be engaged in domestic production for the next decade or so. Despite selling off Polish military aviation plants in early 2000s, the creation of the WB Group in 1997, the recent intention of PGZ to reacquire WSK PZL and PGZ lead ORLIK UAV programme shows that not everything in the domestic military aviation scene has been lost. Polish defence co-operation under the EU umbrella and the US-Polish bilateral defence co-operation demonstrates the Polish defence industry’s interest to open up, contribute its knowledge and know-how to European partner programmes, and and also acquire the necessary skills from the US. Both forms of co-operations are for the medium to long-term and are likely to benefit the Polish defence industry in the long run.

PGZ Group financial results – including an impressive result of the HSW in particular – demonstrates the Group’s robustness and trend to maintain healthy financial shape and investment into Research and Development. The latter is of crucial importance for Poland’s domestic needs and arms exports. Co-operation between PGZ and WB Group emphasises their mutual interest in pursuing joint projects and securing funds from the MoND for the next decade. WB Group expansion beyond the Atlantic shows that leaders of the group understand that turning WB into an international company requires having a ‘foot on the ground’ in the US and from there pitch its products to the nearby countries.

Eugene Kogan

The author would like to thank Justyna Moson, PGZ Communication and Marketing Department Director, for assistance in the preparation of this article.