Arms industry booms as Eastern Europe arms Ukraine | Popgen Tech

PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is churning out guns, artillery shells and other military supplies at a rate not seen since the Cold War, as governments in the region lead efforts to to help Ukraine in its fight against Russia.

Allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbor on February 24, depleting their own supplies along the way.

The United States and Britain pledged the most direct military aid to Ukraine between January 24 and October 3, with Poland in third place and the Czech Republic ninth.

Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries see aid Ukraine as a matter of regional security.

But nearly a dozen government and company officials and analysts who spoke to Reuters said the conflict also presents new opportunities for the region’s arms industry.

“Considering the realities of the ongoing war in Ukraine and the visible attitude of many countries aimed at increased spending in the field of defense budgets, there is a real chance to enter new markets and export revenues in the coming years increased,” said. Sebastian Chwalek, CEO of Poland’s PGZ.

State-owned PGZ controls more than 50 companies that produce weapons and ammunition – from armored personnel carriers to unmanned aerial systems – and holds dozens more interests.

He now plans to invest up to 8 billion zlotys ($1.8 billion) over the next decade, more than double his pre-war target, Chwalek told Reuters. This includes new facilities located further from the border with Russia’s ally Belarus for security reasons, he said.

Other manufacturers are also ramping up production capacity and rushing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic.

Immediately after Russia’s attack, some Eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition familiar to the Ukrainians, while Kiev waited for NATO-standard equipment from the West.

As these stocks dwindled, arms manufacturers increased production of older and modern equipment to keep supplies flowing. The flow of weapons has helped Ukraine push back Russian forces and regain swaths of territory.

Chwalek said PGZ will now produce 1,000 Piorun man-portable air defense systems in 2023 – not all for Ukraine – compared with 600 in 2022 and 300 to 350 in previous years.

The company, which it said has also supplied Ukraine with artillery and mortar systems, howitzers, bulletproof vests, handguns and ammunition, is likely to surpass a pre-war 2022 revenue target of 6.74 billion zlotys.

Companies and officials who spoke to Reuters declined to give specific details of military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities.

HISTORICAL INDUSTRY

Eastern Europe’s arms industry dates back to the 19th century, when the Czech Emil Skoda began producing arms 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 employed people and supplied weapons for Cold War conflicts that fueled Moscow around the world.

“The Czech Republic has been one of the powerhouses of arms exporters and we have the personnel, material base and production lines needed to increase capacity,” its NATO ambassador Jakub Landovsky told Reuters.

“This is a great chance for the Czechs to increase what we need after they gave the old Soviet-era stocks to the Ukrainians. It can show other countries we can be a reliable partner in the arms industry.”

The collapse of the Soviet Union in 1991 and NATO’s expansion into the region forced companies to modernize, but “they can still quickly produce things like ammunition that fit the Soviet systems,” said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute, said.

Deliveries to Ukraine included artillery rounds of “Oriental” calibers, such as 152mm howitzer rounds and 122mm rockets that were not produced by Western companies, officials and companies said.

They said that Ukraine obtained weapons and equipment through donations from governments and direct commercial contracts between Kiev and the manufacturers.

NOT JUST BUSINESS

“Eastern European countries support Ukraine significantly,” said Christoph Trebesch, a professor at the Kiel Institute. “At the same time, it’s an opportunity for them to build up their military production industry.”

Ukraine received nearly 50 billion crowns ($2.1 billion) worth of arms and equipment from Czech companies, about 95% of which were commercial deliveries, 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 assistance it provides, is clearly a boost that we have not seen in the last 30 years,” Kopecny said.

David Hac, CEO of the Czech STV Group, outlined to Reuters plans to add new production lines for small-caliber ammunition and said it was considering expanding its large-caliber capacity. In a tight labor market, the company is trying to poach workers from a slower auto industry, he said.

Defense sales helped the Czechoslovakian Group, which owns companies including Excalibur Army, Tatra Trucks and Tatra Defense, nearly double its revenue to 13.8 billion crowns in the first half of a year earlier.

The company is ramping up production of both 155 mm NATO and 152 mm Eastern caliber rounds and refurbishing infantry fighting vehicles and Soviet-era T-72 tanks, spokesman Andrej Cirtek told Reuters.

He said supplying Ukraine is more than just good business.

“After the Russian aggression started, we increased deliveries to the Ukrainian army,” Cirtek said.

“The majority of the Czech population still remembers times of a Russian occupation of our country before 1990 and we do not want Russian troops closer to our borders.”

($1 = 4.5165 zlotys)

($1 = 23.3850 Czech crowns)

Reporting by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Editing by Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.