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Poland Domestic Arms Production
Under the communist system, the Ministry of National
Defense
ran nineteen manufacturing and repair plants, but about
eighty
plants were designated as defense industry enterprises
under
branches of the Ministry of Industry. In the late 1980s,
the
largest military goods producers were the Stalowa Wola
Steel
Works, the Kasprzak Radio Works, the Krasnik Ball-Bearing
Plant,
the Wifama Textile Machinery Combine, the Stomil Tire
Plant, the
Polish Aviation Combine, the Pronit firm, the Northern and
Wisla
shipyards in Gdansk, the Lucznik Works, the Starachowice
Truck
Factory, the Polish Optical Works, the Bumar-Labedy
Engineering
Equipment Combine, and the Olkusz Enamel Plant. In most
cases,
over 85 percent of a plant's production went to nondefense
customers; the shipyards, the Bumar-Labedy combine, and
the
Stalowa Wola Steel Works were among the few producers
whose
output went mostly to the military. In 1988 military goods
producers employed about 260,000 people and accounted for
about 3
percent of total output of enterprises under the Ministry
of
Industry. At the same time, over 6 percent of Poland's
total
exports were military products. Of military output, 49
percent
went to the Polish military, 46 percent was exported, and
5
percent went to the ministries of justice and internal
affairs.
By 1992 military goods had dropped from 3 percent to 1
percent of
total industrial output.
Polish military industries began planning for
conversion to
civilian production in 1987, when the Warsaw Pact was
developing
its new defensive posture. Some twenty of the eighty
designated
defense industry enterprises were considered for closure
or
conversion to civilian functions. Meanwhile, all defense
industries made long-term plans for greatly reduced orders
between 1991 and 1995. By 1990 military contracts had
dropped by
30 to 80 percent, depending on the plant. Spending on
weaponry
had dropped by 84 percent. These reductions in demand led
to
unemployment and unused industrial capacity. Defense
industries
also lost the privileged position they had enjoyed in the
communist economy. Gone in 1990 were supply priority, lowinterest credit, state subsidies, and tax exemptions.
Industry
pessimism increased in 1990 and 1991 when military
planners
considered replacing Soviet- and Polish-made equipment
with
Western equipment.
Conversion of defense industry plants to civilian
production
faced serious obstacles. Deep cuts in the defense budget
left
little money for a centrally administered program or for
the
massive investment required to convert heavy industry.
Because
long-range military needs remained undefined in 1992, the
degree
of conversion would require guesswork. Finally, some
plants
simply could not be converted at any reasonable cost.
In 1992 the Ministry of Industry proposed a program to
restructure the defense industry. The program would create
three
classes of linked holding companies, classified according
to the
degree of competition in which they engaged. One group,
including
producers of munitions and electronics, would be fully
controlled
by the State Treasury. The second group, including
producers of
aircraft, armored vehicles, and the Northern Shipyard at
Gdansk,
would have the State Treasury as controlling shareholder.
The
third group, including private firms supplying specialized
production, would operate as market-economy enterprises.
This
structure was designed to focus production on critical
military
items and efficiently convert remaining capacity to
free-market
production.
By 1992 budgetary uncertainty and the high cost of
Western
equipment caused planners to rely more on domestic
production of
high-technology equipment and on joint production projects
between Polish and Western firms. Projects considered in
1992
included an improved T-72 tank, new armored combat
vehicles, a
new ground attack helicopter, and a light attack aircraft.
Many
new products were suggested to replace Soviet equipment.
Among
the new products developed by the Polish industry were the
I-22
Iryda combat training jet, the first such airplane
completely
designed in Poland, and the PW light military vehicle. In
its
testing stage, the I-22 Iryda jet trainer was evaluated as
a very
well-made airplane lacking a first-class engine. In 1992
Polish
manufacturers sought joint ventures with Western firms to
supply
appropriate Western components to upgrade the Iryda and
the PW.
In the Warsaw Pact decades, Polish production of
sophisticated guidance and communications equipment was
generally
discouraged. As a result, in 1990 Polish industry was
unable to
supply the armed forces with modern avionics, electronics,
and
guidance systems that would make up some of the ground
lost by
relying on Soviet technology. The greatest manufacturing
capabilities were in airframe design, small weapons
design, and
ammunition manufacturing.
A top procurement priority was electronic friend-or-foe
aircraft identification units to upgrade the primitive air
defense system. In the late 1980s, the Soviet Union had
refused
to complete a contract to supply such equipment--a
fortunate
development in light of ensuing changes in Polish threat
perception and the advantages design familiarity would
have given
Russian attack planes. In 1992 Polish planners were
considering
both domestic design of an identification system and
coproduction
with a Western firm.
The Bumar-Labedy combine manufactured the T-72 tank by
license with the Soviet Union, using Polish manufacturing
technology. Until 1988 a seller of tanks to many countries
of the
world, Bumar-Labedy suffered from reduced world and
domestic
demand, and by 1989 its plants were working at half
capacity.
Like many other defense-oriented heavy industries,
Bumar-Labedy
found conversion to civilian production difficult.
Meanwhile, the
firm's financial condition deteriorated because of the
high cost
of maintaining a spare-parts inventory and serious payment
lapses
by the Ministry of National Defense.
Data as of October 1992
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