Polish Defence Holding is Planning to Invest 700 million USD in Innovation in the next Five Years

Defence Turkey: Mr. Krytowski first of all thank you very much for the interview. We know that Bumar took the new name of Polish Defence Holding in last May. Could you please inform us about the new structure and what is the reason behind of this new formation?

There are many reasons to underline that we are now new type of the company. We have decided to have a new strategy recently. It was adopted in December last year and in this new strategy we decided to change a lot our methods of operation. So first of all we decided to be very much focused our customer needs, this is the first and the most important. All efforts we could do are to be related to our customers’ expectations. And our main customer is Polish Ministry of Defence and Polish Army. So the second we decided to be very consequent to build new holding structure, not to be like it was in the past, the group of companies which in fact cooperated within themselves but not in very tight relations. We decided to build one common structure to be prepared to compete in the global market, to find more synergy inside the group and to build stronger and more reliable solutions. That’s why we finally built a structure which consists of headquarter and three divisions; the divisions which are focused on some specific markets and specific fields of products. First division is electronics, the second one is ammunition and missiles and the third one is land systems. Now we are the group of company which consists of more than 20 companies, more than 9.000 people. 50% of Polish market of Defence equipment is controlled by our company. The turnover for the last year was more than 1 billion dollars. So this is also the change of a name, this is also the signal of closing some era of restructuring and internal improvements. Because Polish defence industry was in very difficult situation twenty years ago, Polish defence industry in 1980s was one of the most important branch of Polish economy. But we are very much focus on some deliveries and cooperation with Soviet Union and former countries from Soviet bloc. Now when Iron Curtain disappeared it was all of us, we are citizens of Poland, we were happy from that but not that so much about the defence industry because we had to reduce defence industry in Poland from 250.000 employees to around 20.000 today which half of those number are located in my company, so it means we had very tough years. 1900s and then beginning of 2000 were very tough years; years of cutting cost, years of restructuring. So finally we decided to say ok it happened, it was not easy but finally we have to close this period of time and say now it is time of improvement, development. There are two main pillars of this strategy. First one is internationalization, and the second one is innovation. So everything is focused very much on customer needs but to be open for cooperation with foreign partners, treat our competitors as a partner, this is very specific type of business we are providing. This is business in which sometimes you are competing with somebody, sometimes you are in partnership, sometimes you are customer, sometimes you are supplier. This is global business completely new approach, and this new approach has to be underlined also by us, by this new glance to say hello we are new company, we understand this global rules, we would like to spend a lot of efforts to be more innovative. And this is the second plan I mentioned is related to our innovation effort. We plan to spend more than 2 billion Polish zloty in the next five years only to invest in innovation, 2 billion Polish zloty is roughly 700 million dollars. It means we would like to spend around 8 percent of our turnover every year on innovation. For example this year we will spend more than 10 percent of our turnover as an investment on R&D.

 

Defence Turkey: We know that your company is a state-owned company. Is any privatization planned in the future? 

We are almost hundred percent state-owned company but our owner, which is the Ministry of State Treasury of Poland, supports us in a process of partially privatization. We consider organizing IPO on our stock exchange market in 2015, we are considering to sell minority shares on the market.

Defence Turkey: As a Polish Defence Holding, what will be your export strategy in international markets and also what are your current export markets?

The change of strategy was also the change of our approach in international markets. First of all we decided to be very much focused on some region of world and we think about Asia. Asia is very interesting part of our interest and this is not our opportunity; I hope to cooperate also with Turkish companies which are very well presented in this part of world in the future. So we decided to focus on maximum 10 countries in which we would like to establish our stronger presence. We have offices in those countries especially in Asia region, like Vietnam, Indonesia, Malaysia, Philippines but we would like to invest more and increase our presence there. This is another type of change we have in our strategy. We now understand how much important those days in global economy is to be open to share technology with your partners. We are looking for local partners in those countries like Vietnam, India and Kazakhstan. We are looking for very strong local partners to share with them the projects, to share with them technology, to share with them know-how, to cooperate together, to deliver good solution for their customers.

 

Defence Turkey: Could you please inform us about capabilities and products of your companies?

As I said, we are divided in three divisions; in electronics division our main specialization is our radars. We are the biggest producer of professional electronics for Military applications in Poland, our turnover is around 200 million dollars; the next company behind us is something about maybe 20 million dollars. Radars are our big specialization from very small radars up to long range radars, then also electronics as an individual equipment of a soldier, especially including optic-electronics. The second area of our activity, the second division is ammunition and missiles. We are monopolist in Polish market in ammunition and missiles in Polish Army. We are producing from very small up to the biggest caliber which is 155 mm for howitzers. And also missiles, the missiles are anti-tank missiles on the license which we receive from Israeli Rafael and also our anti-aircraft missile grom which is one of the third best missiles in this type for very short range anti-aircraft systems around the world. This is something very similar to Stinger, to American Stinger. The third part of the company is land systems, we are producers of tanks, we are producers or armored vehicles to support tanks for very big engineering bridges also and also very wide range of guns for individual soldiers up to even guns for tanks including 12,7mm but also antiaircraft 23mm and also maritime applications and also 35mm. So very wide range of products and as I said before 9.000 people more than 20 factories in Poland, more than 1.000 for those 9.000 engineers are involved in R&D activity.

 

Defence Turkey: What are your core capabilities or products which makes you more competitive in the Asian market?

This kind of our specialization, which is very interesting I hope from the point of view of our Asian customers, is that we have very big experience in modernization of old Soviet systems because we are the company which is supported our own Polish army in this modernization process for last twenty years, how to move from this Russian technology to new modern western type of technologies. Sometimes this way is not so easy that just you have to buy a new western type of equipment because you have some habits of your soldiers, because you some habits of your officers, you have some systems organized related to this Soviet equipment. So very often the way is to modernize it, to improve it and then step by step change for the new solutions. And so we are able to support our customer form the very beginning from process of maintenance repair overall this Russian equipment then to modernize it and then finally to deliver systems which are our own systems invented by us but which are quite to close in philosophy of using those old systems so it is easier for soldiers to come to this solutions and to use it.

 

Defence Turkey: It seems that there has been cooperation between Polish and Turkish Defence Industry in recent months; we know that many Turkish companies have great interest on the Polish market.   Could you please inform us on the achievements taken with the Turkish companies and Turkish government?  

What I would like to underline that this interest of Polish market which is expressed by Turkish Defence companies is new for us and this is something newly started. I think if we discussed it two years ago, I could say I don’t know about any interest of Turkish companies in Poland. Now this year Turkish exposition is the leading exposition in these fairs which is the proof how much this interest of our country increased. So I think Turkish companies are not real partners especially in Asia, but we are on the very early stage and the both sides should know each other better and try to understand what we can do together.

 

Defence Turkey: You have some initial meetings with the Turkish companies for joint production and R&D activities, right? Which companies exactly are you cooperating?

Aselsan; because Aselsan is working on the same field like us, so this is not real partner for us. But maybe this promotion which took place in these days will give me also the chance to understand better how the Turkish Defence industry is organized and maybe to find new partners.

 

Defence Turkey: Thank you very much for the interview. Would you like to add remarks for our readers?

I am happy from this meeting as well and thank you very much for inviting me to this interview.