In 1920 Poland opened its first ammunition factory to supply soldiers who successfully defended the country’s freshly reclaimed independence against the invading Soviet Red Army.
A century later, the same manufacturer is struggling to contribute once again to Poland’s efforts to fend off Russian aggression by boosting weapons output, reducing reliance on the US and helping Nato and the EU to support Ukraine in resisting Vladimir Putin’s invasion.
Niewiadów’s plant in central Poland reflects the country’s manufacturing decline since the end of the cold war. Its 80-hectare site is dotted with abandoned testing ranges and derelict buildings once used to make Soviet weapons, including S-5 rockets fired by Moscow’s aircraft during its 1980s war in Afghanistan.
Niewiadów executives complain that it and other smaller manufacturers are being sidelined by the Polish Armaments Group (PGZ), a sprawling state-controlled conglomerate that has struggled to meet even some basic needs of the armed forces — not only for ammunition, but also for essentials such as boots and helmets.
“It’s not in my character to say that everyone and everything before me was wrong, but in this case they really failed — they didn’t develop the Polish arms industry,” defence minister Władysław Kosiniak-Kamysz told the Financial Times earlier this year, when asked about the manufacturing sector that he inherited from the previous government of the Law and Justice (PiS) party.
Poland’s manufacturing problems come despite the fact that Warsaw leads Nato in military spending, allocating the equivalent of 4.7 per cent of GDP in this year’s budget to defence. Domestic production has also become a priority for Poland’s EU partners, eager to reduce their dependence on the US following President Donald Trump’s criticism of European allies.
Poland’s uphill struggle was underlined last month when Krzysztof Trofiniak resigned as chair of PGZ after only one year in charge. Neither PGZ nor the defence ministry responded to questions about why Trofiniak left just when he was spearheading Poland’s drive to boost defence manufacturing.
Trofiniak was the tenth PGZ boss since the holding company was formed in 2013 under a previous Tusk government as a national champion grouping about 50 manufacturers.
“Running PGZ is one of Poland’s worst jobs,” said a former defence official who requested anonymity. “You get picked by politicians and removed when they need a scapegoat or political power changes hands.”
Still, there are some brighter spots.
Deputy defence minister Cezary Tomczyk last month welcomed a $310mn contract for PGZ to deliver 18,000 tonnes of TNT to a US army supplier. “Until now, we have been announcing that we are purchasing military equipment from the US — today we are the ones selling our products to an American company,” he said.
Tusk’s government is also pushing foreign manufacturers to move production and knowhow to Poland. Last week Polish company WB Group and South Korea’s Hanwha formed a joint venture to make rockets in Poland, to be used for the Chunmoo artillery launchers previously acquired by Warsaw. British company Babcock has also extended a partnership with PGZ to build frigates in Polish yards.
PGZ can also claim some production achievements. It designed the Krab howitzers used in Ukraine’s war, and last month sold the Polish army 111 Borsuk fighting vehicles. EU defence commissioner Andrius Kubilius hailed Poland for “showing the right example” with the Borsuk. “To scale up your defence, you are buying Polish,” Kubilius told a Warsaw security conference.
But most industry experts say the Borsuk cannot eclipse other PGZ shortcomings, especially its ammunition output. Last month Dariusz Łukowski, who heads Poland’s national security bureau, warned that current ammunition supplies would only allow Poland to fight for one or two weeks against a Russian attack.
At Niewiadów, managing director Dariusz Szlafka — who joined last year from PGZ — said his previous job involved producing ammunition “in homeopathic quantities” due to PGZ’s constant management rotation. He had worked on plans to build a 155mm artillery shell factory, discussions for which began in 2014. “I left PGZ because I wanted to actually produce 155s, not just talk about it,” he said.
Niewiadów was bought out of bankruptcy in 2019 by Works11, a defence contractor founded by Michał Lubiński. He has since transferred ownership to his sister because he has been fighting a court case over bribery charges he says were part of a politically motivated campaign by the previous government.
Lubiński accuses PGZ of preventing Niewiadów from growing faster beyond its modest €20mn annual revenues by lobbying decision makers not to fund non-PGZ projects. Instead of supplying the Polish military, Niewiadów will in June start producing 60.7mm mortar ammunition as a subcontractor to Slovak defence companies.
PGZ’s near-monopoly status, Lubiński argued, exemplified how “a lot of money can be wasted in a sector that has been isolated from real competition and driven by politics rather than the market”.
Jarosław Kruk, managing partner of KW Kruk, a Warsaw law firm that works for the defence sector, said one of his clients was supplying radar components to Germany, Belgium and the Netherlands, but was unable to win a domestic order. Kruk said the Polish army’s contract requirements were at least three times harder to meet for a privately owned supplier than for PGZ.
“In my opinion, our lovely Polish army believes that only state-owned companies can meet its needs, even though some private companies now make very interesting products,” Kruk said. “PGZ has always promised whatever the politicians and the army people want, but it’s mostly been only promises.”
Deputy defence minister Tomczyk has called for 50 per cent of the budget for military equipment to go to Polish manufacturers. But achieving that goal will require opening up military procurement, said Rafał Brzoska, a billionaire entrepreneur who is advising Tusk on deregulation. “In Poland, nothing has been produced by private business,” Brzoska said. “In the US, the F-35 [aircraft} and everything else is made by private companies, not the state.”
Tusk’s government has continued to buy American weapons, even as it anxiously watches Trump’s rapprochement with Russian President Vladimir Putin. Over the past month Poland sealed a $2bn deal to reinforce its US Patriot air defence systems, as well as a $1.3bn purchase of air-to-air missiles from Washington.
“Our politicians can give public speeches about making everything more Polish, but when they then get the private call from Washington, they will sign the contract with the US,” said Kruk. “We love Americans and their military and I really think we will remain fully dependent on them.”