The event was opened by ambassador Robin Barnett, BPCC chairman Antoni F. Reczek, and Gen. Stanislaw Butlak, General Advisor to the Under-secretary of State at the Polish Ministry of Defence.
The signing of a Memorandum of Understanding between ADS and the Polish Chamber of National Defence Manufacturers underlined the strengthening of relations between the two business associations and highlighted the prospect of greater cooperation.
Marek Matraszek from CEC Government Relations gave a strategic overview of Poland's current defence situation and its implication for defence sales. Poland is unusual in being a NATO member that takes its Treaty commitments seriously, guaranteeing to spend not less than 1.95% of its GDP on defence. But as Poland's economic growth slows, the focus – like in most other countries – is to do more with less. Yet pressure for Poland to modernise its armed forces will not go away. Delegates had previously heard from General Butlak that by 2020 Poland intends to have two-thirds of its military hardware in the form of up-to-date western equipment, with one-third being Soviet legacy kit. Today, the proportions are the other way around.
Tomasz Zalewski, partner at Wierzbowski Eversheds, who initiated the London event at ASD's headquarters, spoke about the DSPD. The Directive theoretically opened the way for cross-border tendering for defence contracts. EU member states should have equal access to one another's defence contracts, this improves value for tax-payer's money and boost competitiveness. However, it is expected that most member states will continue to protect their domestic defence sector industry using, among others, Article 346 of the Treaty on the Functioning of the EU. This says that 'any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes.'
In terms of its application of Article 346, Poland differs little from other member states. Poland's public procurement in practice continues to be a mine-field for BPCC members and foreign players in general. In each of the last three years in Poland there have been around 3,000 challenges to public procurement decisions compared with 30 for the whole of the last three years in the UK, said Tomasz Zalewski from Wierzbowski Eversheds. Taking part in Polish public procurement requires a large commitment of management time. The result is so easily challenged or a bid is rejected because for a petty formalistic reason. Other issues are timing and clarity. Governments underestimate the amount on internal competition for resources within large defence contractors to satisfy the demands of different markets – sufficient time has to be allowed to evaluate and prepare for a tender.
The first panel discussion looked at the Size and scope of opportunities going forward; possibilities for enhanced British-Polish cooperation in defence sector. The panellists were David Houghton, Defence Attaché, British Embassy Warsaw; Willy Hockin, Director - Acquisition & Maritime ADS; Sławomir Kułakowski, Chairman of the Polish Chamber of National Defence Manufacturers and Marek Bujny, Member of the Board, Aerospace Valley Association. Mr Bujny said that British defence contractors were yet to show they are serious about Poland, while Mr Kułakowski, was critical of the low levels of investment in the Polish defence sector from the EU when compared to those from the US. In response, Mr Hockin pointed out that the UK is responsible for 70% of European aviation output – mainly wings, aero-engines and avionics. Group Captain Houghton suggested that if the Polish Air Force buys American F-16s and C-130s and state-owned airline LOT, flies US and Brazilian airliners, it's not surprising that European manufacturers are not investing as much in Poland as Poland might like. There was also a discussion around the need for Europe's defence industry to consolidate; Mr Hockin illustrated this by pointing out that NATO forces in Europe deployed 27 different types of armoured fighting vehicle.
The second panel consisted of Geoff Hoon, former British defence minister (from 1999-2006), now Managing Director, International Business at AugustaWestland; Ivan Valcuende, Finance Director at Airbus Military Polska; Paul Kaye, President Central, Eastern and Southern Europe, Rolls-Royce; Timothy James, International Business Development Manager, Lockheed Martin Mission System and Training UK and Mark Stevens, Director International Sales and Marketing Thales UK. The panel discussed the practical issues faced by defence companies present in Poland, touching on the issue of technology transfer and the extent to which UK, EU and US defence manufacturers are prepared to transfer technology to Poland. Wanting to maximise the amount of manufacturing which takes place domestically, Poland is looking to enlarge the size of its defence industry with more advanced technologies that is can export elsewhere. With a well-educated workforce and relatively low wage costs, Poland has the potential to move beyond up the value-added ladder, away from basic metal-bashing.
The forum offered a delegates the chance to meet potential business partners and highlighted the opportunities for UK and Polish firms to work together. There will be more chances to follow up in coming months; the Radom Airshow at the end of August will gather the aerospace sector, in particular those with an interest in the Polish Air Force's requirement for a fast jet trainer and the Army's tender for helicopters. Then, there's the MSPO defence exhibition in Kielce in early September. The BPCC and British Embassy, together with ADS, will be organising a British-Polish Security Forum in Warsaw in the autumn (date to be announced), and a BPCC/ADS defence event will be held in London at the Polish Embassy in the first quarter of next year.
A key message emerging from the panels was that large amounts of patience and agility are required to succeed in this market. The politicians – whose time horizons are always too near – must understand that long-term investment is born of long term stability. Contractors need clarity both as to the procurement procedures and the actual needs of government and Polish companies must recognise the value of a true partnership approach. On these foundations a sustainable Polish defence industry may be built.
The accompanying exhibition showcased the products of several UK companies, including Analytical Graphics UK Ltd, Inmarsat Global Ltd, Selex ES Ltd, Thales UK Ltd,, TMD Technologies, and Vital Seating and Systems IFS Defence.