The Polish Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017

The Polish Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017

The Polish Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 report provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

 

Introduction and Landscape

Why was the report written?

The Polish defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Polish defense industry.

 

What is the current market landscape and what is changing?

Poland's defense industry is the largest in Central Europe. During the forecast period, the country is expected to spend an estimated US$56.4 billion on strengthening its defense forces, primarily due to the modernization initiatives implemented by the Polish Ministry of Defense. Furthermore, the country's defense expenditure will be driven by a combination of factors such as tensions with Russia, strong economic growth, and increased involvement in NATO and peacekeeping missions. As a result of the restructuring, modernization, and financing plans of the Polish Armed Forces, the country's capital expenditure allocation of the total defense budget will increase over the forecast period.

 

What are the key drivers behind recent market changes?

Throughout the forecast period, Poland is expected to spend US$56.4 billion on its defense requirements. The main factors that will fuel the country's military expenditure include the country's modernization of existing defense equipment, threats from extremist organizations and organized crime groups, participation in peacekeeping missions, and a strained relationship with Russia. In addition, it is anticipated that Poland will register strong economic growth, which will enable the country to increase its defense expenditure.

 

What makes this report unique and essential to read?

The Polish defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

 

Key Features and Benefits

• The report provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
• The report includes trend analysis of imports and exports, together with their implications and impact on the Polish defense industry.
• The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
• The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
• The report helps the reader to understand the competitive landscape of the defense industry in Poland. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

 

Key Market Issues

The current offset law requires foreign investors to direct the majority of their offset obligations into existing and largely unreformed local defense companies. A significant number of these companies are state-owned, with inefficient cost structures and Soviet-style management. Foreign OEMs often struggle to meet their offset obligations and, as such, are required to pay a penalty. All foreign contractors are contractually obliged to pay the penalty following the non- or under-performance of the offset policy which is specified at the time of offset agreement, regardless of whether the foreign firm was responsible for the failure or not.

 

In 2010, Polish defense imports registered a massive decline due to the effects of the global economic crisis, and imports in 2011 were 85% less than in 2007. Despite the country's defense imports in 2009 falling to almost one quarter of those in the previous year, imports are anticipated to increase over the forecast period. Imports will be fueled by to the country allocating 20% of its budget to upgrade its military hardware.

 

The Polish Public Procurement Law faces the challenge of excessive interference from high-level government officials with the power to manipulate tenders to the disadvantage of foreign bidders. The acquisition process preceding the 2003 F-16 tender, worth US$3.5 billion, lacked transparency and faced the obstacle of corruption. Three foreign contractors entered the bid for this contact: Lockheed Martin with F-16C/D Block 52+, Saab/BAE Systems with JAS-39 Gripen, and Dassault with Mirage 2000-5 Mk II. The details of the offers made by Saab/BAE Systems and Dassault are not in the public domain, which indicates a lack of transparency and possible corruption in the bidding process.

 

Key Highlights

Poland's military expenditure valued US$9.1 billion in 2012, after recorded a CAGR of -2.41% during the review period, making it the largest in Central Europe. The country's defense expenditure is expected to record a CAGR of 7.2% during the forecast period, to reach a value of US$12.9 billion in 2017. The Polish defense industry is currently undergoing an infrastructure modernization phase, which will contribute to the country's high military expenditure over the forecast period. Poland's defense expenditure growth will also be driven by the country's strong economic growth, strained relationship with Russia and participation in peacekeeping missions.

 

Due to the global economic crisis, Polish defense imports reduced by 85% between 2007 and 2011. The US was Poland's main arms supplier over the review period, and the country relies entirely on the US for procuring its air defense systems. In addition to supporting international counterterrorism efforts, Poland partners closely with the United States on issues such as democratization, nonproliferation, human rights, regional cooperation in Central and Eastern Europe, economic growth and energy security, and United Nations reform.  Therefore, the bilateral relation between these countries will provide business opportunity for exports during the forecast period.

 

With approximately 2.1 million unemployed citizens, which equates to 12.9% of the total civilian population in May 2011, organized crime in Poland is increasing. Polish crime groups are primarily engaged in human trafficking, cyber attacks, and the production and illegal distribution of drugs. Poland has emerged as one of the leading global producers of synthetic drugs, and an increase in the demand for recreational narcotics has resulted in a sharp increase in the smuggling of drugs and chemical substances from Russia through Belarus.