Poland Boosts Domestic Defence Industry to Build Europe’s Largest Army
Poland's Strategic Shift in Defence Procurement and Regional Collaboration
By Karol Badohal, Maria Rugamer and Michael Kahn
WARSAW/GDANSK/PRAGUE, Sept 1 (Reuters) - As Poland builds Europe's biggest army, it is pivoting toward domestic and other central European defence companies to reduce reliance on far-flung suppliers unable to quickly ramp up deliveries, government officials and companies say.
Polish spending on defence procurement from domestic companies, including joint ventures with other central European companies, has risen nearly four-fold since 2022 to 30.4 billion zlotys ($8.15 billion) last year, according to Armaments Agency data analysed by Reuters.
While the Ukraine conflict has prompted higher defence spending across Europe, in Poland it's a top priority as the country shares a border with Ukraine and sees Russia as an existential threat, officials say.
Building the Largest Land Army in Europe
"We're building the largest land army in Europe," Deputy State Assets Minister Konrad Golota told Reuters.
"The fact that something is used by our army and the fact that it's manufactured in Poland is becoming increasingly important."
State‑linked Polish defence firms have stepped up capital spending again in the past year, and more than a dozen government officials, companies and experts told Reuters that Warsaw's new push reflects a shift that creates opportunities for defence firms in the region.
This year, Poland is expected to spend around €53 billion ($61.45 billion) on core defence expenditures, the fourth-highest in the EU behind France, Italy and Germany, according to NATO data, up from €44 billion in 2025 and equal to around 4.7% of gross domestic product.
Focus on Domestic and Regional Production
While big-ticket systems such as U.S.-made Patriot missile batteries, Abrams tanks and F-35 fighter jets remain important, Polish officials say expanding domestic and regional production of drones, ammunition and other frequently used equipment has become a priority.
Regional Shift in Defence Industry
REGIONAL SHIFT
Poland's strategy reflects a broader rethink across Europe as governments seek to rebuild defence industrial capacity after the war in Ukraine exposed how quickly modern conflicts can deplete ammunition stockpiles.
Supply Chain Independence
"This is not merely an investment to ensure we have a highly developed defence industry, which serves as a driving force for the Polish economy, but a matter of supply chain independence," Defence Minister and Deputy Prime Minister Wladyslaw Kosiniak-Kamysz said.
"It ensures independent supplies to the front line should the need arise."
Expanding Regional Partnerships
Until recently, defence firms in countries such as the Czech Republic, Slovakia and Hungary had a more limited presence in Poland, which relied heavily on state-owned producers such as PGZ and U.S. suppliers.
Now those companies see an opening.
Czech-based CSG, a major supplier of ammunition to Ukraine, signed a series of agreements in recent months to expand production in Poland.
These include a transfer of propellant production technology to PGZ subsidiary MESKO and an agreement with PGZ to expand production of drones, missiles, ammunition and armoured vehicles.
CSG's Polish unit has also acquired defence component maker Domar MS.
In August, CSG signed an agreement worth more than €100 million with PGZ unit Dezamet to supply components for 155 mm artillery ammunition and a separate €150 million contract with Huta Stalowa Wola for fighting vehicle equipment.
"Central Europe is undergoing a broader shift in how defence industrial capacity is built," CSG Polska Chief Executive Wojciech Grzonka told Reuters.
"Poland is a strategic market for CSG and one of the key directions for our long-term development and expansion of production capabilities."
'Near-Shoring' Pioneer
'NEAR-SHORING' PIONEER'
New Industrial Collaborations
Other defence groups are responding to Warsaw's push.
Polish arms maker Grupa Niewiadow, a Niewiadow PGM unit, is setting up 155 mm ammunition production with KNDS Ammo France, with output expected to reach 180,000 rounds annually from next year.
PGZ said in March it will partner with Estonia's Frankenburg Technologies to manufacture ultra‑short‑range air defence systems in Poland.
Resilience and Supply Chain Security
Zdenek Rod, a defence expert at CEVRO University in Prague, said Poland was emerging as a pioneer in efforts to "near-shore" military production within Europe.
"For years, supplies from the United States were a priority to ensure NATO interoperability," Rod said. "Now Poland is also trying to ensure resilience against global disruptions by turning more toward regional and European suppliers."
Polish officials also told Reuters they are discussing expanded industrial cooperation with countries including Slovakia and Hungary.
Germany's Rheinmetall said rising demand from Poland was one reason it was establishing production capacity there and developing a regional maintenance and repair hub for land combat systems.
"The demand generated by Poland's defence modernisation programme justifies establishing full-scale production sites there, which can be integrated into European supply chains and contribute to redundancy and resilience in the European defence industrial system," Rheinmetall said.
Poland's Defence Ambitions and Future Outlook
The Polish Armed Forces surpassed 220,000 personnel this year, one of Europe's biggest, and Poland, along with Estonia, is one of few NATO members that are close to their NATO commitment to spend 5% of GDP on defence by 2035. In another sign of its defence industry ambitions, Warsaw last month offered to jointly produce missiles for the Patriot air defence system with Ukraine and the United States.
"If you want to sell in Poland, you have to invest in Poland, you have to transfer technology, you have to work on joint projects with us," Deputy State Assets Minister Golota told Reuters.
"The more factories and know-how we have on our side, the better our defence is."
Exchange Rates
($1 = 3.7314 zlotys)
($1 = 0.8625 euros)
