Poland forms consortium to bid for share of military spending

KIELCE, Poland, Sept 3 Wed Sep 3, 2014 10:34am EDT

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KIELCE, Poland, Sept 3 (Reuters) - Poland on Wednesday brought small defence manufacturers into a consortium big enough to bid, alongside foreign majors, for a share of the country's $40 billion military modernisation pot.

The Polish Arms Group (PGZ), set to comprise over 30 companies ranging from a shipyard to a high-tech graphene manufacturer, will allow the country's fragmented industry to compete for state tenders against large foreign companies.

"We're creating the largest defence consortium in this part of the world," said PGZ's chief executive Wojciech Dabrowski at a consolidation ceremony on Tuesday.

"We're doing what other developed countries have done before, achieving significant business success."

Following the consolidation, the unlisted consortium's valuation will reach 6 billion zlotys ($1.9 billion), Treasury Minister Wlodzimierz Karpinski, also present, told reporters.

The group will employ around 16,000 people and have an estimated annual income of 4.5 billion zlotys ($1.4 billion).

Poland currently spends 1.95 percent of its GDP on the army, one of the highest rates of military spending, with a further increase in the defence budget planned for 2016.

PGZ could also serve as a potential contractor in tenders awarded to foreign bidders. Polish industry's participation in manufacturing and servicing will be a significant factor in awarding procurements, according to defence ministry.

(1 US dollar = 3.1932 Polish zloty) (Reporting By Wiktor Szary, editing by David Evans)

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