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Poland

Domestic Arms Production

Under the communist system, the Ministry of National Defense ran nineteen manufacturing and repair plants, but about eighty plants were designated as defense industry enterprises under branches of the Ministry of Industry. In the late 1980s, the largest military goods producers were the Stalowa Wola Steel Works, the Kasprzak Radio Works, the Krasnik Ball-Bearing Plant, the Wifama Textile Machinery Combine, the Stomil Tire Plant, the Polish Aviation Combine, the Pronit firm, the Northern and Wisla shipyards in Gdansk, the Lucznik Works, the Starachowice Truck Factory, the Polish Optical Works, the Bumar-Labedy Engineering Equipment Combine, and the Olkusz Enamel Plant. In most cases, over 85 percent of a plant's production went to nondefense customers; the shipyards, the Bumar-Labedy combine, and the Stalowa Wola Steel Works were among the few producers whose output went mostly to the military. In 1988 military goods producers employed about 260,000 people and accounted for about 3 percent of total output of enterprises under the Ministry of Industry. At the same time, over 6 percent of Poland's total exports were military products. Of military output, 49 percent went to the Polish military, 46 percent was exported, and 5 percent went to the ministries of justice and internal affairs. By 1992 military goods had dropped from 3 percent to 1 percent of total industrial output.

Polish military industries began planning for conversion to civilian production in 1987, when the Warsaw Pact was developing its new defensive posture. Some twenty of the eighty designated defense industry enterprises were considered for closure or conversion to civilian functions. Meanwhile, all defense industries made long-term plans for greatly reduced orders between 1991 and 1995. By 1990 military contracts had dropped by 30 to 80 percent, depending on the plant. Spending on weaponry had dropped by 84 percent. These reductions in demand led to unemployment and unused industrial capacity. Defense industries also lost the privileged position they had enjoyed in the communist economy. Gone in 1990 were supply priority, lowinterest credit, state subsidies, and tax exemptions. Industry pessimism increased in 1990 and 1991 when military planners considered replacing Soviet- and Polish-made equipment with Western equipment.

Conversion of defense industry plants to civilian production faced serious obstacles. Deep cuts in the defense budget left little money for a centrally administered program or for the massive investment required to convert heavy industry. Because long-range military needs remained undefined in 1992, the degree of conversion would require guesswork. Finally, some plants simply could not be converted at any reasonable cost.