Earlier this year, Poland's minister of national defence Wadysaw Kosiniak-Kamysz spoke with his Swedish counterpart Pal Jonson, and the conversation turned to procurement. The Swedes were aware that they sold a lot to Poland, from ships to planes to anti-tank missiles, Kosiniak-Kamysz recalled. They wanted to know what they could buy in return.
"Our flagship product that could be sold is Piorun," Kosiniak-Kamysz said, referring to a portable anti-aircraft missile launcher, manufactured by Mesko, a subsidiary of the state-owned defence conglomerate Polska Grupa Zbrojeniowa, or PGZ. But Poland simply doesn't make enough; the single production line making the weapons is at full capacity. "There is a waiting list for this from many places in Europe," the minister told Bloomberg.
This lack of manufacturing capacity has become a critical problem for the Polish government. Since Russia's full-scale invasion of Ukraine in 2022, Poland has increased defence spending from 2.4% of gross domestic product to 4.7% in 2025, more than doubling it in real terms.
That money should have led to a boost in the Polish defence industry, which is dominated by PGZ, a 50-company conglomerate producing a wide range of materiel. But much of Poland's spending has instead gone to foreign contractors, demonstrating the difficulty that the country, and its European neighbours, face in turning their surging spending on security into resilient domestic defence industries.
"The Polish armed forces and those of our allies are in need of large quantities of weaponry, so the defence market has an immense development potential," said Jacek Tarocinski, research fellow at the security and defence department at the state-funded Center for Eastern Studies think tank. "If we don't set up our own defence capabilities, we will be paying for someone else's production capabilities. This applies to every country in Europe."
One of the greatest needs on the battlefield in Ukraine is for artillery shells, in particular, 155mm NATO standard ammunition. The EU has pledged to supply Kyiv with two million shells in 2025.
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A worker moves 155mm ammunition at the Nitro-Chem SA factory in Bydgoszcz. Photographer: Damian Lemanski/Bloomberg
As they work to supply Ukrainian forces and build their own stockpiles, European countries have been investing heavily in new production facilities. Poland had set a target of being able to produce 150,000 shells per year by 2025, according to a plan, dated 2023, seen by Bloomberg.
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To meet that target, PGZ needs gunpowder, supplies of which have been tight in Europe in recent years. That shouldn't have been a problem. Plans to expand production of propellants at Mesko have been in place since at least 2015, according to a 2023 report by Poland's Supreme Audit Office, a watchdog overseeing public enterprises and ministries.
The first initiative for expanding gunpowder production, dubbed Project 44.7, was supposed to develop new, innovative types of gunpowder. It was scheduled to be in operation by 2017, and delivering revenues by 2018.
The Supreme Audit Office dismissed the initial deadlines as "unrealistic" in the first place. Then, according to the auditor's report, the business plan kept changing. PGZ, Mesko's parent company, didn't approve the updated versions. Machinery worth 8.4 million zloty (US$2.26 million) was purchased in 2017 and 2018, but was then left in warehouses because the buildings supposed to house it hadn't been constructed.
In 2019, the then-government, under the Law and Justice Party, drew up plans for an even larger gunpowder manufacturing facility, Project 400, which was supposed to be completed by 2022. But, according to the audit office report, the plans had to be adjusted multiple times. The audit found that estimates of building costs were out of date, and that the company struggled to hire experts to work on the factory, and was slow to develop the technologies it needed to build the production lines.
Between 2017 and 2021, Mesko had five different CEOs. Neither Project 44.7 nor Project 400 is yet in operation.
In response to a request for comment on the Supreme Audit Office's report, PGZ said that new business plans for Project 400 and Project 44.7 were awaiting approval, but that the former was "on the finishing line" and the latter would be at full production capacity by July 2026.
The national target of producing 150,000 shells per year has now been pushed back to 2028, according to Konrad Golota, deputy minister of state assets. Projects 44.7 and 400 should, finally, be up and running by June next year, he said.
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Other countries in Europe have been able to increase their production capacity of 155mm ammunition. Since 2022, the German defence giant Rheinmetall has increased its production of large calibre shells tenfold, and can now produce 750,000 units per year.
"Three years have passed and not much has been done in Poland," said Tomasz Smura, director of the defence program at the Casimir Pulaski Foundation think tank. "Neighboring countries... have dramatically increased production while Poland is still producing quantities similar to those which were produced at the beginning of the war."
The coalition government under Prime Minister Donald Tusk, which took power in 2023, has blamed the previous Law and Justice Party administration for the defence industry's struggles.
Mateusz Kurzejewski, deputy spokesperson for the Law and Justice Party, said that the slow progress in building capacity was due to global shortages of components, and blamed the administration that preceded his - which was also headed by Tusk - for "destroying" the industry. "Could we have done more? We couldn't have done more. We did everything we could to get the Polish arms industry back on its feet," Kurzejewski said.
Other efforts to boost manufacturing have foundered. In 2022, PGZ signed an agreement with the South Korean industrial group Hyundai Rotem to buy 820 K2 tanks. The partnership was supposed to involve a gradual shift of the manufacturing process from South Korea to Poland, so that Polish factories would start out assembling the vehicles, eventually making more and more of the component parts. Production was supposed to start in 2026, but the terms of the final deal are still being negotiated. Golota said the talks between PGZ, Defense Ministry and Korean partners are ongoing.
Krzysztof Trofiniak, PGZ's chief executive, resigned earlier this month. He could not be reached for comment.
There have been some successes in building local capacity to assemble weapons systems. Last year, Poland's Armament Agency, which oversees defence procurement, signed a 16 billion zloty (US$4.27 billion) contract with PGZ group's Huta Stalowa Wola for 96 Krab howitzers for the army.
Since 2022, PGZ subsidiary Jelcz has been mounting Chunmoo missile launchers, made by South Korean contractor Hanwha Aerospace, onto locally-manufactured vehicles.
WB Electronics, Poland's largest supplier of military drones, expects to sign a deal later this year with Hanwha Aerospace that will allow it to manufacture rockets for Chunmoo artillery in Poland, according to Remigiusz Wilk, a spokesperson for WB Electronics. The two companies have laid out the broad terms of their partnership, but have yet to sign a final contract. WB Electronics will need to secure contracts for delivery from the Polish Armed Forces to be viable, Wilk said, "because the factory itself will not exist in a vacuum."
Other European countries have expressed interest in buying missiles from the factory, Wilk said.
Creating export businesses would help to justify the enormous investments that Poland is making in its military. The country spent more than 150 billion zloty on defense last year, Robert Pszczel, a former director at NATO's office in Moscow, now senior fellow at the Centre for Eastern Studies think tank, told Bloomberg.
"A very large part of this sum was spent on purchases abroad," Pszczel said. Exports are small by comparison. A Polish foreign ministry report showed that overall defense exports in 2023 were 1.74 billion.
"This is a very small percentage of all the expense," Pszcel added, "and creates understandable pressure that this proportion must change."
The coalition government wants to kick the defence industry into gear, and bring some dynamism to PGZ, according to Golota. The company has been too focused on producing solely for the Polish military, meaning it hasn't invested in the kind of products and manufacturing capacity that would allow it to compete internationally.
"Export hasn't been the priority, which is one of the reasons behind today's investment delay at the Polska Grupa Zbrojeniowa," Golota said.
In April, the government adopted a draft bill aimed at making it easier to get permits and permissions to build military infrastructure and manufacturing facilities. The proposed bill, which still needs to pass through parliament and be approved by the president, is also supposed to make it easier for Poland to use European Union funds to invest in defence. At a press conference announcing the bill, Kosiniak-Kamysz said that another production line for the Piorun was now part of the country's plans.
In November 2024, the government allocated 3 billion zloty for the construction of a new ammunition factory, which it expects to be completed by 2028.
More delays would be deeply concerning for some in Poland, where the need to build defence supply chains goes beyond commercial considerations.
"Poland is a frontline country," Pszczel said. "We cannot rule out the possibility of a full-scale war."
The best form of defence is deterrence, he added. That means having more than just equipment and soldiers, it means being able to manufacture at scale. While Ukraine's military has benefited hugely from imported weapons, the country has rapidly increased domestic production of drones and missiles to allow it to stay in the fight against a far larger adversary. It's a lesson that Poland, but also the rest of Europe needs to learn.
"Like in other European countries," Pszczel said. "For many years this industry did not function at its highest speed because we lived in a time of some kind of bliss."
