Aviation and Aerospace to Poland

Trends and opportunities

The market

Poland is the largest economy in Central Europe and the sixth largest in the European Union. With a population of 38 million, strong economic growth and a highly skilled workforce, Poland has seen its manufacturing base develop rapidly over the last two decades. Poland’s Aviation Valley provides an opportunity for Australian firms to access global aviation supply chains.

Major global aviation companies including Pratt & Whitney, Safran, Rolls Royce, MTU, Sikorsky and Leonardo have established manufacturing operations in Poland’s Podkarpackie province (marketed as Aviation Valley). International and Polish SMEs are located in close proximity to provide a range of products and services. The investment in the Podkarpackie province has made it one of the fastest-growing aerospace clusters in the world.

There is at least one part of every civil aircraft in the world made in Poland.

While the manufacturing of parts and components was the catalyst for industry growth, companies are now moving up the value chain. Local factories of large primes are becoming more independent and are sourcing their suppliers. This is stimulating the growth and development of local innovative SMEs. These SMEs are looking for new technologies to help them to become more competitive on the global market and are eagerly looking for foreign partners. Avionics, 3D printing, UAVs and special surface treatment processes are in demand. There are also opportunities for Australian companies to access global supply chains via the Polish subsidiaries of major companies.

Poland has the largest defence budget in Central Europe. With the statutory target of military spend at 2% of GDP (one of highest among NATO countries) and government commitment to increase this to 2.5%, the outlook for the Polish defence sector looks strong.

The Polish defence forces are undergoing the most ambitious modernisation program in the country’s history. The government budgeted A$45 billion for defence modernisation over a decade. The program is comprehensive and covers land, sea and air force platforms. Planned procurement includes fighter jets, helicopters, UAVs, BMS and more. Poland has a significant defence industry but is lacking new technologies. Consequently, new procurement will be focussed on technology transfer or imports.

The recommended market entry strategy is partnering with a local company. A local partner is better positioned to identify opportunities (on time) and facilitate public procurement procedures.

Market Overview

One hundred years of aviation and aerospace manufacturing experience has seen Poland develop as an important part of the global aviation industry supply chain, particularly in the manufacture of civil and military aircraft and components.

Aviation

The Polish aviation industry is playing a significant role in the global aviation supply chain. There are more than 160 members who are part of Aviation Valley and this includes the majority of global aviation industry prime contractors, a strong base of small and medium-sized supplier firms, and dedicated academic and research institutions.

Aviation Valley is a world-class industry cluster employing more than 30,000 people, with almost 80% of its US$3 billion (Source: Aviation Valley 2018) in annual sales coming from export.

Poland has attracted most of the major international players, and the largest Lockheed Martin manufacturing site outside of the US, PZL Mielec, is located in Poland. Black Hawk S70i helicopters are produced there. Every 10th Black Hawk’s cabin is manufactured in Poland. (Source: PZL Mielec A Sikorsky Company 18 December 2018). PZL Mielec is also known for its Short Takeoff and Landing (STOL) aircraft M-28 Skytruck, which is available in the Australian market. Poland is also home to:

  • Leonardo – manufacturing helicopters at PZL Swidnik
  • Pratt & Whitney – manufacturing engine components including Fan Drive Gear System for the latest Geared Turbofan™ Engine and Auxiliary Power Units (APU)
  • Rolls Royce – manufacturing accessory drive trains for the newest aircraft engines
  • Safran, MTU, Airbus Group, and General Electric.

Lufthansa and General Electric recently invested €150 million in Poland to build an advanced plant for servicing aircraft engines. The facility will test and repair state-of-the-art engines for Boeing 747-8 jumbo jets for Lufthansa and for other airlines.

The advanced level of processes used in the Polish aerospace sector is well illustrated by the participation in different international projects, for example the development of the innovative engines like Pure Power PW1000G (GTF), GEnx and LEAP.

While the manufacturing of parts and components has driven the sector’s growth in Poland, companies are moving up the value chain. The establishment of a new design and engineering centre provides local factories with increased design capability and independence, which is expected to facilitate the opening of the supply chain to new suppliers including Australian firms.

Passenger transport in Poland is rapidly growing. Last year the number of passengers increased by 18% which was the second-highest globally, and continued double-digit growth is forecasted. (Source: PWC Air Traffic Forecast: Report, 18 December 2018)

The growing number of airline passengers in Poland has driven the development of airlines and companies servicing the air transport sectors such as handling and MRO. This creates collaboration opportunities for Australian companies supplying MRO centres.

Poland is planning to build a new airport, due to be completed in 2027. The new central airport will replace Warsaw’s Chopin Airport, which currently handles around 38% of all national air traffic and is close to reaching its capacity. (Source: Polish Press Agency, ‘Poland adopts legislation for key airport hub’, 14 June 2018)

The planned new 3,000 hectare airport will become one of Europe’s largest international travel hubs, handling up to 45 million passengers per year with further plans to expand to serve 100 million passengers per year.(Source: Polish Press Agency). Together with the accompanying road and rail infrastructure, the facility is expected to cost over A$13 billion. There are opportunities for professional airport consultancies, investment funds and airport infrastructure companies.

Airspace modernisation is needed in Poland to accommodate the growth in demand at existing airports, while enhancing safety, operational resilience, environmental performance and market competitiveness. The Polish government published its Airspace Strategy for Poland 2018 (Source: Air Space Strategy for Poland: Report November 2018) which addresses needs such as modernising the terminal space and airport infrastructure, modernising the upper airspace, air traffic systems and infrastructure and integrating unmanned operations.

Defence

Poland has been implementing an ambitious, A$45 billion plan to modernise the armed forces.

There is a statutory target of military spend at 2% of GDP (one of highest among NATO countries) and a government commitment to increase this to 2.5%. While the investment program has encountered delays due to its size and complexity, the outlook for the Polish defence sector remains favourable. The defence budget for 2019 is A$16.5 billion, an 8.6% increase year-on-year.

Poland’s defence procurement program is comprehensive and covers air, land and sea force modernisation. The focus is on anti-missile defence systems, cyber security, investment in the navy (including acquisition of submarines), purchase of utility and attack helicopters, build-up of the territorial defence and enhancement of the command system and structure. Poland is looking for new technologies to enhance its deterrence capability and to advance the local defence industry.

Opportunities

New aviation technologies

The list of desired capabilities include, but are not limited to:

  • Avionics, composites, UAVs
  • 3D printing technologies
  • Robotics and Industry 4.0
  • Special surface treatment processes – especially galvanised coating – Cadmium Plating, Zinc Plating, Nickel Plating,
  • Anodising (Poland has a strong capability in machining engine components but insufficient supply of special treatment process is the barrier for further growth).
  • Niche manufacturing technologies
  • Flight simulators

Modernisation of Poland’s military’s hardware

Domestic polices attempt to maximise the participation of Polish firms in the process, but due to the relatively small size of the domestic industry and the lack of latest technologies opportunities exist for both foreign players and those seeking to establish subsidiaries or partnerships in the country.

The Polish Ministry of Defence (MoD) has announced the new generation fighter aircraft programme. The objective is to fast track the introduction of a successor to the MiG-29 and Su-22 fast jets in the Polish Air Force, with the F35 considered as one of the options.

MoD’s draft budget for 2019 secures funding for Mi24 helicopters modernisation. It will include avionics and weapon systems integration. The modernisation will be undertaken by WZL1 in Lodz in cooperation with Polish and international partners. This could present opportunities for Australian companies supplying avionics and helicopter equipment.

There are also plans to acquire 32 attack helicopters within the framework of the Kruk procurement programme. Boeing, Bell and Leonardo are being considered.

Airspace modernisation

  • Infrastructure investors, consultants and airport technologies providers
  • Air traffic systems and infrastructure solutions

Marketing your products and services

Market entry

The most common market entry strategy for Australian companies is to partner with a local entity or distributor. It is important to demonstrate commitment and build the relationship. It is recommended that companies visit the market regularly for face-to-face meetings and to maintain frequent telephone and email contact between visits.

Austrade Warsaw has well-established contacts in industry and government and can provide market intelligence and assist Australian companies to identify business opportunities and introduce potential partners.

Maximising Polish content in any defence contract is a requirement. Australian firms seeking to tender for defence work need to consider partnering and working with local Polish companies (including the Polish Armaments Group) and/or establishing a manufacturing and services presence in Poland.

Europe is a priority market under the Australian Government’s Defence Export Strategy. Companies are encouraged to engage the Australian Defence Export Office (ADECO) and/or Austrade to discuss available opportunities. Information on the ADEO is at http://www.defence.gov.au/Export/Office/.

The Global Supply Chain Program managed by the Centre for Defence Industry Capability, allows access to markets and opportunities through the supply chain of multinational defence primes.

The ADEO, supported by Austrade, arranges for Australian companies to attend multiple trade shows in Europe under the Team Defence Australia program.

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