Poland bets on home-grown giant PGZ for its defence buildup, but its structure raises questions

Warsaw wants domestic companies to supply more of its rapidly expanding military. But the fragmented structure and political exposure of the state-owned Polish Armaments Group (PGZ) raise questions about whether Warsaw can turn the spending surge into a stronger industry.

PGZ is Poland's largest defence company. It has won billions of złoty in new orders, placing it at the centre of the military buildup.

The conglomerate was cobbled together in 2013 from about 50 fiercely independent smaller companies, each with its own management team and often its own political backers. Chief executive Adam Leszkiewicz has been in the post since May 2025, making him the holding company's 12th CEO since its founding.

Leszkiewicz said PGZ is different from other European companies, adding that PGZ makes more than 700 products. 'I could say we make almost everything. But what can be a strength can also be a weakness,' he said.

Marek Świerczyński, a defence analyst with the Warsaw-based Polityka Insight Center for Policy Analysis, said Leszkiewicz essentially has to use diplomacy to try to manage the other companies.

For decades after the end of communism, Poland spent little on defence and the military largely made do with antiquated Soviet-era equipment. Russia's annexation of Crimea in 2014 and its full-scale invasion of Ukraine in 2022 changed that, and Polish defence spending surged.

Leszkiewicz said: 'We have strong historical and current experience with armoured vehicles and maintenance, repair and overhaul services. We also make wheeled vehicles such as the Jelcz, and our work on sensors and radar is developing well. We have long been strong in rifles and pistols.'

Aleksandra Kozioł, a defence analyst with the Warsaw-based Polish Institute of International Affairs, pointed to other notable Polish defence companies, such as the private WB Group, which specialises in communications networks, unmanned aerial vehicles, loitering munitions and fire control solutions.

On improving in new technologies, Leszkiewicz said: 'We want to improve in new technologies, especially unmanned vehicles as well as software and IT solutions.'

PGZ is also building ties with other European defence firms. It is building three new artillery shell factories in conjunction with the UK's BAE Systems. PGZ's Narew air defence system includes a tie-up with MBDA to supply missiles and launchers.

This year, Poland aims to spend 200 billion złoty (€45.7 billion) on defence, or 4.8 percent of GDP — the highest level in NATO. It is also the largest recipient of the EU's €150 billion SAFE loans-for-arms programme, taking in almost €44 billion.

The government is trying to ensure the country's defence industry gets a growing share of the new spending. In May, Poland's Armaments Agency signed almost 120 billion złoty in contracts with Polish arms companies financed by SAFE. A large share went to PGZ and its subsidiaries, mainly Huta Stalowa Wola, for equipment including 146 Borsuk infantry fighting vehicles, 96 Krab howitzers, 64 Rak mortars, K9PL support vehicles and 1,000 vehicles for the Homar-K rocket-launcher system.

According to a report by the Warsaw Enterprise Institute think tank, most of the deals with PGZ were no-bid contracts. The report said the development of the Polish defence industry is necessary, but it should not automatically mean preferential treatment for companies directly controlled by the government.

Defence Minister Władysław Kosiniak-Kamysz last month underlined the government's aim to develop the country's military-industrial complex, saying: 'We are building a strong army, strengthening security, and investing in Poland's future.'

But favouring domestic companies risks clashing with the government's drive to rearm as quickly as possible; Warsaw wants to buy tanks, jets and missiles to deter Russia. About 60 percent of Poland's defence spending goes on imports, Świerczyński said, and that will not change quickly. Most arms imports come from South Korea and the United States, including systems such as K2 Black Panther tanks and F-35A fighter jets.

Leszkiewicz said: 'In 2022, we were looking for ready-made solutions and products because we felt threatened. Today, we are trying to take every opportunity to Polonize production. We are now hardly buying ready-made products, except where we really lack a particular capability.' One of PGZ's subsidiaries will be building K2 tanks starting in 2028.

Kozioł said she does see an effort to increase Polish intellectual property, adding that it is still unclear whether the government's effort to shift contracts to Polish firms will lessen the reliance on foreign technology.

In 2025, PGZ reported 18.4 billion złoty in revenues, a 23 percent increase on the previous year, and 2.8 billion złoty in profit, a 66 percent increase. The company ranked 51st in the Stockholm International Peace Research Institute's 2025 list of the world's top 100 defence companies. Leszkiewicz aims to reach the top 10 in Europe and the top 30 globally.

Polish state-controlled companies are notorious for high levels of political interference. Mateusz Morawiecki, prime minister from 2017 to 2023 under the previous Law and Justice Party government, this summer called for PGZ to potentially be dissolved, accusing it of 'weak' management. Kosiniak-Kamysz fired back, calling the idea 'harmful and anti-state.'

Poland holds a parliamentary election next year and opinion polls suggest Prime Minister Donald Tusk's coalition could be unseated by a grouping of right-wing parties. Leszkiewicz was a junior member of Tusk's previous government from 2007 to 2011 and took over PGZ after running the state-controlled fertilizer giant Grupa Azoty. Świerczyński said a CEO would have to be in the job for a decade, but in Polish realities there is no chance of that.