Creating our own chances

WBJ Observer talks with Ryszard Kardasz, director of the board of PCO S.A., Poland’s biggest producer of optoelectronic devices with the use of laser technology, night-vision and thermal imaging technology, about innovation, sector consolidation and chances for exports

WBJ Observer: Your company can be considered a success compared with other Polish defense companies. PCO is making a profit and has competitive products, how did you get to this position?

Ryszard Kardasz: The defense sector found itself in trouble after the fall of communism, since nearly all products were produced on Soviet licenses. Left without a product offer, overstaffed, and with declining exports, the industry had to be redefined. The process of setting out the path of development after 1989 took a very long time, with the first several years having been wasted. Although some efforts were being made in the interim, the first, very general proposal on how to upgrade the army was tabled in 2009. The 14 areas of growth were not precise and lacked detailed definitions of what the army wanted to get. Nonetheless, it was the first vision of where the industry should head. When it comes to PCO, we didn’t wait for our chances, we created them on our own. When I came here 11 years ago, the company was in crisis, indebted, and there were no competitive products on offer. With help from gifted engineers from the R&D department, we defined a catalogue of products that luckily fitted well with the needs of the Polish Army. At that time, Poland was participating in military missions in Iraq and Afghanistan and soldiers admired the equipment of the US Army. Optoelectronic sensors were seen as something that was not necessary, but greatly improved the efficiency of the weapons, so they wanted them. In the opinion of troops who came from Afghanistan, our night-vision devices are as good as those of the American army. Technically, they are on par with them, so there are big possibilities for exports.

The Polish defense sector doesn’t seem to have good publicity abroad. Where do you want to sell your products?

We can’t say Poland is not present anywhere and we have poor recognition. In countries where we have sold weapons, like Malaysia or Indonesia, we are viewed positively. Of course, global giants compete there, and without bigger budgets for promotion we will not do much. So where are our export opportunities? Definitively in former Eastern Bloc countries, in India, in some Arab countries, Algeria, Vietnam, and CEE countries. Many of those still use the weaponry that was bought from the USSR. The feature of these devices is that they can be modernized. And the upgrade mainly means installing optoelectronics, which definitely increases the quality of the weapon. So, there is a chance of becoming present in those markets, we have made some sales to Vietnam, we are active on the Ukrainian market, in Algeria and in Saudi Arabia. We monitor the global market, but it’s difficult to compete with the US, whose influence is very strong, or with global giants that have been present on the market for several decades.

[caption id="attachment_98835" align="alignleft" width="300"] Image: PCO[/caption]

PCO is the leader of a consortium working on a system called Tytan, can you tell us something about it?

Advanced Individual Battle System Tytan is a project carried out by a consortium of 13 companies, mainly from the PGZ group, as well as research institutes and Military University of Technology in Warsaw led by PCO, whose responsibility it is to manage the project, integrate the whole system, and to provide optoelectronic sensors. The Ministry of Defense has promised to order 14,000 units worth PLN 4 billion.

Does cooperation with the world of academia help in developing innovation?

Before I answer that, I have to mention who funds R&D activities in Poland. Some time ago, the army withdrew from sponsoring it and passed the responsibility onto the National Center for Research and Development (NCBR), which wasn’t very well prepared for the role and initially the money allocated was wasted. The army didn’t have control over the projects, they were not coordinated properly, and most of them ended up on the shelf. Academics were not interested in the commercialization of the projects, because their job is appraised based on the number of publications and participation in R&D projects, and not their commercialization. The situation has improved recently as the Defense Ministry has put its people onto the NCBR and they are trying to impart control over the R&D process. I demand this kind of control, because I need to be told what the clients’ demands are. Our R&D team is composed of civil engineers, who didn’t serve in the army. Although they know their job, they have to be told exactly what is expected of them. An officer who was in Iraq or Afghanistan knows best what he wants and should be present at every stage of the production, starting with the plan, through the prototyping, up to the commercialization of the product. If this process is lacking, the work may be futile. With that help, we can make production faster, cheaper and more in line with clients’ demands.

How do you assess the consolidation of the sector?

I am for the consolidation. If the sector has to be state-owned, there should be a structure that acts as a subsidiary between the ministries and companies. Such a subsidiary would be more competent than civil servants. The positive side of the latest attempt of the consolidation is that the industry is under the defense sector. It may not be transparent as it’s also our customer, but I believe that this model works better. I hoped for improvement in the cooperation with the ministry, that relations will be based on trust, respect and ceded powers. The industry is more competent and knows better, thus it should have a say in such aspects as the choice of a foreign partner. It ought to be approved by the ministry, but our role in the process should be increased.