- In the current geopolitical context, in which we have been witnessing since the beginning of the year, a hot war in Europe, right on one of Romania’s borders, in Ukraine, the state’s major interest is to ensure the security and stability of the country. What is the current situation of the defense industry?
- The defense industry in Romania, until the emergence of the situation in Ukraine, was intermittently engaged in production activities, based on organized tenders, depending on the needs of the Ministry of National Defense or other external beneficiaries where we have a traditional presence. This fact led to the activities carried out at the level of economic operators in the profile to be predominantly of conservation and maintenance of the necessary production equipment, which allowed maintaining the professional skills of the minimum staff necessary to carry out the activities specific to this sector. Without being able to say whether there is any connection with the situation in Ukraine, recently, at the level of the defense industry, there have been orders for additional armaments and ammunition, which have determined the change in the approach to the activities carried out at the level of these economic operators. This change in approach to production activities, combined with the decision of the Ministry of Economy to increase the level of investments in the field of the defense industry, has allowed us to approach the manufacture of new benchmarks. This happens recently, at the level of economic operators active in this field, by carrying out research and development activities, as well as by resuming the manufacture of some of the benchmarks for which the national beneficiaries have not requested the purchase for more than 30 years. In this sense, we can mention thermobaric ammunition, Flare ammunition, 30 mm caliber ammunition, 122 mm caliber ammunition as well as the assimilation of maintenance activities specific to new categories of military equipment entered into the army. In conclusion, we can say that this period, at the level of the defense industry, is a very turbulent period, marked by significant investment processes, research and development activities aimed at assimilating the manufacture of new products, as well as by activities to resume the manufacture of some products. The defense industry has the technology necessary for series production, but the lack of orders at the national level led to the suspension of production.
- Are there any recent measures, determined by the war in Ukraine, to stimulate investment in the national defense industry?
- Without making a mistake, I can say that the volume of investments in the last period of time, from the level of the national defense industry, has increased significantly. The growth is due primarily as a result of the change in the approach to the acquisition of military equipment by the Ministry of National Defense, both at conceptual level, but especially at the level of the necessary volume. Secondly, is a result of the increase in allocations, from the state budget, through the budget of the Ministry of Economy, of funds intended to finance these investments.
In this sense, I can mention that the invocation of the essential security interest by the Ministry of National Defense, in the implementation of some endowment programs, such as the 8×8 PIRAHNA 5 armored personnel carrier, the 4×4 armored and non-armored all-terrain vehicles, the communications and IT systems, unmanned aircraft systems, transport platforms, etc. has contributed to increasing the interest of national and foreign economic operators, in getting involved in the development of cooperation and production activities in Romania to create products that can be successfully offered to both national beneficiaries as well as the international ones. In the end, this expressed interest was materialized through the emergence of associations between prominent Romanian companies and foreign manufacturers, which have in their portfolio representative products and equipment from the fields of interest of the Ministry of National Defense, or led to the emergence of new subsidiaries of these foreign economic operators in Romania.
At the same time, the offset obligations resulting from military equipment contracts, assumed by their suppliers, and especially in the case of purchases that take place under the conditions of satisfying an essential security interest, have allowed the creation of associations. These associations between Romanian and foreign economic operators determined the realization of technological transfers and substantial direct or indirect investments, the result of which put Romania back on the map of military equipment producers (Pirahna 5, IVECO trucks, ammunition of different calibers, UAV systems, etc. ).
At the same time, the funds allocated from the state budget, through the budget of the Ministry of Economy, in the form of a capital contribution, to economic operators with majority or full state capital, are intended only for the realization of investments necessary for the modernization and reliability of existing production capacities at their level. This means that during 2022 the total amount of 327 million lei was allocated.
- Recently, the budget of the Ministry of Economy was supplemented with 25 million lei for investments in the national defense industry. To what type of investments will these funds be directed?
- Indeed, during 2022, the Romanian Government adopted a series of measures intended to support economic operators in the defense industry, which mainly target the following areas:
- amending and supplementing the national legislation intended to regulate the defense industry sector, so that the most flexible tools can be ensured to support production activities;
- the cancellation of some debts to the consolidated state budget;
- allocating funds to increase the capital of economic operators with state capital active in the field of the defense industry;
- the allocation of funds intended to finance the salary expenses of the personnel in the defense industry, directly involved in the activities of maintaining the manufacturing capacities of sensitive products needed in crisis situations, which, however, due to the lack of orders, cannot carry out productive activities to obtain funds to pay their salaries.
Thus, on the 2022 budget rectification, an amount of 127 million lei was allocated. The sum is intended both for the modernization of the production capacities at the Mija Mechanical Plant, and for the creation of a new manufacturing line of infantry weapons at the Company The Cugir Arms Factory, which will be able to supply the Ministry of National Defense with new categories of infantry weapons, in accordance with NATO requirements.
- What is the involvement of the national defense industry in ensuring the integrated logistical support of military equipment?
- For the Ministry of National Defense, the approach to the acquisition of new weapon systems, by taking into account all specific activities and expenses throughout their lifetime, is the only solution that can provide sustainability and predictability in the maintenance and operation process.
Considering this concept, the legislative, normative and procedural framework was created at the level of the national defense industry. Respectively, the processes necessary for the designation of National Maintenance Centers were initiated and carried out, the objective of which is to provide the necessary support to ensure the maintenance of Intermediate level and as far as possible of the Factory level, in an integrated and unitary way.
The support provided by the national defense industry in ensuring the integrated logistic support of the military equipment in the possession of the Ministry of National Defense refers both to the equipment produced by the national economic operators and to those purchased from various external or governmental supply sources.
- In June of this year, the 10th Meeting of the Romania- Republic of Türkiye Defense Industry Cooperation Commission took place in Ankara, in which you participated as co-chairman. What are the opportunities for Romanian-Turkish collaboration in the defense industry?
- Of course, the 10th Meeting of the Romania- Republic of Türkiye Defense Industry Cooperation Commission was approached as an opportunity to increase the level of cooperation between the profile companies of the two countries. In the sense that the representatives of 10 Romanian companies participated in the official activities between the two parties at executive management level, together with the vice president of the Defense Industry Agency (SSB) in Republic of Türkiye who was accompanied by a commercial delegation composed of representatives of 18 companies profile from The Republic of Türkiye.
Companies from Romania are interested in cooperation with companies from The Republic of Türkiye, with a view to developing or assimilating products specific to the defense sector, which can be promoted both on European markets and on emerging markets where Romania is traditionally present, but to be offered to beneficiaries from Romania as well.
Thus, following some visits to the industrial capabilities of companies in the Turkish defense industry, potential topics of common interest were identified, relevant being:
- production of fresh nitrocellulose, simple base powder and spherical powder, achieved by revitalizing, modernizing and expanding some existing capabilities, a fact similar to the existing situation at Romarm
- Făgăraş Powder Factory and S. Pirochim Victoria.
- the ability to manufacture remote-controlled and stabilized rounds of different calibres, being identified as a potential area of cooperation in the manufacture of Ahead ammunition. 25 and 35 mm;
- the ability to manufacture electronic communication and telephony products, where the representatives of some Romanian companies have identified new possibilities for cooperation in the field of rigid communication and IT equipment manufacturing;
- the ability to manufacture armored and non-armored off-road 4×4 vehicles, where the Romanian representatives have identified the potential for cooperation in order to achieve the transfer of technology necessary for the manufacture of such products in Romania;
- the ability to integrate information, sensors and effectors, in accordance with the operating concepts indicated by the beneficiaries, in the radio data networks of the control command systems provided by the beneficiaries;
- the industrial capability of manufacturing tactical and strategic UAVs, where the Romanian side was very interested in the products made, and the Turkish side was interested in the cooperation mechanisms in the case of intergovernmental supply agreements;
The companies from the national defense industry, participating in the activity, considered that by correlating this official visit with the visits to the economic operators in the defense industry in The Republic of Türkiye to which they were invited to participate, are much better highlighted, and this constitutes an opportunity in implementing their objectives. In this sense, the representatives of the two countries believe that the continuation of such initiatives is indicated, which would allow the participating companies to identify the areas of interest, and the governmental structures the tools necessary to support this potential industrial cooperation, which, later, to develop and subject them to approval.