They wrote about us: the hunger for weapons will not go away. We expect demand for another 10 to 15 years
Interview with David Hac for Hospodářské noviny
STV GROUP, including its sister companies, now employs over 700 people at ten locations in the Czech Republic. The family-owned company with 100% Czech capital has its main production plant in Polička and builds on a century-long history dating back to 1920. We pride ourselves on domestic production and maintaining and creating new employment opportunities in the regions where we operate. Our task is, to put it bluntly, to create conditions for the development and existence of an independent defence industry for the next hundred years," says David Hác, Chairman of the Board of STV GROUP, in an interview.
At the end of last year, you concluded the largest framework agreement for the supply of ammunition in the history of the Czech Republic. Specifically, it concerns 155 mm calibre artillery ammunition for the new French Caesar guns. How does such an opportunity affect the company?
As the only manufacturer of large-calibre ammunition in our territory, we will participate in the project together with the state company Explosia by producing artillery ammunition. Both standard M107 projectiles and projectiles with an extended range of up to 40 km. I see the Caesar project as a great step forward not only for our army, but also for industry. It is not only a parametric change in the calibre between 152 mm and 155 mm, but a conceptually different ammunition system. We see the conclusion of the framework agreement as a commitment that will not only provide our army with a source of ammunition from a local manufacturer, but will also open up export markets and, figuratively speaking, move us into a higher league at the global level.
You are one of the largest Czech companies in the defence industry. What other products do you offer your customers, besides artillery ammunition?
Our main activity is the production of ammunition and explosives. In addition to large-calibre ammunition for tanks or artillery, we also produce mortar rounds, RPG-7 armoured rifle rounds, including our unique version with thermobaric effect. We are growing significantly in the segment of small-calibre ammunition for small arms, but we also focus on ballistic protection of individuals, where we pride ourselves on the superior ballistic resistance of our products. The KS-122 "Krizna" ammunition system, unique in NATO, which enables engineers to create an anti-tank tactical minefield at a distance of up to three kilometres very quickly and with minimal preparation, has also attracted great attention during deployment in the Baltics as part of the Enhanced Forward Presence. Our plastic explosives, where we are the largest Czech producer, are also a great export success. But we are not alone in the group. Our sister company Poličské strojírny focuses on automotive production. Their products can be found, for example, in the vast majority of European buses. Our sister company, Fenix Protector, develops unique tactical equipment solutions for our armed forces and police. We try to use the experience of warfighters using our equipment in the development of new products. I am also pleased with DEUS Automation, which develops solutions for automation and robotization of production lines, and we already use their products in our production. Our group stands on several legs and the different areas support each other.
Who are your customers? What role does export to foreign markets play and how difficult is it to compete internationally with the "Made in Czech Republic" brand?
As we are a Czech company, our essential customers are of course our Ministry of Defence and the Ministry of the Interior. We are proud when we can contribute to the tasks of our army and police and see our products during training, on foreign missions or on the streets. Although we are happy to cooperate with our domestic customers and always have their requirements in the first place in mind, these are relatively small units. The long-term underfunding of defence and security budgets in recent decades has brought with it the need to manufacture and supply to export markets. In the context of war in our neighbourhood, this is even more relevant for us. Only full lines, and therefore also the fulfillment of orders for foreign customers, give us the opportunity to improve in a very competitive environment, to build on our tradition, but also to constantly innovate our products and, ultimately, to invest in production capabilities and an excellent team of people working in STV GROUP. Finally, "Made in Czech Republic" is still a brand that has its charm for a large part of the world and many of our customers and partners know very well that the defence industry has always been the showcase of our economy and industry.
What impact does the deteriorating security situation in the world and especially the war in Ukraine have on your group and the defence industry as a whole?
The war in Ukraine is a game changer. No one could have imagined a conventional war on the European continent a few years ago, even in the frozen conflict in the Donbas. Moreover, on the part of the aggressors, conducted with tactics reminiscent of the most difficult battles of the Second World War. I do not want to go into details, but we have supported Ukraine in its fight practically from day one. Much of what we have managed over the last year-plus fills me with optimism that we are doing the right thing. I am pleased that we have not abdicated our role as the Czech Republic and, even with the strong support of the Ministry of Defence or the Licensing Administration of the Ministry of Industry and Trade, we are doing work every day that may not be visible to the media, but is crucial to the Ukrainians. A small thing - you may have noticed in recent weeks a collection for "our" RM-70 "Premysl" missile launcher organized by the Gift for Putin Foundation. Well, that's just a bit of icing on the cake. Of course, the war is having a severe impact on subcontracting chains. Many of our partners are extending delivery times, because the market is demanding everything. Private companies and governments. Everybody is trying to do something to help, and at the same time countries are starting to realise that they would not be prepared for a high-intensity conflict. We are therefore not only expanding our own capacities, in which we have invested hundreds of millions of crowns over the last year, but also strategically diversifying our supply chains to be able to respond flexibly to market fluctuations.
Aren't you worried that the interest in arms and ammunition will end after the war in Ukraine? In the defence ministry, cuts are often made in the search for budget savings.
I don't think the demand will go away. We have operated for a long time in a mode of deferred consumption and a chimerical idea of 'just in time' supply. We are now in a situation where European armies have mice scurrying around in their ammunition depots, and the war has clearly exposed this. Once the ceasefire is concluded, it will be year zero for Ukraine and Europe. From then on, they will have to fill up the ammunition depots. I do not think that anyone will ever allow a situation where there is simply no ammunition. From this point of view, we expect demand for at least 10 to 15 years. And that's only until the ammunition stock can be stabilised. And if we live to see a world disarmament agreement, the materials in the munitions will be debased. And even in this capability we are unique in Europe.