Korea’s Hanwha Aerospace to build first production base in Europe

Hanwha Aerospace Co.’s K9 self-propelled howitzer [Photo provided by Hanwha Aerospace]

Hanwha Aerospace Co., a defense unit of Korea’s Hanwha Group, will form its first European unit in Poland in the second half of this year to respond more actively to demand in the European market, which is rapidly emerging as the largest export destination for the Korean defense industry.

Hanwha Aerospace plans to utilize the Polish unit as a production base for exports not only to Europe but also to the Middle East in the future.

“Increasing demand for conventional weapons in Europe due to the war in Ukraine has raised the need for a base in the region,” said a senior official from Hanwha Group on Tuesday. “So, we have chosen to establish a European unit in Poland as the county is actively purchasing Korean weapons.”

Hanwha Aerospace signed a contract with Poland in the second half of last year to supply weapons worth 8.2 trillion won ($6.20 billion), including K9 self-propelled howitzers and Chunmoo multiple rocket launchers. The company is also engaged in negotiations to export the Redback, a next-generation infantry fighting vehicle, to the Polish army. There is also a high possibility that the two parties would sign additional arms sales contract in the second half of this year.

When signing the contract with Hanwha Aerospace in July last year, the Polish government wanted to introduce 648 K9 self-propelled howitzers and the Korean company is producing the first batch of 212 units in Korea. However, the Polish government is now calling for the remaining 400 units to be produced in Poland, indicating its desires for technology transfer to enhance its own domestic defense industry.

In this regard, there is a possibility that Hanwha Aerospace will establish a joint venture with a local company in Poland. Hanwha Aerospace is mulling over the timing of the construction of a production facility as it is having difficulty negotiating to export the Redback to the country. The Polish government is reportedly weighing Hanwha’s Redback against German products.

There is also a possibility that the envisioned production facility in Poland will take over some of Hanwha Aerospace’s exports to the Middle East. Saudi Arabia‘s state-run news agency SPA reported in March last year that the Saudi Ministry of Defense signed a contract worth $800 million to introduce the company’s Chunmoo system. Hanwha Aerospace didn’t officially confirm this report, but a video released by the Saudi ministry in April confirmed the deployment of Chunmoo in the country. The United Arab Emirates also reportedly signed two contracts worth 1.6 trillion won to import the system to fight Yemen’s Houthi rebels.

Hanwha Group integrated its defense units - Hanwha Corp., Hanwha Defense and Hanwha Aerospace - into Hanwha Aerospace earlier this year to strengthen its global competitiveness. Group Vice Chairman Kim Dong-kwan is leading Hanwha Aerospace’s overseas expansion as the chief executive officer of the strategy division at the defense company. Kim is the eldest son of Hanwha Group Chairman Kim Seung-youn.

Hanwha Aerospace currently has production bases in the U.S. and Vietnam, where aircraft engine parts are being produced. Weapons, such as self-propelled artillery, armored vehicles and launchers, are all manufactured at its Changwon plant in Korea. The company is currently building its first overseas plant in Australia to produce self-propelled artillery and armored vehicles.