Latvia bulks up its military production

Latvian company "EMJ metāls" has started cooperation with Finnish military vehicle manufacturer Patria. EMJ metāls is one of many companies in Latvia that have started military production alongside civil production, Latvian Radio reported January 5.

The Federation of Security and Defense Industries of Latvia was formed 10 years ago, and the Chairwoman of the Federation Board Eīina Egle said Latvian companies are cooperating with 10 large global companies in other countries.

“A number of Latvian companies have cooperation agreements and are already involved in international supply chains to produce products and services for markets in other countries. This includes a number of companies, both working in the field of land force and the navy, information, communications.

“So the collaboration certainly goes far and we also very much hope that this year will be rich in new partnerships, more and more projects will follow,” Egle said.

Agris Punculs, a spokesman for EMJ metāls, said the company started producing the first parts for the military industry two years ago. The start of cooperation with producers in other countries has taken time and investment of three million euro, as both specific equipment and renovation of the production building were necessary. The Latvian company, which has so far manufactured metal sheet parts, currently also manufactures armored personnel carrier bodies.

“We work with both the so-called common materials and the armor steel. Technically, the most challenging thing we produce is armored vehicle bodies. We started with simple things and then gradually, we moved on to more complex things,” Punculs said.

He said starting out in the military industry was not straightforward.

“It's not like today I want to produce, next day I'm going to start producing. One is your partners who trust you. What follows, you have documentation, licenses, clearance, staff, and investment as well, because that production process is also generally long enough in terms of time. Firstly, the military sector is demanding in terms of quality, as the machinery has to endure 20 to 30 years. Then it is an opportunity to develop specific competencies within the undertaking. The third thing – becoming a military manufacturer, a supplier, it requires not only money but investments in people,” said Punculs.

Chairman of the Board of the Latvian Federation of Security and Defense Industries emphasized that often large military companies are ready to invest in cooperation partners.

“When working with these large companies, it should be recognized that it is also common for them to be prepared to invest in Latvian companies and come as strategic investors. The other thing that matters, of course, is the quality of governance, because companies are big, their profits, and their annual turnover is as high as $15, 16 billion, and of course reputational risks are among those that have a huge impact on them.

“And the third thing, it must also be taken into account that work in the defense and security sector – it is not a sprint, it is a marathon,” Egle noted.

In order to develop military and defense-related industry in Latvia in the long term, a new state-owned company named SIA "Valsts aizsardzības korporācija" ("State Defense Corporation") was also formed at the end of last year in Latvia. The State Defense Corporation will work as a holding company and will be part of the Latvian military industry ecosystem. Its share capital will initially be EUR 500,000 and its registered address is at the Ministry of Defense.

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