Orban spent €67 million on Reviving Hungarian Weapons Manufacturing

Google Streetview, Arzenál

An enormous skeleton of a building had lied abandoned for years on an outlying plot in Kiskunfélegyháza suggesting that its construction may have been halted due to bankruptcy. What used to be an eyesore, however, is now a fully completed factory surrounded by barb wire: this is where the Hungarian military industry has been rejuvenated and where arms production will fully start next January. The factory will produce weapons based on licenses from a Czech manufacturer. The project cost close to 22 billion Hungarian forints – at the current exchange rate this is approximately €67 million.

Prime minister Viktor Orban has been working on strengthening the military of Hungary for years, and he has also been trying to make the military more popular among citizens. The brand new, €67-million firearm factory is part of this push.

In the summer of 2018 Orban appointed former defense minister István Simicskó as government representative for ‘patriotic education.’ Simicskó’s job is to figure out how to integrate patriotic education into the national curriculum.  

This month the current defense minister Tibor Benkő said that he wants to add eight thousand soldiers to the army: he would raise their numbers from 29700 to 37650. 

Moreover, the soon-to-be-fired civil servants, according to press reports, will be forced to join the reserve army if they want to qualify for help from the state to find new jobs. It has been reported that the government is planning to make nine or ten thousand civil servants redundant.

There will be infrastructure development as well: a government decree from last September says that the state will build 40 new shooting ranges in 2017 and 2018. The cost is 17 billion Hungarian forints.

A new arms factory 

István Simicskó, secretary of defense at the time and his Czech counterpart, Karla Slechtová, announced this March that Hungary would be producing infantry hand guns using a Czech license. 

Weapons assembly was planned to begin as early as 2018, with full-scale manufacturing set to start with 200 workers in January 2019. According to its website, Czech weapons manufacturer Ceská Zbrojovka is licensing its technology for a period of ten years and 200,000 weapons.

However, the decision about the weapons factory had been made long before the March announcement. By the time of the press conference the project had been well on its way.

It had long been rumored in Kiskunfélegyháza, a town of 30,000 in the South of Hungary, that a weapons factory would be built by the old crosscountry road. According to a press conference by the local mayor, József Csányi, the ministry of defense started talks with the town about an arms factory back in the beginning of 2017. 

The local employment bureau has been recruiting workers for months. According to the Opten company register, weapons manufacturer Terra Plc. already has 47 employees and assembly of weapons has already started. After all the equipment arrives, the plant will produce arms from scratch.

The ministry of defense has been working on the company structure behind the factory for a long time as well. The owner of the factory is HM Arzenál Kft., owned by the Hungarian Army, i.e. the Hungarian state. 

In 2017 HM Arzenál bought a company, Terra Ingatlankezelő és Forgalmazó Ltd. from another defense ministry subsidiary called Honvédelmi Minisztérium Elektronikai, Logisztikai és Vagyonkezelő Plc. in 2017. The company was then transformed into a plc. (TERRA Gyártó és Szolgáltató Plc.) and its capital was raised to HUF 10 million.

Terra’s registered site was changed from Nyírtelek to Kiskunfélegyháza. Terra was tasked with running the weapons factory under construction.

The details and the cost of building the new factory are revealed by the 2018 business plan of HM Arzenál. The document mentions a certain ‘project no.1’, which – as Légierő Blog found out in March – was the code name for the weapons factory in Kiskunfélegyháza.

During the early stages of the project Arzenál’s capital was raised by HUF 24.5 billion. According to the proposed budget, HUF 6.2 billion was to be allocated for construction, HUF 4.6 billion for the license and HUF 11 billion for production tools. The total planned budget of the project was HUF 21,742 billion.

Hungarian factory, Czech licenses

The plant is going to manufacture CZ BREN 2 type assault rifles, Scorpion Evo III machine guns and P-09 pistols, as featured in a PR video published by Arzenál in March.

The licenses for the arms are purchased from an 80-year old Czech weapons factory called Česká Zbrojovka. 

The weapons factory was founded in 1936 in Uherský Brod, some 50 kilometers from Brno. Proprietor of the famous CZ brand and specializing in hand guns, the company is a key pillar of the renowned Czech weapons industry. 

70% of the goods produced by its 1900 employees is earmarked for export to over a hundred countries, most notably to the USA, but increasingly more to the Czech and Slovakian armies.

Big plans for a small town

Kiskunfélegyháza has been paving the road for the weapon factory since early 2017. Mayor József Csányi said in a press conference this June that the army first proposed the idea to the town council in early 2017. The preparations, however, had largely been kept secret until this summer.

The production facility, planned to house 50 highly qualified professionals, was completed last year. Some weapons assembly processes have already started. With further machinery to be shipped soon, full-scale manufacturing is set to begin next year, Csányi said in June.

The city, however, had made preparations to accommodate the weapons plant prior to the official announcement. 

On March 29, 2018 the Kiskunfélegyháza city council declared that they would begin new weapons-related vocational tracks in the local Lajos Kossuth Vocational Secondary School. Furthermore, news about the “secret project” started circulating among the residents before the official announcement when the local employment bureau started recruiting workers for the factory.

And there were personnel changes as well: Terra’s management welcomed a new member on May 27, 2018. Her name is Andrea Ildikó Pap Csányiné, and she is the wife of mayor József Csányi.

According to a recent press conference held by minister of defense Tibor Benkő, an ammunition and gunpowder plant is also in the plans in the near future. He did not specify the location for the factory, but Arzenál already has another plot in Kiskunfélegyháza, not far from the new factory. 

English translation by Péter László

All company information cited above is from the Opten company database.