18.08.2023.
Failed attempts to discredit success of Serbian Defence Industry
Due to malicious allegations made by certain media outlets and in order to keep the public truthfully informed, we announce that the attacks on the Ministry of Defence, the Serbian Armed Forces and our defence industry and constant concern about the "collapse of the defence system" are unsuccessful attempts to devalue and discredit the results and remarkable successes achieved by the defence industry in the production of new, modern weapons.
Without in-depth analysis, referring to unnamed sources, they criticize in an extremely superficial and unprofessional manner the latest investment in supplying the Serbian Armed Forces with modern combat platforms that will be produced in domestic factories, in collaboration with a large number of Serbian subcontractors. They also cite inaccurate data relating to prices, the justification of the investment and production, as well as "unfeasible sale" on the foreign market. All this at a time when the number of weapons that have been developed and entered service in our armed forces has increased manifolds and when the Serbian Defence Industry’s export is reaching a historic high.
We would like to remind you that since 2018, more than 180 weapons have entered service in the Serbian Armed Forces, 52 of which are zero series, which is another proof and confirmation that the defence industry factories are ready for serial production. We proudly state that after more than 40 years, series of complex combat systems (combat vehicles, artillery systems, unmanned platforms, etc.) are being produced at the Defence Industry factories with the aim of increasing the capabilities of the Serbian Armed Forces.
Zastava TERVO is a young state-owned factory that produces military off-road vehicles, which was created from remnants of Zastava Kamioni, a former factory that had been destroyed through infamous privatization. The Ministry of Defence has recognized the importance and long-term profitability of this production facility, because the Serbian Armed Forces need these types of vehicles, and the import thereof would require several times bigger budget allocations than the ones needed for restoring the production in domestic factories. FAP has had a similar fate. It was written off by the previous government a long time ago, and potential foreign investors predicted its complete collapse. Over the last few years, as a result of enormous efforts invested by the state, the factory has been gradually revitalized and is becoming one of the key partners in supplying the Serbian Armed Forces with equipment. Certification and major export of FAP's undercarriages to the European market is expected very soon, which was unthinkable few years ago.
It is an indisputable fact that the vehicles produced by Zastava TERVO in cooperation with FAP and other domestic subcontractors are fitted with imported assemblies of world-class quality. Every serious analyst and expert in the field sees this as a benefit and a prerequisite for a great final product, in keeping with our military’s strict safety and reliability requirements. Please note that the total price of the final product is still several times lower than a similar imported product. Needless to say, this production is important for the quantity of work carried out by the factory and subcontractors, the strengthening of the personnel structure, the retention of young and successful staff and the increase of our country’s export potential. Not so long ago, the Ministry of Defence was criticized for being more focused on importing modern weapons and for not purchasing enough high-quality weapons produced by Kragujevac factories. Unfortunately, certain media, whose approach to this issue was superficial, malicious and ill-intentioned, spread a series of falsehoods with the intention of diminishing the importance and capability of the factory. The recently signed contract for the delivery of combat equipment produced by Zastava TERVO to one of the fussiest markets speaks volumes about the quality of the product and the competitiveness of the price.
We underscore that during its five-year operation, Zastava TERVO, in cooperation with the Military Technical Institute, has successfully developed, tested and verified the MRAP M20 armoured personnel carrier, which has resulted in Serbia's development and production capabilities ranking with the world's top producers of these vehicles. The buyers’ interest in this asset testifies to its quality, competitiveness and price. The factory and the state are currently focusing on the production for local needs, bearing in mind the complex security and political situation. The company is also recognized as a systems integrator of the complex anti-aircraft artillery-missile system PASARS. In addition to the basic version of this system, fitted with the Swedish-made 40mm Bofors gun, the versions with integrated Strela 2M and IGLA missile systems and state-of-the-art French-made Mistral missile system are being successfully developed.
The future modernization of the factory will include the creation of robotic lines for welding armoured cabins with a high degree of ballistic protection, which will increase the capabilities of Zastava TERVO manifold.
Since 2021, the factory has hired 100 new employees, and it is expected that the total number of staff will be further increased from the current 180 to 250 employees, in order to meet the demands of the Ministry of Defence and the Serbian Armed Forces. The established development trend, along with the introduction of new technological processes, the influx of personnel and the competitiveness of products, ranks Zastava TERVO as one of the most promising factories in the domestic industry, spearheading the development of the Kragujevac defence industry.
Considering the fact that the factory was established five years ago, that it had no working capital for initial operation, better business results, income and living standards of workers are expected at the end of this year and the beginning of next year.
Every investment in the development of new products is one of the major but necessary risks in the business of every company, because it ensures a long-term position on the market. Likewise, the constant development of new weapons is imperative, not only for economic reasons, but also for security reasons. The defence capabilities of the Serbian Armed Forces’ infantry and special units will make a dramatic leap with the family of Zastava Arms’ modular weapons, while the 30mm gun has long become the world-class standard in modern ground combat platforms.
Various comments have been made on the 6.5/7.62mm modular automatic rifle and the alleged delays in the development of the 30mm gun. It is expected that these products will be the greatest assets of the Zastava Arms factory in the coming period and a significant support to equipping the Serbian Armed Forces in the future. In search of the optimal "rifle-bullet-sight" system, our experts have chosen a new 6.5mm rifle cartridge with the aim of increasing the accuracy, range and lethality of the new rifle system, the backbone of which is the modular automatic rifle.
In addition to the modular rifle, the NT-35 optical and thermal weapon sights produced by "Teleoptik-Žiroskopi" and the new revolutionary ordinary and penetrating 6.5mm bullets produced by Prvi Partizan Užice have been successfully developed and entered service, thus completing the domestic industry’s modern "rifle-bullet-sight" system. Following the introduction of the prototype batch of modular rifles, a contract for the zero series was concluded, which, after successful tests, is in the acceptance stage at the Technical Test Centre. At the recently conducted training with firing demonstration, the general public had the opportunity to learn about the quality and capabilities of the abovementioned system featuring a modular rifle. Compared to foreign solutions in this automatic rifle category, such as the 5.56mm FNSCAR-L, the Serbian-made 6.5/7.62h39 modular rifle with similar ergonomic solutions is significantly cheaper. Overall, the modular rifle using a 6.5mm bullet is far more effective at all distances, both in terms of accuracy of fire, and in terms of lethality and penetrability.
In support of this, the fact that fire arms connoisseurs have repeatedly published affirmative texts about this modular rifle testifies to this. After several years of analysis, during the year 2022, the US Armed Forces invested significant funds in the production of a new 6.8mm small arms family due to its improved kill potential at distances beyond the effective range of 5.56mm and being more accurate than 7.62mm. The development of several types of 6.5 mm fire arms to be used by their Special Forces is underway, which is another proof that right strategic moves have been made towards arming our infantry and special units.
When it comes to the 30mm gun, which is installed on infantry fighting vehicles, the fact that only a few countries in the world have the facilities for the production thereof speaks volumes about the efforts made by the Ministry of Defence and other state authorities to further improve such technological capabilitis through investments. The first batch of these guns produced at the Zastava Arms’ production facility is in the final testing phase and has shown excellent results so far.
It is evident that Zastava Arms has been operating at a loss for many years, more precisely since 2004, when debts were incurred that burdened the factory's budget. More than half of the total debt now is interest on unpaid debt from that period.
In specific business conditions, the Supervisory Board, in cooperation with the management and with the support of competent state authorities, implemented measures of strategic importance for the factory's operations. Those measures resulted in the Republic of Serbia investing 9.7 million euros in 2017 and a significant improvement of technological and working conditions, financial support for employees during the Covid pandemic in 2020 and the adoption of the Government's conclusion on the conversion of old debts to state creditors into the capital of the Republic of Serbia and writing off interest in 2022. The implementation of the Conclusion is underway and a significant relief of the factory’s debt is expected. Also, a new investment cycle is underway. Namely, the state is investing an additional 11 million euros in technological support, with the aim of carrying out current projects that are beneficial to the defence system.
Also, allegations that the factory has not had a general manager for seven months have been repeatedly made by media outlets. It is important to highlight that key tasks that fall within the competence of the general manager have been carried out without interruption.
It is important to emphasize that there is a small number of manufacturers of modern combat and artillery systems in Europe and the world today. Serbia can boast its factory in Velika Plana and its subcontractors that produce combat platforms that are among the best in the world and whose export potential is undeniable.
We live in a time when the demand for armaments is rising dramatically and when the products manufactured by the Serbian factories are a "thorn in the side" of the competition, which in various ways tries to downplay the importance of the Serbian Defence Industry and its capabilities. Unfortunately, it seems that they get support from certain media outlets that strive to belittle the results achieved so far.
There have also been reports on alleged preparations for the privatization of domestic defence industry factories, even though the current Law on the Production and Trade of Weapons and Military Equipment clearly states that these factories will remain majority owned by the state.
The Ministry of Defence and the Serbian Armed Forces will continue to strengthen their capabilities, and the factories of the Serbian Defence Industry will continue to give them support on that path, because a strong military is the guarantor of safety and stability to all citizens of Serbia and a deterrent against all those who do not wish well to our country and citizens.
