Lord of Defense. Big interview with the new dollar billionaire Michal Strnad
The war in Ukraine has changed everything. Even the view on the arms dealers. The defense industry, as it calls itself, is growing at the fastest rate in the last decade. And together with it the Czechoslovak Group of the thirty-year-old entrepreneur Michal Strnad too. Anyone who wants to look at the weapons business with a skeptical eye should know: nowadays, there are queues at ammunition and weapons factories.
The extensive grounds of the Tatra Kopřivnice are busy, with finished or unfinished trucks and special military vehicles at every corner; the factory is running at full speed.
"And these are Pandurs for Indonesia," the youngest Czech dollar billionaire and the newest member of the elite global selection of the most successful people in the world shows in the production hall, surrounded by barbed wire and guarded like a barracks, pointing at unfinished and still very raw-looking future armored personnel carriers.
He is thirty and he gets up every morning at five. His name is Michal Strnad and under his leadership, the largest arms-production machine in Central Europe has been operating for ten years. It was once founded by his father Jaroslav as a scrap business and decommissioned military equipment business; today, it has a turnover of almost sixty billion crowns, an operating profit of over seven billion, and orders for sophisticated weapons systems worldwide. And the one, who thinks that Strnad Jr.'s main qualification is the fact that he is the son of founding father, would be very wrong.
Michal Strnad has been leading the entire group since 2013, from the age of twenty-one, initially side by side with his father. Five years ago, he took over the ownership from him and knows every detail of his empire.
He walks past the finished, slightly ominous-looking, mat painted green Tituses and casually turns to the production director of Tatra Defence Vehicle. "Yesterday I spoke with those cable suppliers, they will contact you today," he says decisively.
The production halls of this company are located in the middle of the huge complex of Tatra in Kopřivnice, which also belongs to the Strnad's companies of the Czechoslovak Group. There, a few dozen minutes earlier, he was dealing with late deliveries of gearboxes and engines from the USA.
As we drive past the aircraft maintenance hangar in Mošnov, which belongs to his other company Job Air Technic, he shows which aircraft will be repaired, knows about every order, knows the turnovers and profits of his companies from memory, whether they produce weapons, brakes for locomotives, or Prim watches.
His knowledge about Pandur vehicles for Indonesia will be needed very soon. He will fly to Jakarta. He won't enjoy the exotic islands much – he is going for a quick trip. Sixteen hours there, then a few hours of negotiations, and sixteen hours back. He will deliver 23 Pandur armored personnel carriers here.
"In this business, not only perfect products but also good relationships are essential. And you just have to talk to your customers personally, no matter how many thousands of kilometers away they are," explains the slightly bearded Michal Strnad, dressed in a light dark coat. He spends a lot of time on planes, as well as visiting about forty active companies belonging to the CSG holding.
Under his leadership, the group's turnover has increased tenfold, he is systematically building it in various verticals, and according to Strnad, even better times awaits it. "The arms industry is now completely full, we produce at maximum capacity, we can't have more. And that's how it can be for the next five, ten, or more years," he thinks.
Why do you think so?
It's simple. Just due to the war in Ukraine, ammunition and equipment supplies will have to be replenished that were sent there. Western armies have half-empty warehouses and will want to reach much larger numbers in stock for their own security than before the conflict. At the same time, the security situation has changed, many governments and parliaments have approved much higher defense spending. We already have two percent of GDP for defense in the law, it's just waiting for approval.
What is most needed now in connection with the war in Ukraine? What is the highest demand for?
Artillery and tank ammunition. The production can´t keep up. It could be done, but there is a shortage of gunpowder. It is produced in only three factories in Europe, one of them is the Czech Explosia, although it is smaller. Otherwise, our ammunition factories in Slovakia and Spain are running at full capacity.
Two examples: When we bought an ammunition factory in Granada, it had 35 people and was struggling. Now there are 300 people, they produce ammunition for tanks and guns and they don't know what to do first. The price of tank ammunition has doubled since the outbreak of the war, demand is huge and there is almost a queue.
Are the Czechs in it too?
Yes. The day after the start of the war, we received a call from the Czech Ministry of Defense to secure and reserve capacity for the Czech army. We did that. But no specific order has arrived to this day. When the same and fast demand came from Poland, a clear order followed within 24 hours. But unfortunately, it is delayed with us. We are really running at full speed, this year will be even better in terms of orders and results than 2022.
We may ask stupidly: business is growing because there is trouble in the world…
Today, yes, but we were growing even before the war.
How do you take it when someone tells you: but you make money from selling weapons?
I don't think it's bad, weapons are precise engineering, it's an industry like any other. On the contrary, I think it's a shame that the defense industry has been heavily underinvested in Europe for the last thirty years. Governments did not buy, and we could not invest back into factories.
And today it is all coming back to politicians, and it is hard to listen to. I am not ashamed at all that we are selling weapons. We do not sell weapons primarily for someone to kill or attack with them, but to defend themselves. We are the defense industry, not the offensive.
Yes, even in the columns of statistics, it is called the defense industry. But the perception can be as such, because many people will say that your business has grown dramatically because suffering has increased.
In my opinion, this definition is incorrect. The entire defense industry accelerated and began to be taken seriously after what happened in Ukraine. Because states, led by politicians, finally realized how important the defense industry is.
Would you be upset if someone said you were like Nicolas Cage and Lord of War?
I don't know if I would be upset, I probably wouldn't like it, but I just take it that everyone has a different opinion. I do not take anyone's opinion away. I know what it is like. We are not doing anything wrong, we have more than eleven thousand employees in this field in the group, we provide many people with work, today you could be convinced that we are investing in our companies. We invest in new products.
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