Michal Strnad on the defence industry: ‘There’s a lot of talk but reality lags behind. Slovakia’s defence is ahead of the Czech Republic’

Adam Kotrbatý

“We are a pro-Western company. We are more interested in other markets than Russia, such as the US or the Middle East,” says Michal Strnad, CEO of the holding company Czechoslovak Group (CSG). INFO.CZ interviewed him during the Globsec Forum on security in Bratislava where he told us about his plans for the Tatra and Avia brands or his vision for the future of CSG. He also explained in what ways Slovakia is ahead of the Czech Republic in the arms industry.

At the end of last year, you replaced the executives of your companies Tatra Trucks and Tatra Metalurgie. Can you see any effects already?

Yes, we can. We have said in the past that the previous management was not an entirely right choice for us. So we have agreed to end the collaboration. Now we have hired Petr Karásek as a short-term executive – he knows Tatra, he was the chief executive for two years since 2013 when we were restructuring. We chose him because he knows what needs to be done. (Editor’s note: On 1 June Pavel Lazar became the head of Tatra. He has been the CEO of Tawesco, Tatra’s neighbour company owned by Tatra’s minority shareholder René Matera, for many years.)

Tatra was growing very quickly and we haven’t managed it completely successfully. We needed someone who would look at the company’s processes, who would make sure tasks are being completed and start enforcing deadlines. So we would never take our foot off the pedal, as I call it. Tatra is the kind of company where when you take your foot off the pedal, the company will crumble. We also made some changes in our middle management.

Now we have contracts for the whole of this year. Last year’s numbers weren’t as great because some of our orders were moved to 2019. We have orders from Jordan, Egypt, Saudi Arabia, and also from the Czech Army. I believe we will surprise everyone again this year and achieve better numbers. We are already closing contracts for 2020.

What’s your vision for the future of Tatra?

Tatra itself should be a market nicher as we call it. It means it should make undercarriages for specialized purposes, for the army, for drilling platforms and so on. We are not planning to make tens of thousands of vehicles like other manufacturers, we want to find the gaps and make things that others don’t know how or don’t do it for reasonable prices

Last year after Tatra you’ve started to revive another brand, Avia. What is the development there? Is it going as you’ve hoped?

Frankly, I can tell you that it isn’t going as we’ve planned. We’ve hoped for a little more, we had different plans. The emission standard Euro 6d has a big impact. We were working on a vehicle complying with Euro 6 so we could sell it in the EU. Clients are happy with it, they’d like to buy it but we won’t be making new ones because Euro 6d will become effective in September. It would require so much investment into development that it wouldn’t pay off in the small-scale production we have in Avia.

We’ve changed our strategy. We’ve decided to only make 4x4 diesel vehicles and Avia should focus on electric vehicles. We have signed a memorandum of understanding with an international company which deals in electromobility. But it’s still in the process so I don’t want to announce anything yet.

In an interview for E15 from last year, you talked about the possible split of CSG into more divisions. How would you like to balance the civilian and military areas of your activities?

The plan is to be active in 5 areas – the defence industry, aerospace, rail transport, automotive, and a kind of mixture, where we’ll have the remaining companies from Prim to safety boxes. Those are the 5 areas where we want to invest and grow. I don’t want to diversify any more than that; you can’t catch a 100 rabbits at the same time.

What this means on an organizational level is that we will gradually create divisions where companies in similar fields can cooperate. We started the aerospace division in 2018 where we have our radar companies and companies providing services in the aviation business, such as flight training. By the way, we’re the only private corporation in Europe that has American Sikorsky UH-60 Black Hawk helicopters in their fleet.

This year we are founding a Land Systems division which will comprise companies that make mostly land machinery and ammunition.

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