PGZ Business Services Centre To Be Established in Radom. “Savings and Consolidation”

PUBLISHED AT: Friday, 22 September 2017, 9:25

During a press conference involving, among other persons, the Deputy Marshal of the Senate of the Republic of Poland, Adam Bielan, as well as the Polish Defence Minister, Antoni Macierewicz, it was announced that PGZ business services centre is to be established in Radom. Establishment of such centre is one of the elements of the process, through which the Group’s companies would be consolidated, it may also diminish the cost of business activities undertaken by the group. 

The PGZ Business Services Centre would, primarily, deal with the four following areas: Procurement Centre, Finances and Accounting Centre, Training and Competence Development Centre and ICT Services Centre. It is going to be established within the period between 2017 and 2018 at the current headquarters of the Group in Malczewskiego 24 street (Radom Office Park). Ultimately, after 2020, the BSC would be placed in a new building owned by the Group in Warszawska street in Radom, along with a Group’s showroom.

PGZ Systems’ President, Rafał Zgorzelski, has indicated the areas of activities that are to be developed and expanded between 2018 and 2020, including HR/payroll services, real property management, subsidies, car fleet management, provision of security for the property and cleaning services.

The conference name: Radom: PGZ 2.0; constitutes a direct reference to upgrading the PGZ group up to a higher level of operations. Our intention was to show that our Business Services Centre is going to be implementing the best market solutions in the key areas of operation for the Group. Not only is it our intent to introduce modern forms of management with regards to the shared processes, but we are also willing to increase the actual integration of the PGZ group, enhance the cooperation between the companies and raise the effectiveness of the Group’s operation, as a whole.

Rafał Zgorzelski, President of the Management Board at PGZ Systems sp. z o.o.

 

The expansion of the operational structures of the PGZ group in Radom would make it possible to generate relevant savings for the capital group. For example, back in 2016 the annual spending of the Group pertaining to procurement of goods and services was shaped at the level of PLN 2.2 billion. Considering the above, should costs be optimized at a level of 10%, this would generate at least 220 million zlotys of savings. However, taking into account the fact that shared services centres existing on the market, thanks to consolidation of procurement, allow for generation of 20% to 40% of savings with regards to the general costs amount, one may expect that the savings would be much greater than the aforesaid 10% sum. The Group assumes that 30% to 40% savings may also be generated through consolidation of shared processes in the accounting domain. The saved amounts would also go up as the activity of the Radom-based centre is expanded with further domains. 

 

Notably, Poland is an important European hub for the shared services centres that are currently employing around 120 thousand persons, providing 45% of jobs in the area within the whole Central-Eastern European region. What is even more important, the Radom-based Centre is not going to limit its activities solely to the PGZ Group’s companies, as a plan also exists to undertake cooperation with the external entities, especially with other companies in which the Treasury has shares. Ultimately, the Centre is to employ at least 300 persons, with the first several jobs planned to be created in Radom by the end of this year.

Rafał Zgorzelski, president of the management board at PGZ System sp. z o.o., Image Credit: A.Hładij/Defence24.pl

 

The main effects of the shared activities listed by the President of the PGZ System company included: introduction of modern management, making use of the scale effect and cost optimization, increased transparency and safety of business processes, enhancing the cooperation between the companies, creation of competency support structure for the PGZ, and the actual integration and consolidation of the Group. This is to be translated into increased effectiveness of Group’s operation and, consequently, the aforesaid steps would allow for creation of a solid brand: a national defence corporation.  

Błażej Wojnicz, in his statement, noted that creation of the Radom-based shared services centre equals to completion of one of the Group’s strategic objectives, namely consolidation of the Polish defence industry, required on the contemporary competitive market in this domain of economy. President of the PGZ Group also stressed the fact that the goal of establishment of the Centre is to make the PGZ products cheaper - this is required both by the primary customer: the Polish Ministry of Defence; as well as by the export customers, who are going to bear more and more significance for the group as time passes by.  

One of the primary goals for the PGZ is to finalize the functional consolidation of the Group. The aforesaid steps mean that a deeper integration of the companies within the group would take place, and a better use would be made of the existing synergies. We want to deliver the highest quality equipment for our customers – above all, to the Polish Ministry of Defence – at the same time taking care of cost effectiveness and efficiency and regular improvement of our financial results. This is the primary goal of consolidation of the shared processes within the group, and the main reason for establishment and development of a Business Services Centre in Radom. We are driven towards creation of a strong and reputable PGZ national brand, with Radom acting as the central point for the Polish defence industry.

Błażej Wojnicz , President of the Board at the PGZ S.A. Company.

 

Antoni Macierewicz, Polish Minister of Defence, Image Credit: A.Hładij/Defence24.pl

Radom’s significance for the Polish defence industry has also been stressed by Antoni Macierewicz, attending the conference. 

Radom is a special place, both for the Second Polish Republic and the defence industry born then, as well as – in the light of the June 1976 events – for the latest period in the history of our country. I am hence immensely satisfied with the fact that the Polish Armaments Group which is the key entity involved in the modernization of the Polish Armed Forces, has decided to place the Business Services Centre right here. I am convinced that the investment would also be an impulse for development of the city that has contributed, so beautifully, to our history.

Antoni Macierewicz, Head of the Polish MoD

The head of the Polish MoD also noted that the decision to create the Business Services Centre bears a great significance for the key Armed Forces modernization programmes to be pursued by the Ministry. 

For everybody, this is a key decision. For the Ministry of Defence this is a decision that may generate an opportunity to save money - which is always important - but it also creates a prospect for consolidation and professionalization of the PGZ Group’s companies. This is important especially in the light of the prospective contracts that are to be pursued by the PGZ Group in the nearest future. Here I am thinking of the three largest contracts, related to the Patriot missile defence system, Homar rocket artillery system and procurement of the submarines. These are the three largest contracts that are going to, throughout the next decade, shape the business activities undertaken by the PGZ Group’s companies.

Antoni Macierewicz, Head of the Polish MoD

 

 

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