Željko Pavlin: If HS Produkt were from Germany or the USA, we would sell much more weapons to other countries

At the entrance to the Karlovac HS Produkt complex, we wait for an armed guard to record all personal data, and we are already somewhat nervous because we are not used to such long protocols in most other industrial facilities. However, we are not entering an ordinary can factory, from which a worker can sometimes smuggle out a product. The pistols and rifles produced here must not be taken out unauthorized from the factory premises.

In addition to its guards, HS Produkt has strong technical security, with cameras covering the entire facility, and it is precisely known who can enter which department alone and who needs an escort. That is why we were also given a discreet escort to the office of Željko Pavlin, who has gone through all stages in the company – from student internship and apprenticeship to the position of director, or rather CEO, where he has been for a full 20 years. He has been representing the company since co-owners Ivan Žabčić and Marko Vuković withdrew from the public eye after all the problems they had with the judiciary.

We start the conversation precisely with the security protocols that prevent the removal of ‘cans’:

– A pistol cannot be taken out because the production tracking system prevents it. And that is the reason why our pistols are almost non-existent on the black market. We know where, when, and to whom every piece of our weapon has been sold. We have invested a lot of money in this, and we continue to work on that security. Every kilogram of steel, every bolt, grip, and every part of the weapon receives a number under which it is tracked.

Traceability ‘from field to table’?

– Yes, and in that sense, the FBI has thanked us because even if someone erased the serial number of a pistol, we knew when we made it and to whom we sold it.

What were the business results in 2021?

– This was a record year, and we grow almost every year and are used to growth being something usual, except for the decline in 2019. We had about a billion kuna in revenue, quite a large profit, and all other indicators were good.

So, you didn’t need Trump for growth in the main American market?

– No, contrary to expectations, our weapon sales are higher when the Democrats are in power than when the Republicans are.

According to that logic, you are cheering for Trump to run for president again, but also to lose the elections?

– Haha, it turns out that way. We cheer for the Republicans because then there are no changes and restrictions in arms trade, and that situation from the USA spills over to other countries. Thus, in 2021, we are not only recording growth in the USA but also in Europe, in Croatia, and in all other markets. In the last two years, the sale of personal weapons in Europe has been increasing, and it continues even now. This is a consequence of some insecurity during the corona period.

How much revenue do you generate in the main market, in the USA, and how much in Croatia?

– In recent years, it has been about 70 percent in the USA, and Croatia is about one percent.

But recently, the sale of pistols in the civilian market is also increasing in Croatia?

– Yes, until about ten years ago, we sold around two hundred pistols a year, last year it grew to about a thousand, and in the first four months, we sold more than four hundred. And this is not a Croatian peculiarity; we are following the trend and growth percentage throughout the European Union, where the civilian arms market has doubled, even tripled. Perhaps Croatia is growing a bit more because we are a domestic manufacturer, so we offer preferential prices, and we also sell ‘directly’, without intermediaries.

What is the difference in working with the state and civil sector? Is it like wholesale and retail?

– Well, sometimes there is no difference in quantity with states, especially in the USA. The significant difference is that in the civil market, you depend solely on yourself, on the price-quality ratio, and that market, if you have a product, is much more stable. When doing business with states, armies, and police, you depend on many other factors, from lobbying to logistics and political influence. That is the key difference.

So, hypothetically, if you wanted to sell weapons to the Russians, a good lobbyist would be Milanović, and you would find it easier to enter the Ukrainian market with Plenković’s help.

– I wouldn’t say it quite like that. I would say the following: if this factory were in Germany or the USA, we would sell much more weapons to other countries than we do now precisely because political power is extremely important in arms sales. Croatia is a small country and cannot compete with Germany or, if you will, Italy, especially with the USA in that sense.

So, for a significant increase in production, you would need to relocate your headquarters to Munich?

– Very likely. It has its pros and cons, but it is certain that we would sell more weapons to some EU members, even outside of it.

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