To escape war, Ukrainian factories move west

It is an unusual arrangement for unusual moments: Above a factory in Lviv, Ukraine, where Volodymyr Mysyk moved his furniture manufact...


It is an unusual arrangement for unusual moments: Above a factory in Lviv, Ukraine, where Volodymyr Mysyk moved his furniture manufacturing business, he and his 15 employees became roommates. They have brought their children and their dogs, and share a kitchen above the machines where they spend their days reviving a business that could have been destroyed by the war.

But Mr Mysyk, 23, and his workers, who came to Lviv from the bombed city of Kharkiv in eastern Ukraine, benefited from a spirit of solidarity and a government policy to rescue industries threatened by an invading Russian army and help bring them together, piece by piece, in towns along Ukraine’s western border.

This region is rapidly becoming the new economic heart of Ukraine, with more than 200 relocated companies manufacturing just about everything, including paint, building materials and parts for electric vehicles.

Factories in Russian-occupied areas have been packed up and moved on trains and trucks, and are being resurrected in the west. Manufacturers are creating jobs and looking for skilled workers. Now closer to Poland, Ukraine’s gateway to Germany and Western Europe, the resurgent companies are forging ties with the European Union, which Ukraine hopes to join soon.

“The main motivation for them to come here is that they stay in Ukraine,” said Andriy Moskalenko, deputy mayor of Lviv in charge of economic affairs. “Whether they come from Kharkiv, from Kyiv, from Chernihiv, they are all Ukrainians. We have to support them,” he added, “because Russia has destroyed a lot.”

Ukraine’s economy is expected to contract by more than a third this year. Inflation is risingand is likely to climb above 30%, the country’s central bank said recently, and the finance minister recently announced that the country has reached an agreement to stop paying certain foreign creditors.

As part of a government resettlement program, Mr. Mysyk was able to offer workers in his small business, Roomioan opportunity: join him in the relative safety of Lviv and keep their jobs, even if it means living closely with their boss until they can find their own place to live.

Emotionally, it wasn’t always easy: “I tried not to look depressed, because I wanted to encourage everyone,” said Mr. Mysyk, who moved large chunks of the chain from assembly in Lviv in a bakery truck lent by a nearby bakery. . It took a month to get everything out of the old factory, then pockmarked by bombings and shootings.

“I would smile and say everything was fine, even when I wasn’t sure I believed it,” he said.

But the financial and political support companies like his have received, Mr Mysyk said, have been an inspiration – and a reminder of how essential companies are in helping keep the economy afloat.

Big business is working as fast as it can to rebuild – even if it’s a daunting task trying to come up with a business plan in the constant uncertainty of war.

Oleksandr Oskalenko, Managing Director of Pozhmashinaa maker of fire trucks and agricultural vehicles, halted production in March at its sprawling modern plant in Chernihivsite of a brutal siege by the Russians, and cared about the safety of its 550 employees.

“Things have developed very well in Ukraine,” he said. “We still had corruption issues, but those issues were easing and the economy was improving. But with the invasion of Russia, half of the country ceased to function.

When President Volodymyr Zelensky announced an economic package in April to rescue businesses in the war-torn east, Mr Oskalenko jumped at the chance. “We took the plant apart piece by piece and put it on trains to be shipped,” he said.

The government offered tax breaks and free transport of equipment on Ukrainian railways. Lviv and other neighboring cities have been racing to attract newcomers, offering additional financial sweeteners including cheap warehouse space, free legal advice and fast-track paperwork to set up new operations quickly.

Beyond the 200 companies that have already moved, Another 800 have asked to be relocated, said Volodymyr Korud, vice president of the Lviv Chamber of Commerce.

On a recent weekday, a team of welders worked to redo the Pozhmashina paint shop inside a gigantic Soviet-era warehouse, fixing huge steel beams under beams of sunlight through broken windows. When complete, Farm Trucks will spawn in cool layers of Olive Green and Fire Trucks in Cherry Red.

Even so, Mr. Oskalenko said, it is unclear when things will resume as before.

“The Russians destroyed large industrial centers that produced energy, chemicals and steel,” he said. “The agricultural fields in the occupied areas are not producing,” he added. “So making a business plan for one to two years is impossible.”

“But it gave us perspective for the future,” Mr. Oskalenko said, smiling as he surveyed the revival of his former factory. “There are no trenches here, so that helps.”

The war also brought a flood of Ukrainians to settle in the relative safety of the west, many seeking work. For executives like Pavlo Chernyak, the head of Matro Luxury, one of Ukraine’s largest mattress manufacturers, moving to Ukraine’s western border opens up what it sees as a great opportunity to provide employment for some of the tens of thousands of people who have lost their jobs because of the war.

Under whizzing bullets and a hail of Russian rockets, he said, he has moved more than half of Matro Luxe’s ​​equipment from factories in Kyiv and Dnipro to the east, and plans to expand the activity. Mattresses are in demand in times of war – not only for soldiers but also for families in bomb shelters or centers for the displaced. And whenever the war ends, he expects demand will only increase amid a reconstruction boom.

Mr. Chernyak has pledged to expand his workplace in Lviv from 40 people to 200 in six months, and up to 500 by the end of the year.

“For me, it’s very important to keep places of work for people – we need to keep as many jobs here as possible in order to support our economy and pay our taxes,” he added.

Even as they search for skilled workers, replanted businesses face additional challenges in a wartime economy shattered by supply shortages and damaged infrastructure.

At the new place of NPO Rost, a manufacturer of interiors for passenger trains, a managing director, Aleksandr Pletiuk, scrambles to fulfill orders in a small warehouse. Prior to the Russian invasion, the company operated a modernized 33-acre factory in the now beleaguered city of Zaporizhia.

Today, Mr. Pletiuk’s warehouse space in Lviv is tiny by comparison, and his production capacity is only 10% of the old site. “We’re trying to fulfill all of our contracts as quickly as possible, while settling into an empty space that doesn’t even have electricity yet,” he said.

A handful of employees were trying to fill orders for train windows – but were missing key parts needed to make the windows airtight. Due to the impact of the war on Ukraine’s supply chain, Pletiuk said, it now takes twice as long to source glass. Fuel costs have more than doubled.

The company signed contracts with customers before the war at fixed prices, but now the expenses have increased: metal prices are 50% higher. And investments need to be made in the new warehouse to build production capacity.

Yet Mr Pletiuk said: “When we win this war, we will have a lot more to do. Russian attacks have damaged at least 3,900 miles of railway tracks in Ukraine. And many wagons that carried refugees and supplies will have to be refurbished and new ones ordered.

He’s not the only one seeing a windfall: an irony of the great eastern corporate migration is that it hasn’t always resulted in financial hardship, but gain.

Now about 60 miles from Poland, Mr. Mysyk realized that it would be easier to export Roomio’s furniture to European customers from Lviv than from Kharkiv. After emailing companies all over Europe, he secured new clients in Denmark and Slovenia – his first export opportunities.

“In Ukraine, it’s cool to work with European countries. So I felt really happy when the first contract was done,” he said. “For our work – I hate to say this, but it’s better for us.”

His company is not alone in starting to find new business in Europe, a trend he believes is important not only to help Ukraine keep its economy alive during the war, but also to foster closer ties. closely with the European Union.

“The more we are connected, the more the governments of the European Union and Ukraine will understand that we must be one,” he said.



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