Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Ukraine rebases businesses from war front to shield vital producers

Economic Indicators Jun 06, 2022 06:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
5/5 © Reuters. An employee prepares a facility for producing fire trucks, as the factory was relocated from Chernihiv region to Lviv amid Russia's invasion, in Lviv, Ukraine June 5, 2022. REUTERS/Pavlo Palamarchuk 2/5

By Natalia Zinets

KYIV (Reuters) - Oleg Averyanov's factory produced fire trucks and employed 600 people until it was forced to halt operations and close its doors as a Russian invasion force poured over the border into his region in northeastern Ukraine on Feb. 24.

Months later, the 44-year-old is gearing up to restart some of the plant's operations 700 km (435 miles) away in the western city of Lviv, where he has moved some staff and 20 rail cars of equipment and production lines that weighed hundreds of tonnes.

"No one believed this could happen. But the war began and we decided to diversify the risks, move part of the production line to western Ukraine," he told Reuters by phone.

Averyanov is part of a wave of businesspeople taking up a government programme to relocate businesses westwards from war-ravaged areas to protect manufacturers and shield them from further damage to an economy facing its greatest ever crisis.

The economy is projected to contract 35-45% this year as the war severs export routes for Ukrainian grains and metals, jacks up inflation and unemployment, and devastates heavy industry in the south and east where fighting has been fiercest.

Now it is transforming the geography of industry too.

More than 600 enterprises have already relocated to Ukraine's western regions, and 390 of them had already resumed work by early June, according to Economy Ministry data.

Some 150 of those companies have moved to the Lviv region that borders Poland and has been relatively unscathed by the war, the regional administration said.

"The large-scale relocation of business to safe areas will help Ukraine maintain production, jobs and meet the demand of the army and civilian population for a number of goods and services that are necessary to defeat the enemy," Economy Minister Yulia Svyrydenko wrote on Facebook (NASDAQ:FB) on March 29.


Averyanov plans to retain some of his business's operations at his original plant in Chernihiv region that was overrun by Russian troops in the first phase of the war before Moscow withdrew its forces there.

"The war will finish and we'll have two factories - one in western Ukraine and one in Chernihiv region," Averyanov said.

His company, Ukraine's only producer of fire engines and fire equipment that are vital to the war effort, hopes to start operating in Lviv region by the end of June.

    He plans to recruit and train about 100 local residents or internally displaced people this summer.

Though grateful for the support, he now wants the government to provide enterprises like his with procurement orders and criticised the preference shown to imported goods.

    "We have retained our manufacturing capabilities... and our team of employees. But if the state does not think about how to provide orders to enterprises like ours that are moving to western Ukraine, then we will not survive," Averyanov said.

His message was echoed by Central Bank Governor Kyrylo Shevchenko who has urged the government to scrap tax breaks for imports and to impose additional taxes on non-vital imported goods.

    "The incentives created for imports in the form of the abolition of import duties and value-added tax deprive Ukrainian producers of an advantage," he wrote in a column on the ZN.UA news website.


Ukraine has lost 200 large factories during the war, said Andriy Yermak, head of the presidential office.

    In the east, the war has brought operations to a standstill at the Azovstal and Illich metallurgical plants in the city of Mariupol, the chemical Coke and Chemical Plant in Avdiivka and the Azot chemical plant in Sievierodonetsk.

    "The government is doing a good job helping to evacuate businesses, it would be much worse without it," said Mykhailo Kolisnyk, a professor at the Kyiv School of Economics.

    But with their share of gross domestic product at no more than 1-2%, the number of relocated enterprises is not enough to noticeably improve the economy, he said.

    A few large agricultural and metallurgical enterprises make up a sizeable chunk of Ukrainian gross domestic product but their production facilities cannot be relocated, he said.

    "There is a number of such conglomerate enterprises in the east, and most of them have stopped making their contribution to GDP," Kolisnyk said.

    "Russia, the invaders, are deliberately destroying these enterprises and taking away their products."

Ukraine rebases businesses from war front to shield vital producers

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email