Rebuilding Ukraine

In this article Kostiantyn Salii, the President of the All-Ukrainian Union of Manufacturers of Building Materials looks at the opportunities in rebuilding Ukraine.

Ukraine is the fourth largest country in the world in terms of mineral reserves for the construction industry.

According to various estimates, the purchase of construction materials for post-war reconstruction will require $65 billion to more than $100 billion. This wide variation in forecasts is due to the lack of verifiable data on the losses suffered by infrastructure and housing stock as a result of Russian aggression.

It is clear that industry’s current capabilities and even its pre-war capacities will not be enough to cope with the surge in demand when the recovery begins. According to our estimates every factory in the industry that has not been bombed or looted by the Russians will have to increase production by 200-300%.

This applies to quarrying, production of ready-mixed concrete, building mixtures, decorative materials, and dozens of other product groups. Many market segments will face significant shortages after the war.

Building Materials
Cement – In Soviet times, Ukraine produced more than 20 million tonnes of various cements per year. Last year, it produced only 4.5 million tonnes.

It will be possible to increase production to 13 million tonnes far short of what will be required. At present, in spite of the continuing war, globally recognised Western investors are interested in buying factories in Ukraine. Ukraine is open to this in the belief that it will raise the quality of goods produced compared to products coming from elsewhere. In order to have enough cement and concrete, do you need new plants or is it enough to modernise the existing ones? We need new ones. Many existing plants are located close to the front line and have suffered significant damage.

Glass – Ukraine needs 3-4 factories with a capacity of 25 million square metres of thermally polished glass per year. There is already a shortage of window glass on the market. It is not produced in Ukraine at all. It has historically been imported from the east and is of very low quality – even inferior to that produced during Soviet times.

Bricks – Most domestic production has ceased due to a lack of orders and shortages of electricity – electricity is switched off for two hours per day and it is difficult to run machines with intermittent power.

Basalt insulation and ceramic tiles – there should be enough as Ukrainian producers have been actively exporting these products recently.

Drywall and aerated concrete – again there should be enough of these products.

Within the framework of the “industrial” visa-free regime with the EU, the procedures for importing many goods into Ukraine have been simplified.

New factories and automation
We are now trying to convince potential investors that investing in Ukraine is very profitable. Even if you do not want to build a plant here during the war, preparatory work should begin now. Ukraine has enormous mineral reserves for the construction industry – we are the fourth largest in the world.

We have everything: sand, lime, and granite crushed stone. The only thing we lack are modern factories. Transport adds high costs. It is better that factories will be located in Ukraine – closer to local raw materials. For example – it is more profitable to get lime and process it nearby than to transport it and process it and then return the finished product.

When the starting whistle blows there will be a very large influx of companies – especially from Poland and Germany. We can say for sure that at least 1,700 Polish companies are ready to enter Ukraine on the first post-war day.

Our strategy will be about maximising robotisation and mechanisation of both the production of building materials and the construction processes themselves.

According to trade unions, more than 200,000 people were officially employed in the construction industry – on sites and at factories – before the war. About 50,000 of them are on the front line.

A factory that produces concrete products used to employ an average of 245-260 workers. Now it’s good if there are 45 left. We hope that the majority of those mobilised during the war will return to their companies unharmed. Unfortunately, many will come back from the front line with disabilities. The modern production model and digitalisation make it possible to involve disabled people in complex production. The way to involve them in production processes is to teach them how to operate the latest robotic mechanised systems. One person in a wheelchair can remotely control the process by pressing a few buttons in the workshop, entering specialised codes for production, or even working at home.

Housing – Last year, there were reports that housing sales in modern complexes had increased in Ukraine. But in reality, this applies mainly to those housing estates that were 90-95% ready before the war. They only required a small amount of building materials.

We are thinking of producing house-building kits that will reduce the consumption of steel, concrete and cement by 3-4 times, and most importantly, reduce the number of people involved in construction.

Prefabricated homes – off site construction – Houses of 40-50 square metres are very popular in the country. The British and Germans are coming to Ukraine with their own technologies, and we already have our own developments.

This is good for areas that lack the funds to rebuild quickly and/or those destroyed by the Russians.

It is possible to order houses from a manufacturer, manufacture them and install them all in six months to a year at most. This approach will, among other things, facilitate the return of Ukrainians from abroad immediately after the war.

For further information contact martin@hardwareassociation.ie