Staying in the ranks: The bumpy ride of investing in Ukraine through war

Staying in the ranks: The bumpy ride of investing in Ukraine through war

After Russia invaded in Ukraine, foreign firms dug in their heels and committed to the country, Scania, Atlas, Kingspan, SciPlay, Westinghouse...

When Russian troops arrived in Bucha on the outskirts of Kyiv last March, they took over Scania’s local workshop. The Swedish truck company regained control of its facilities the following month and quickly pushed ahead with its plans to open a new workshop in the Brovary district on the other side of Ukraine’s capital.

“We had already ordered most of the equipment, and that was on its way,” Håkan Jyde, managing director of Scania Ukraine, tells from his office in Kyiv. “So, when we saw that Kyiv was fairly safe and the troops had left, we decided to go on with the investment.”

The Brovary workshop, which opened last June, sits on the opposite side of the Dnieper River from Bucha and allows Scania to be closer to its clients. “There were difficulties crossing the bridges and there were fuel shortages, making it even more difficult for customers to move around,” Mr Jyde says.

It has been busy since day one, in part because Russia’s blockade of Ukraine’s ports and bombing of fuel infrastructure has increased demand for land transportation. However, the war has also taken a toll on the firm’s Ukrainian network. Its workshop in Kramatorsk was destroyed by missiles in November and its plans to open a workshop in Mariupol were quashed by Russia’s occupation of the city.

Resilience and courage

Scania is one of the 26 companies that ploughed on with investments in Ukraine during 2022 despite Russia’s invasion.

US cybersecurity firm Hold Security chose Kyiv for its second European office in late 2021 and commenced its Ukrainian operations just 18 days after Russia’s invasion. Of its 30 employees, many still work remotely as power issues and air raids make it difficult to commute to the office in central Kyiv.

“The office doesn’t get used every day, but it’s a place for unity … and where people can connect with each other,” says Alex Holden, the firm’s founder. “It doubles as a shelter for employees and their families whose power is out, especially in the winter.”

He says the investment was “much more complex” than he originally anticipated. For example, there were difficulties paying one Kyiv-based employee because his legal address was in Donetsk, which is caught by US sanctions. But Mr Holden has no regrets: “If I had to do it over, I would do it with even more vigour.”

One day before Russia invaded, the Latvian firm Atlas signed an agreement to provide Ukraine’s army with drones. Today, half of its revenues come from Ukraine and the use of its equipment on the battlefield has provided “the proof of our product,” says CEO Ivan Tolchinsky.

The firm is now hiring engineers for a new research, development and customer contact centre in Kyiv; however, Mr Tolchinsky warns that property prices in the capital “are still very high, even during the war”. The office it is leasing in Kyiv is more than twice as expensive per square-metre as Atlas’s headquarters in Riga.

Last June, Irish building materials group Kingspan approved plans to open a €200m building technology campus near Lviv, which will produce energy-efficient insulation and heating products.

“Incremental capacity in eastern Europe is always on the agenda … [and Ukraine] was always a country of significant interest” says Mike Stenson, Kingspan’s project lead for Ukraine. The campus creates opportunities to “supply a lot of materials that will be needed post-war in relation to the reconstruction of Ukraine,” he added.

Mr Stenson has been inspired by the “absolute resilience and courage of many people that [he’s] met in terms of their determination to see this [investment] through”, including investment promotion authority UkraineInvest which has supported 17 projects since Russia’s invasion.

Expanding amid blackouts

Online games developer SciPlay, which has operated in Ukraine since 2020, has grown its local headcount by more than 60% since the war began. “Despite multiple difficulties like rolling blackouts, internet challenges and relocations, our team perseveres and continues to perform [and] execute on our roadmap,” says Kimber Dall, the company’s vice president for people.

Another company to grow its footprint over the past year is the US’s Westinghouse. In June it agreed to provide technology and equipment to Ukraine’s nuclear power operator Energoatom for the construction of nine reactors, upping its 2021 commitment to assist with five reactors. Westinghouse also committed to building an engineering centre in Kyiv, although this has been put on hold due to the war.

David Durham, Westinghouse’s president of energy systems, says “we are probably still three years away from starting construction [of the reactors]”. However, Energoatom has gained government approval to start preparations for the first two reactors. “They are determined to get through this war and continue working on the new plant projects that they’ve committed to,” he adds.

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