Page 44 - bne_Magazine_July_2018

44 I Eastern Europe bne July 2018
Eurocar assembly line in Uzghorod, Ukraine
Ukraine's German factories left ticking over on the EU border
an market, which peaked in 2008, when locals bought more than 600,000 cars (analysts expect that number to reach 100,000 this year).
Other German companies focused on the production of automotive car parts that are then sent to Western countries for final assembly. Nearly all of them kept investing in Ukraine despite the crisis, but experts say that the political context and continuing conflict in the East has kept many potential investors at bay.
Cheap labour on Europe’s doorstep
Leoni, a German cable and harnessing manufacturing firm, arrived in Ukraine in 2002, just as the first cars were roll- ing off of the Eurocar assembly line.
In 2005, Kromberg & Schubert, which produces electric cables for companies like Daimler, BMW and Volkswagen, inaugurated a factory in the Volyn region, which borders both Poland and Belarus.
According to estimates from the German Chamber of Commerce, the German automotive supply industry employs up to 30,000 people in Western Ukraine, and has become the main target of German investment in the country.
Eurocar’s path in Ukraine has been a rocky one. Back in 2002, up to 60% of the production was expected to be for the Russian market, Eurocar’s general manager told bne IntelliNews. And until 2008, the plant produced cars not only for Skoda but also for Volkswagen, Audi and Seat.
Just like other German companies, Eurocar chose Western Ukraine for two main reasons: cheap labour and proxim-
Fabrice Deprez in Solomonovo
Twenty kilometres from the Carpathian city of Uzghorod
and barely 2km away from the Slovakian and Hungarian borders, in what used to be a deserted swamp,
the Eurocar plant stands mostly silent. Ten years ago, 1200 people worked here, assembling Skoda cars for the Ukrainian market. Today, after two economic crises, a change of government and a war with Russia, production has been drastically cut; about 250 people go to work at the plant each day now.
Ukraine's westernised car sector is a well-kept secret and epitomises the challenges the country faces when it comes to modernising its industry. The assembly line, modern and up to all European standards, is still operational, but only a couple of dozen workers occupy the large hangar. At its peak, the plant was capable of producing more than 4000 cars a month. In April, only 615 cars came off of the assembly line.
Still, there is a silver lining: according
www.bne.eu
to UkrAutoProm, an association of Ukrainian auto manufacturers, the total number of cars produced across the country in April was also 615, making Eurocar the sole automobile producer in Ukraine. “We have the capacity to produce more once demands picks
up. We are ready,” Volodymir Litvin, head of the SKD department, told
bne IntelliNews.
Since the early noughties, German com- panies involved in the automobile indus-
“We have the capacity to produce more once demands picks up. We are ready”
try (or, in the case of Eurocar, Ukrainian companies with German investment) have rushed to Western Ukraine to take advantage of the low cost of labour and the country’s advantageous geographic position. Some, like Eurocar, have been looking to tap into a promising Ukraini-
ity to Europe. Average monthly wage in the Zakarpattia region, where Eurocar is based, is around UAH7,000 ($270), about 3 times less than in Poland.
Meanwhile, the border with Slovakia can literally be seen from the plant and the