Ukrainian factories struggle as Russia’s attack rocks supply chains

Klim Tulin’s cardboard mill in the central Ukrainian city of Dnipro is running out of raw materials and could lose water or electricity any day.

Mr Tulin, whose corrugated boxes are used by local food producers, says he can’t keep the assembly line running much longer when utility lines are stretched, utility networks are fragile and roads to and from the city are dangerous. But he’s trying to keep production alive while farmers and bakers struggle to get meat, fruit, vegetables and bread to shops.

“We said, ‘Guys, we’re going to stay here and work because if we work, we’re helping our country and our country,'” Mr Tulin said.

Small factories like Mr Tulin’s are part of the backbone of Ukraine’s industrial economy, providing food, textiles and other goods, as well as the equipment and materials that support the country’s sprawling agricultural sector.

As Ukraine faces military attacks from Russian forces, analysts warn the world’s wheat supply could be under serious threat. WSJ’s Shelby Holliday explained. Photo: Valentyn Ogirenko/Reuters

Owners and operators of Ukrainian farms and factories like Mr Tulin say keeping their businesses running is just as important to Ukraine’s war effort as serving in a territorial defense unit. If Ukraine ousts Russia from its country, its efforts can help spur an economic recovery.

“War is very expensive,” said Roman Kazanko, managing partner of BZKU Ardenz, a boiler manufacturer in a suburb of Kyiv, the capital of Ukraine. “If we don’t start working, the economy will kill us, not the Russian people.”

Mr Kazanko says he has supported Ukraine’s war effort by converting its drilling, welding and laser equipment to manufacture anti-tank traps and other materials.

At the same time, he is trying to boost his boiler business and find customers abroad. He hopes to soon be able to deliver three industrial boilers to a customer in Austria, but says he will struggle to fill any more orders.

Most of its Ukrainian customers, who account for about 90% of its business, have temporarily closed. He is running out of the steel and industrial gas needed for production, and around 90 of his 100 or so workers have left the country or are serving in national defence.

War, it’s very expensive. If we don’t start working, the economy will kill us, not the Russian people.


— Roman Kazanko, BZKU Ardenz

But he’s confident his supply lines and production will restart once the Russian army is pushed back. “People will come back because people need to make money,” he said.

Entrepreneurs say they learned to improvise their logistics after the initial shock of the invasion.

Anton Avrynskyi’s online drug delivery service, Liki24.com, relies on messaging apps like Telegram and WhatsApp to find out where to get fuel for its vans. When state post Ukrposhta or private courier Nova Poshta cannot deliver medicines to a besieged city, Mr Avrynskyi turns to volunteers who provide vehicles and drivers free of charge.

“Everyone in our country is working to help each other right now,” he said.

Corrugated boxes, the heart of the warehousing and delivery trade, are harder to come by.

Russia has damaged or destroyed several of Ukraine’s largest packaging makers, said Eduard Litvak, executive director of UkrPapir, a pulp and paper industry trading group, reducing production by about 60% and limiting the companies’ ability to store and store goods transport if they try to continue operating.

Russia’s attack failed to reach Mr Tulin’s factory in Dnipro, one of Ukraine’s largest cities and near the Donbass region of eastern Ukraine that Russia claims. But Dnipro was hit by rockets, and a March 11 strike destroyed a shoe factory there.

A shoe factory was shelled in Dnipro on March 11.


Photo:

nuno veiga/Shutterstock

Mr Tulin, who is 32, is spending as much time as possible at the factory while his partner Darya stays at home with their young son, who was born on the morning of the Russian invasion on February 24. When air raid sirens sound, the family rushes to the basement of their apartment building to take shelter with neighbors. Mr Tulin said he only finds peace in the first few seconds of each day when he wakes up. “Until you remember this is a war,” he said.

Before the invasion, Mr. Tulin’s factory and a sister factory across town were producing more than 10 million cases a month to move food, beverages, machine parts, consumer goods and electronics across domestic and international markets.

Production is down about 80% today, Mr Tulin said. Most customers have ceased operations in and around occupied, encircled, or threatened cities. Some local businesses are clinging to bringing meat, cereal, eggs and bread to local shops, but foreign markets are largely cut off.

More from the logistics report

Mr Tulin said he had stocks of raw materials for about a month. His company uses around 2,000 to 3,000 tons of paper, glue and adhesive tape every month. Some of his workers drive to two nearby paper mills to get supplies, “but it’s still a bit dangerous to get there,” Mr Tulin said. He expects to lose water or electricity every day. But for now he can do it.

“It’s hard to predict how long it’s going to be,” he said. “How many rockets will be launched tomorrow? Where will they strike? How many gas stations will be destroyed? power plants? How far will the Russians advance tomorrow?”

He says he will keep the factories running until he can no longer work. Every new crate order is a success.

“We understand that somewhere another company has started working and we feel a small victory,” he said.

write to Paul Berger at Paul.Berger@wsj.com

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