Ukrainian industry is on the verge of crisis. By the end of October the decline in production was a record 5%, and in processing industry — and at 6%. For the first 10 months of this year, according to state statistics, the rate of decline is not as large at 0.6%. The overall situation pulled a few relatively good months.
But they were not at all.
So, metallurgy in 10 months dipped by almost 12%, industry – 15.4%, textile production — by 9%.
Negative trends will only get stronger. This contributes to a situation in external markets and within the country.
For example, steelmakers are suffering because of a record decline in prices for their products on world markets quotes on metal — minimum 2016.
Light industry collapses several factors.
“In light industry, recently worked about 90 thousand people. Over the past six months quit 6 thousand people. The volume of production fell by 15%. Many businesses operate with a partial load, if not idle. No bookings, no late payments, nothing to pay people. In the end, the specialists leave to work in Poland, and our shops are idle. It is a vicious circle,” he told “Country” the head of concern “Yaroslav” Alexander Badger.
According to state statistics, in October grew a record wage arrears — by 11.5%, compared to September. Employers, and it’s mostly all the same in industrial production, the Ukrainians have more than 3 billion hryvnia. Many simply can’t pay people that only enhances the outflow of personnel.
Alexander Badger says that our businesses are losing and foreign customers.
“We become expensive. Expensive electricity, gas, accounting, verification, regulatory bodies , customs. All this is not, for example, in Moldova, where it goes, our customers, with whom we recently worked on the tolling scheme,” says Badger.
The authorities have not yet commented on the problem of falling industrial production. No programs out of the situation are not yet available.
Perhaps the government calms the GDP growth, which, in the third quarter amounted to 4.2%. Thus, the fact that it did not provide the growth of production, and, mostly, trade, banks and agriculture (due to the good harvest), remained behind the scenes.
“Country” understood that why accelerated decline in the industry and where it leads.
Beef or minus 50%, pipe — less 70%
According to the state statistics Committee, Ukrainian industry this year, worked in the black just three months — from March to may. Moreover, in April managed to increase volumes by more than 5%. But since summer began failure, which from month to month only intensified. So, if in July, the company showed a minus of 0,2%, in August – already at 1.7% in September and 1.1% in October — and at — 5%.
In the processing, the situation is even worse. “Plus” there were only two months — March and April. In June recorded a decline of 4.8% and, by the end of October — 6%.
Short periods of growth slightly brightened the overall picture. In the first 10 months of decline in industry was only 0.6%. But in some areas the situation is catastrophic, especially in metallurgy (where the decline in 10 months — about 12%), automotive industry (minus 15.4 per cent), textile production (minus 9%).
However, there are more or less successful industry. So, at the end of 10 months, plus took manufacturers of computers, electronic and optical products (growth -28,7%), chemical (plus 3.5%) and pharmaceutical products (plus 1.3 percent).
But the overall situation they do not save. Therefore, if at the end of 2018, the domestic industry went into a plus of 1.1%, this, according to the head of the Ukrainian analytical center Alexander Okhrimenko, will be at best a null result. Although it is possible and minus.
Also, according to state statistics, a growing number of unprofitable enterprises. If, at the end of the first half of 2018, there were 24,7% of the total number of production sites of the country this year — almost 25%.
For example, in the processing industry, which, by the end of October fell the most in the first half profit was almost 33% of enterprises less than in the same period last year.
In the processing of the most in October decreased production of frozen beef and veal (in comparison with the similar period of 2018 — almost 53%), sausages (16%), juices (in particular Apple 37%), confectionery made of chocolate (35%).
Also recorded a record minus certain types of light industry products, and knitted dresses almost 33%, men’s costumes — minus 47%.
Pipes in the last month has produced nearly 67% less electric motors and nearly 69% less than in the same period last year.
A cheap dollar and expensive controllers
A record of the reasons for the collapse of several. Part of them, not a novelty for our market.
So, according to the head of the Secretariat of the Council of entrepreneurs under the Cabinet of Andrew Zablovskogo, many businesses still have not recovered from the closure of the Russian market.
“Particularly affected are the builders. Manufacture of transformers, electrical equipment, equipment for industrial enterprises fell significantly,” — says Okhrimenko.
Exports to the EU the situation is not corrected, moreover, that in Europe is mainly our raw materials rather than processed products with added value. For example, milk, which in Russia was shipped in record volumes to Europe still does not communicating. Can’t get into the European market also enterprises of machine-building industry.
But there are new factors that force Industrialists in losses. Thus, the exporters were hit by a strengthening of the hryvnia. Did Ukrainian goods more expensive, which reduced its competitive advantage in the global market, it is no secret that selling our products in many respects low price. At the same time raw and other materials, many purchased even at a higher dollar exchange rate, which further increased the cost of finished goods
As told Alexander Badger, it is especially difficult for businesses that operate on the tolling scheme.
“The low dollar is not to allow anything to earn. On the verge of bankruptcy several companies that were bridges between the Ukrainian apparel manufacturers and buyers from Europe. Why bankrupt? There are several reasons. We become expensive — for electricity, gas, accounting, salaries and other things. Plus the constant RAID controllers, convoluted, lengthy and expensive customs procedures. Because of this, Europeans increasingly do not want to work with us,” said the Badger.
In addition, more complicated business rules. Many businesses embraced the change of government with enthusiasm. From team ze waited simplifications — as taxes (in particular, the abolition of income tax and replacing it with a tax on the capital), and checks. But, as practice showing, neither the first nor the second yet.
The tax on the capital was postponed until better times. At the same time discussed the tax increase for a number of industries.
But most of all, the business community fears of increasing pressure — both formal and informal.
“The causes of production losses — strategic . From war and bad loans (expensive and dropped the course) is simple to police racketeering. Never before regulatory authorities, especially the RRG and the SBU, not tore with such fury business. Yanukovych even hints at the kind. Business tear to curry favour, but mostly to earn money. Assaults with wiretaps and searches are commonplace,” complains Alexander Badger.
Businessmen state — has not happened and promised relief at customs, although there are, allegedly, now there is reform. The main problem, which complain about the enterprise attempts to beat out from them as many taxes, and, by any means.
“Often simply inflate the customs value of goods. And instruct to pay the tax from this elevated base. Documents, which set prices, no one is looking. They say you pay taxes, then sue, and then we plan”, — said “the Country” representative of the major food companies.
The specter of a global crisis
Problems of Industrialists exacerbates the deterioration of the global environment. The experts portend the beginning of a new round of recession, and the signs are already there in many markets.
In particular, reeling the metal market. Prices fell to a three-year low. Reasons to reduce consumption of metal (especially from China) and a new wave of protectionism in the world.
The head of “Ukrmetallurgprom” Alexander Kalenkov was told “the Country” that already by the end of September, all domestic metallurgical enterprises worked at a loss. The result – the production decreased by about 9%.
“If in the first half of last year we made a profit of 4.2 billion hryvnia, then for the same period of 2019 – a loss of 79 million. At the end of the first quarter balances are not sold steel products in the warehouses of the company increased to 419 thousand tons, tone of 273 thousand tons more compared to the same period last year. And forecasts are disappointing: in the third quarter, we see that prices and demand for steel products continued to fall, and the expectations of a global recession increase”, – said the adviser of the relationship with the authorities “have Acelormittal Krivoy Rog” Vladimir Tkachenko.
The situation on the world metal markets continues to deteriorate, collapsing prices for Ukrainian products. So, just a week from 15 to 22 November, the value of the composite price index on the Ukrainian market of metal products has decreased by 0.02%. Most sunk the price of seamless pipe (0.68% or 237 UAH per ton). Cold-rolled sheet fell by 0.13% or 27 hryvnia per ton.
“Continues to shrink the global demand for the metal from China and from many sectors—major consumers of the metal, say, automobile industry. To sell our metal simply no one, at any price,” — says Okhrimenko.
Not everything went smoothly and the farmers, which, along with metals, are the main suppliers of foreign exchange. This year Ukraine received a record harvest of grain and oilseeds — about 92 million tons. According to preliminary estimates, grain exports will amount to 52 million tons, including 27 million tons of corn and 16 million tonnes of wheat and around 4 million tonnes of barley.
But not the fact that farmers will be able to ship all of these volumes. Experts point out that grain exports significantly hinders logistics. In particular, many complaints about the work of “Ukrzaliznytsia”. For example, if domestic elevators can ship up to 700 thousand tons of grain per day, ULTRASONIC able to carry only 100 thousand tons. And to export 52 million tons of grain needed daily to take out no less than 170 thousand tons. Otherwise our crops from the world markets will start to push the Russians and the Kazakhs, who also received a good harvest (grain from Ukraine, Russia and Kazakhstan are sold on the world market as “black sea”).
Plus because of the beginning of the global crisis may lower the price of grain and food. In particular, the best forecasts for corn, for which demand from China is falling.
“As practice shows, the first victims of the global crisis become a small commodity economy, which are highly dependent on the world market, because they can not offer you the products with high added value, which in the Wake of the recession depreciates less than raw materials”, — said economist Viktor Skarshevsky.
So Ukrainian enterprises are caught between two fires — it is now difficult to work with and not the external and domestic markets. In this case exacerbated the problem with the staff — people continue to leave to work abroad, and to keep them, we have to raise salaries. But many enterprises simply have nothing to pay. Wage arrears in Ukraine grew to a record — up more than 3 billion hryvnia.
Why does ze have forgotten about the industry
In the government program for five years about the industry is mentioned in several aspects. Thus, the Cabinet has indicated that it plans to attract $ 50 billion investment and create millions of jobs.
Though not said, by what it will do. And as a modest current investments (less than 2 billion in 2019) will suddenly turn into a 50 billion Experts, which talked of a “Country” with one voice declare that sentiment among potential investors has not changed — they’re still eyeing our market and are waiting for real reform of the judicial system, property rights protection, tax innovations.
All this yet. But there are already wage growth, higher prices of electricity and gas and concerns spheres of influence representatives of the new government.
The program, which was written exclusively for the industry, ze have not yet submitted. Nothing is known about the plans of salvation of the individual sectors, for example metallurgy, which is one of the main suppliers of foreign exchange.
However, see promise enterprises “industrial bezviz” with Europe already from 2020. This supposedly should contribute to the law “On standardization”, which Parliament adopted in September. The law prescribes harmonization of the national standardization system with international and European practice, and should create new opportunities for Ukrainian producers of non-food products in the EU.
The fact that the Association Agreement between Ukraine and the EU envisages the possibility of concluding Agreements on conformity assessment and acceptance of industrial products (ACAA, or the so-called “industrial bezviz”). Potentially ACAA can cover to a fifth of the Ukrainian export to the EU, especially engineering products. But, in addition to standardization, it is necessary to solve the issue even with the quality of Ukrainian products.
After all, even if it is theoretically allow on the EU market, not the fact that it can withstand there is competition with other products. And this requires significant investments in modernization of production, which is not.
“In the government lexicon, the word industry is not as such. And the phrase “industrial policy” and even more so. The government is focused on the sale of agricultural land, the tightening of the rules for natural persons-entrepreneurs, the gas tariffs for optimists and pessimists, you receive the next tranche from the IMF and other things have no relation to economic development, and often contradicting it. Can deindustralization the Ukrainian economy is one of the governmental tasks, it simply forgot to enter into the program of the government,” — wrote on his page in Facebook the economist Viktor Skarshevsky.
The growth of GDP (in the third quarter to 4.2%) it relates to agriculture, trade, banking sector and other things. But not with the industry, which for the third quarter fell by 1%.
“In other words, growth of 4.2% is of low-quality and unstable, as it depends on external factors, is based on the sale of agricultural raw materials, creates new jobs, and comes amid deepening deindustrialization”, — he stated.
Alexander Okhrimenko says that the situation in industry can dramatically improve in just two cases — if Ukraine will resume trade relations with Russia, and for our businesses open again capacious Russian market, or will establish industrial cooperation with the European Union, running, for example, the production of components for European companies. But both in the near future — a big question.Liudmila Ksenz