In the world of black swans, forget Russia’s guns vs. butter, it’s bricks, bricks and insulation in Ukraine

Why should you care about Ukraine‘ s manufacturers of building materials? In the world of unknown unknowns, they have the gut to create in a Eastern European nation that is disrupted by destruction.

There is nothing creative about the destruction that takes human lives. And in this region of rising geopolitical tensions, Ukrainians’ creative resilience is going to inspire you to build where the rival would rather have you stagnantly recover from the destruction he aimed at you.

With their north-eastern neighbours getting deeper into the harsh ‘it’s guns or butter’ dilemma, it’s bricks, bricks and insulation in Ukraine.

Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials’ Manufacturers, explains the human science behind the magic of minerals. We caught up with him in Munich, Germany during the BAU 2015, world’s leading trade fair for architecture, materials and systems.

Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials' Manufacturers
Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials’ Manufacturers
Why participate in the BAU? There are similar events throughout the year in places from Sao Paulo to Tokyo all the way to Almaty and Lagos.

The main idea here is: Ukraine has signed the Association Agreement with EU recently, we can see that the European markets become more open for Ukrainian goods. Why not use this? So we go to the fair and present ourselves, Ukrainian building materials and investment potential of our country. Another thing – it’s about heavy goods so you have to study carefully what kind of competitive products you can offer in regard to transportation costs.

Our next step is to pitch our exceptional offerings across local European fairs: think Bulgaria, Romania, Poland, Sweden. And of course we should not overlook other big and promising markets – we plan to participate in fairs in UAE, Egypt and the MENA region as a whole.

Did the 2008 global recession boost the international competitiveness of Ukrainian producers of building materials?

Not in the first place. We can see that only after 2008 many industries started to flourish. And the reason for that was the weakness of the local currency and growing potential of the domestic market. For instance, thermal insulation (see pdf): until 2008 we imported almost 100% of it . Two new factories have been put up since those times and now Ukraine exports this quality product with a reasonable price-tag attached to it. We are seeing similar trends emerge in other sectors of construction industry in Ukraine.

So I’d rather say that the present crisis pushes Ukrainian manufacturers of building materials in the direction of foreign markets and makes them increase their competiveness. They have everything here to succeed: cheap and qualified labour, rich resources and weaker hryvna [Ukrainian currency] to boost our exports.

How much is the participation of Ukraine's delegation informed by Donbass reconstruction needs -- however bleak is the peace in Eastern Ukraine at the moment?

I have to say that our mission to BAU 2015 in regards to Donbass was more about informing our foreign partners: people needed information about what’s really happening there. Not from the news — they wanted to hear it directly from us Ukrainians, people who live and work here.

Regretfully, it is very hard to predict how the situation will develop given the current state that a significant part of Donbass is in. The fact remains pronouncing – we have 80% of infrastructural, housing and civil objects damaged and destroyed there. So we will have to deal with it afterwards. The only question for now is priorities – when exactly should we be rolling up our sleeves?

"More of Ukraine's working quarries need new technologies in processing," Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials' Manufacturers (left)
“More of Ukraine’s working quarries need new technologies in processing,” Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials’ Manufacturers (left)
Tells us more about the partnership with UFEMAT?

Europe’s UFEMAT is more of a merchants’ association rather than the producers’ union. In 2014 our Union became the full-bodied member of this organisation. Our agenda with UFEMAT is focused on the following aspects:

  • Ways of integration with Europe: energy-efficiency and sustainability in construction
  • Cooperation in science and technology
  • Information exchange on sales and distribution
  • and a pilot project to launch the Centre for European standards in Ukraine.

Our first big meeting with UFEMAT showed that we have what to offer to Europe: many of our products are certified for the EU and our price propositions are highly competitive. In March, we plan to continue developing relations through a visit of our delegation to Brussels. There we plan to meet several major builders’ merchants, visit Trade Fair Batibouw. And – last but not least – take part in a UFEMAT meeting where strategy for 2015 will be developed.

What are the key international markets as Ukrainian manufacturers of building materials see them? What are the prospects of getting a market share in those target markets?

For many years after Ukraine got its independence, the traditional markets for building materials were Russia, Kazakhstan and other ex-USSR countries. As Russia launched some restrictive measures aimed at Ukrainian imports — and has done it drastically since 2012 — our manufacturers started exploring Eastern European and Middle Eastern markets. Guess what: we have some success stories with Africa as well. And for the reasons I mentioned above these markets will remain our priorities for the near-term future.

Good quality, a sound raw materials base and cheap labour are the key factors for getting a share in these markets.

Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials' Manufacturers, takes to the mike: "Watch our bricks and insulation. We have about 30-40% of world reserves of white clay and kaolin"
Oleksandr Pietushkov, Chief International Officer at Ukrainian Union of Building Materials’ Manufacturers, takes to the mike: “Watch our bricks and insulation. We have about 30-40% of world reserves of white clay and kaolin”
What are the two low price/high quality materials by Ukraine's manufactures that you think we should definitely know about? How come it is Ukrainians who excel at manufacturing these?

I think it’s definitely bricks and insulation. Bricks – as we have about 30-40% of world reserves of white clay and kaolin and we mastered the production very well. For insulation, besides raw materials, we also have harnessed innovative technologies.

But there’s still a lot of work ahead. We need more ceramic tile and bathroom ceramics factories. There are more than 3,800 developed deposits for building materials production: high-melting clay, kaolin, limestone, gypsum, granite, gabbro, labradorite, basalt, resources for glass production etc. These deposits have huge export potential. For instance, only in Zhytomyr region (100-150 km away from Kyiv) there are 116 deposits of granite, gabbro and labradorite with proven reserves north of 150 million cubic metres. Regrettably, more than half of those deposits are not being processed and more of the working quarries need new technologies in processing.

Oleksandr, this is not your first time attending an international building fair. How is it different this time?

Before, we were mostly the visitors of different international exhibitions and now we are a full status participant of the fair. So it’s a drastic change, a big step for the industry and individual manufacturers alike. During the BAU 2015 we hosted a unique “Ukraine: invest in future!” business conference  presenting Ukraine’s construction industry and its potential for European and worldwide investors as well as trade partners.

Ukraine is a country of outstanding achievements, business opportunities and high potential. We need to construct, modernize, restore and repair nearly everything, and at a large scale: infrastructure and industrial facilities, housing and municipal buildings, social and cultural facilities. It is necessary to enhance the investment flows and increase the volume of trade turnover.

You can reach Oleksandr Pietushkov
via email on StartegLab@gmail.com or by phone at +380 67 245-02-90.

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