Manufacturing

Norwegian-Ukrainian cooperation within the manufacturing sector has been stable in recent years despite the challenges and obstacles Ukrainian businesses face due to russian aggression. The trade includes clothes, home textiles, furniture and furniture parts, metals, and more. The potential for deepening this cooperation is significant. We encourage all Norwegian businesses to buy Ukrainian products and use Ukrainian factories to help the economy and create jobs.

Ukrainian manufacturing industry has always been very robust, and today it also shows incredible resilience, maintaining production capabilities and preparing for a stronger post-war recovery. It continues to adapt and holds significant potential for future development and European market integration. Before the full-scale invasion, Ukraine was a key supplier of iron ore to Turkey, China, and parts of the European Union. Today, the war has severely disrupted the metal production. While many small and medium enterprises have relocated to safer areas in central and western Ukraine, large industrial complexes near the frontlines are either partially operational or have completely suspended activities. The mining and metallurgical industries have been particularly impacted by the loss of major enterprises like "Azovstal" and Illich Steel and Iron Works in Mariupol, which accounted for over 40% of the country's metal production.

There are calls for government programs to stimulate industrial development, and international organizations offering grants and support for small and medium enterprises. Ukrainian businesses remain focused on exporting goods, particularly to the European market, with a shift towards production closer to the western border

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There are some challenges of the manufacturing sector to consider:

• Logistics play a crucial role in export and import activities. While air freight came to a full stop, maritime transport has been heavily impacted, with a significant shift to rail and road transport, especially towards the EU.
• Raw materials: metals, wires, and foam, among other raw resources, have traditionally come from Ukraine’s eastern regions. Many enterprises are now forced to hunt for other sources of raw materials in western Ukraine and order production parts from elsewhere. However, many manufacturers managed to adapt and build new supply chains.
• Labor force: in 2024, Ukraine sees a paradox – a high unemployment rate is combined with a shortage of personnel. This situation arises from significant geographic and structural changes in the labor market. As of May 2024, nearly 6.5 million Ukrainian refugees are recorded globally, and there are 3.7 million internally displaced persons as of the beginning of 2024.

Post-war recovery efforts will prioritize reconstruction and modernization of infrastructure and developing connections with the EU. Building and construction, furniture manufacturing, machine production, and infrastructure development are among the sectors in Ukraine that have the biggest potential for future growth. Steel manufacturing will have to be restarted for Ukraine to be able to involve its resources in rebuilding activities.

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