Konecranes in Ukraine

Juhani Pihlajamaa,
Security Manager,
Zaporizhkran factory,
Zaporizhya, Ukraine

Alexander Pavlov,
Corporate Communications Director,
Zaporizhkran factory,
Zaporizhya, Ukraine

Konecranes is a world-leading group of “Lifting Businesses”, serving a broad range of customers including the manufacturing and process industries, shipyards, ports and terminals. The company is dedicated to improving the efficiency and performance of businesses by providing productivity enhancing lifting solutions as well as services for lifting equipment of all makes. Konecranes is based in Finland but has approximately 16,000 employees in 50 countries.

The company’s history dates back to 1910, when the electrical motor repair shop KONE Corporation was founded. Konecranes has grown over the years mainly organically but also has a strong acquisition track record as well. Konecranes became an independent company in 1994 via structural and strategic changes at KONE.

Konecranes is an example of how a foreign company can not only survive but also be a successful foreign investor in the Ukrainian market. Konecranes entered Ukraine in the early 1990s, establishing the Konecranes Ukraine company in Odessa. In 2005, Konecranes acquired the Zaporizhkran factory in Southeastern Ukraine, a well-known company from the Soviet era that was the largest maker of lifting equipment in Eastern Europe. Since the acquisition, Konecranes has been one of the biggest Finnish investors in the Ukrainian market.

After being purchased by Konecranes, the Zaporizhkran factory has gained new prospects for its development and undergone extensive modernization. Today, over 90 percent of its products are exported. The factory employs about 380 people, while another 150 work in the frontline office in Odessa in sales and services. As an example of its work, one of the largest projects of late is assembling a huge shipyard crane with a carrying capacity of 180 tons and span of 53 meters for a customer in Chile 2018.

Ukraine is attractive to foreign investors due to its geographical location, access to a relatively wide range of resources and professional labor force. Ukraine has access to the sea and thus to any country on the planet, plus huge territory on which enterprises of any scale can be built.

Among the challenges of doing business in Ukraine are corruption and bureaucracy in governmental and local administrative bodies; the vagueness and complexity of business legislation; a complex tax system; and the absence of an existing state program to support investors, although there is talk of judicial reform as a way to protect investments. An additional risk for investors remains the military conflict in Eastern Ukraine, although situation has stayed relatively stable in the last few years. Ukraine’s weakening currency since 2014 has caused some risks, but on the other hand it has also benefited foreign investors.

In 2019 we have seen the election of a new Ukrainian president and new parliament plus the formation of a new government, with all three repeatedly stating their readiness to create better conditions and investment environment for foreign investors. The activity of the new Ukrainian parliament (Verkhovna Rada) in adopting new reforms and progressive laws in the very first days of its work can be considered a positive signal.

The free trade zone agreement with the EU has become a real advantage for those Ukrainian enterprises which already have world-class technology and are able to compete on equal terms with European manufacturers. Thanks to the investments from Konecranes, Zaporizhkran is one such enterprise. Konecranes has introduced European management approaches in Ukraine and paid great attention to recruiting and relying on talented youth. The company’s employees have great opportunities for training, including going abroad. Zaporizhkran also has broad cooperation with local technical university.

Among other activities, Konecranes has been developing an Industrial Park project on the territory of Zaporizhkran since 2011. The project was launched as a way to optimize land and facility use and attract potential partners and contractors. This is a great opportunity for the region and Ukraine as a whole to stimulate the arrival of new investors. There is not only a developed infrastructure, but also managerial experience, opportunities in terms of interaction with contractors, and already existing administrative and security structures. Today, two other Finnish companies work in the industrial park – forming a unique conglomerate of Finnish business in Ukraine – along with one German company and ten Ukrainian companies. This is an indicator of the reputation of Konecranes – companies entering the park can see it’s possible to create a successful business there.

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