UKRAINE
Low-Cost Production Platform on the EU Border
Free Trade Area UA-EU:
the one-way free trade zone with the EU, encouraged Ukrainian businesses to expand exports to the region. Share of exports to the EU increased from 26% in 2012 to 35% in 2015 to date, with agricultural products and metals driving this growth. Automotive components are now the #1 export category to Germany. Future growth potential is great as per capita Ukraine exports remain low at $1,540 per year versus $4,956 in Poland and $6,605 for the sixteen CEE countries.
Electricity and other important cost
components are significantly lower in Ukraine
than in other European countries, a key factor in
selecting a manufacturing platform. Based on current tariffs, electricity prices for industrial enterprises
are much lower in Ukraine than neighboring
Poland (-25%), Czech Republic (-25%)
or Slovakia (-37%).
Many European companies in textile,
automotive, FMCG and home
appliances are producing
goods in Ukraine.
Production Costs:
The significant devaluation of the Hryvnia changed Ukraine into one of the most competitive low-cost production platforms globally. Labor, raw materials and other production costs have declined significantly in U.S. dollar terms. In particular, labor intensive industries such as food and agribusiness, light manufacturing and small machinery-building are benefiting the most.
The average salary, at $156 per month based on current 2015 figures, is significantly below regional peers in CEE. At the same time, proximity to the large EU market makes Ukraine a competitive alternative to Southeast Asia, especially for industries demanding short supply chains and fast production cycles, such as textiles, apparel or footwear.
PARTNERS
