War in Ukraine disrupts lives and supply chains

It can be difficult to measure the ways in which Russia’s war in Ukraine has disrupted the global supply of parts and raw materials needed to complete different products, from cars to computer processors.

But breaking one of those connections produced a “feeling depressing” to Andrew Bibikresponsible for the steel plant in Interpipe on Dnipro, Ukraine. Bibik spent the first hours of the war winding down a plant that operated 24 hours a day and sending almost everyone home. “It is empty and lonely. Nothing is heard. Everything looks paralyzed”he stated.

Shipments of steel gas pipes to Texas oil companies and rail wheels to European high-speed rail operators have been halted after hundreds of Interpipe’s roughly 10,000 Ukraine employees joined the fighting against Russia. Others have fled.

The small group that remains manages the mess halls and makes spiked metal obstacles to block Russian caravans and tanks. Its bomb shelters play host to dozens of local families at night.

“Stopping production was a difficult decision. We had many orders, many clients waiting for our material. But if you have to choose between safety and potential benefits, I think the answer is obvious.”said Bibik, who has worked for nearly two decades at the company. “The most important thing we have is life, and we really have to take care of the people we love.”

Similar shutdowns have occurred in other industries in Ukraine, prompted not only by security concerns but also because the war and the mass exodus of refugees have closed roads and railways to commercial freight traffic. Some of Interpipe’s finished products that were destined for export are now stuck in the port of Odessaat Black Sea.

Ukraine It accounts for just 0.3% of world exports, while Russia represents 1.9%, according to a report by the Dutch bank ING. Still, some companies doing business with these countries are beginning to feel the impact of the war.

For Russia, a key supplier of energy, steel and raw metals such as nickel, copper, platinum and palladium – many of which are important to the automotive industry – supply concerns are associated with harsh Western economic sanctions and Russian moves to counter them. For Ukraine, it is the war itself that disrupts shipments.

“We want to give priority to refugees, to people trying to leave the war zone, and to military and humanitarian caravans”stated the president and former CEO of Interpipe, fadi hrabibased in houston.

Complications in another Ukrainian industry, which makes car wiring, are already affecting European automakers. Ukraine has more than 30 auto plants, most near the border with Poland and other European neighbors, according to a government agency that encourages foreign investment.

The German parts supplier Leoni said production had been halted at its two plants in western Ukraine, in Styri and Kolomyyaand that he was looking for temporary alternatives. “We are aware that this situation does not only affect Leoni, but the entire sector”said the spokesman Gregor le Claire.

Ukraine is also one of the world’s largest suppliers of neon, a gas used in lasers that helps put integrated circuits in computer processors. That worries auto industry officials, who fear neon supply problems could exacerbate a global shortage of processors that has already led to production cuts and vehicle shortages around the world.

Interpipe has five factories in Ukraine, all located in the industrial hub of Dnipro and the surrounding region, which has a strategic position on the Dnieper River southeast of the capital, kyiv.

Until Russian air strikes reached Dnipro on Friday, the country’s fourth-largest city had been fairly quiet, save for the occasional wail of air-raid sirens, in the first two weeks of the Russian invasion. But on February 24, Interpipe managers made a quick decision to close all of its facilities.

Russian President Vladimir Putin iThe invasion began before dawn and by noon plant operations had stopped, Bibik said.. That night she watched as the last five workers were moved to the suburb where they live. All of the firm’s workers continue to be paid, Bibik and Hraibi said.

The firm’s clients in the rail and energy sectors typically order their pipes, wheels and other products months in advance, but Hraibi said the disruptions will cause shortages and prompt some to look for alternatives.

Some wheel customers, such as a Saudi rail operator, have the firm as their sole supplier. Two of its main competitors, OMK and Evrazthey are in Russiaand the manager expected customers to avoid them.

“I don’t know if our business will survive. We do whatever it takes to support people, to keep our employees, to be able to reopen in a month or two or three, when things are back or at least close to normal. But in reality, no one can predict what is going to happen.”he pointed.