Another brick in the wall: Kiev's construction boom

By Axel  Reiserer

Kiev's construction boom

EBRD funds are helping Ukrainian construction companies expand to meet the demands of Kiev's ongoing construction boom.

If there is one thing you cannot escape in Kiev these days (except for the EBRD logo, of course, as we are here for our Annual Meeting), it is construction sites. The Ukrainian capital is undergoing an unprecedented construction boom. Cranes litter the sky; new developments are rapidly going up in almost every part of the city.

This boom is not only benefiting local residents who can hope to exchange their old homes for new accommodation of a higher standard (once they have come to terms with the sometimes eye-watering property prices) or companies who will find state-of-the-art offices from which to manage the investment which is rapidly flowing into the country these days. It is also a boon for the rapidly expanding Ukrainian construction industry.

Established brick producer expands

One company which is clearly riding the crest of a wave is the brick producer SBK. In addition to the three plants it already operates in the country, it is currently constructing a huge new production facility a few kilometres to the north of Kiev. The location could not have been better chosen: the insatiable market of the Ukrainian capital lies at the doorstep and the facility is close to rich deposits of top-quality clay, the stuff the bricks are made of.

And for some also the stuff their dreams are made of, apparently. Because like the cranes in Kiev, for SBK’s ambitious management team, the sky is the limit: “With the new plant we plan to increase our production 2.5 times in 2009,” the company’s president Igor Dalychuk said in a press conference with EBRD President Jean Lemierre.

The new plant is the only way to increase production: “At present we are running at more the 100 per cent of our capacity,” Mr Dalychuk added. This clearly is not enough to meet the local demand. “By 2012, we expect to produce up to 250 million units of bricks,” Mr Dalychuk said. That year Ukraine and Poland will host the European football championship and the event is already casting huge shadows over both countries, where proportionately huge investment plans are under preparation.

A successful recovery

However, it was not always bliss and sunshine at SBK. Emerging from the collapse of the Soviet Union the then state-owned Slobozhanska Budivelna Keramika for many years lurched on the verge of bankruptcy. It took a group of audacious and – as it turned out – far-sighted investors to rescue and rebuild the company. It is more than a symbol that these days the company prefers to be known as SBK and has just treated itself to a brand new, stylish logo and corporate identity.

The realisation of SBK’s expansion plans (and at breakneck speed, as one example demonstrates: The site for the new plant was only acquired in April last year, yet in less than five months from now production is scheduled to begin) has become possible thanks also to the EBRD. Last year the Bank became a shareholder in SBK and President Lemierre underlined: “We share your vision and commitment and we are here as your long-term partner.”

Then he had to put on a hard hat in shining orange (the company’s brand colour) and was shown around the new facility. Its size alone is impressive and will be more so once bricks are being churned out with breathtaking speed and efficiency. Together with Mr Dalychuk, President Lemierre then unveiled a plaque. Fittingly, it is fixed on a brick wall – and the EBRD can pride itself to have contributed to SBK’s success more than a brick in the wall.