Production Outsourcing in Western Ukraine – Exceptional Location Not Only for Large Manufacturing Companies

Interview with Michaela Macharik – Co-Founder and Excecutive of Time&Space Ukraine and Spektrum Magazine

Why did we decide to enter the Ukrainian market five years ago?

We were searching for a more affordable production option to remain competitive in our market. A few years ago, we also faced a severe labor shortage, or labor was simply too expensive for our “labor-intensive” type of production. After analyzing and visiting several countries, we identified Ukraine as the best option. The decisive factors included its proximity to our EU partners, the 4x lower cost and availability of labor, good transport infrastructure in Western Ukraine, mentality, cultural proximity, and language.

Was it a problem in your business that Ukraine is not a member of the EU?

We operate under a special customs regime of passive processing, which eliminates all import-export taxes between Ukraine and the EU, as well as other administrative complexities. So in this respect, no. We assemble, test, repair, and sew in Ukraine.

What was the biggest obstacle for you?

As a small foreign private investor, we had to navigate a challenging path to find the right partners and workers. You cannot find key people or services in Ukraine through advertising; this only works through references, which you obtain through contacts and by being present in the market. That is why Ukraine became our second home for a few years. And it began to flourish. Our original idea of coming for a few weeks, recruiting key people, teaching them our work and communication habits, starting production, and then going home was quite naive.

What do you consider a success?

We produce over 800,000 units of 100 different products per month for Skoda, Audi, Seat, Porsche, BMW, Daimler, and many other leading automotive manufacturers. The home appliance division produces for brands such as Electrolux and Whirlpool/Indesit. As Meda Mládková said, it is not pride, but satisfaction. Exceptional quality and superior customer care may sound like clichés that are simply commonplace in business. However, for us, people, the employees, are crucial, and years later, we see how they respect us for our care and sometimes prefer us over local companies due to our culture.

How has the current war affected you?

The first two weeks of the war, the situation was very chaotic. Sirens blaring several times a day and night became a daily occurrence that we eventually got used to. But after three months of war, we see that business continues as before. Orders remain at the same levels. We feel a greater availability of labor from the East, who do not want to leave the country and wish to settle permanently. We are confident that future business opportunities will be even better. We are now preparing an additional 4,000 sqm for potential new business. We know how to do it, and we are happy to help.