Yurii Tromsa, CEO of Peikko Ukraine, shared with LDaily the current and upcoming changes in the labor market, the company’s strategy for establishing a strong presence in Ukraine’s construction industry, and the logistical aspects of new production capacities.
LDaily: Could you tell us about Peikko Group’s operations in Ukraine?
Y. Tromsa: Peikko Group has been operating in Ukraine for a relatively short time, approximately a year. We registered the legal entity in late March, and from that point, we started commercial activities. At present, we have begun sales — importing products and selling them to customers. We’re expanding our network, seeking new clients, and focusing heavily on market development, informing about our product and construction methods. In other words, we are actively promoting and popularizing the product. Currently, our work doesn’t yield direct commercial profit — of course, we’re selling and earning something, but we’re in an investment phase.
Peikko’s business is a solution for prefabricated reinforced concrete structures.Why did I mention popularization? Because in our market, monolithic reinforced concrete is widely used for constructing commercial and residential buildings. This technology involves building the structure’s framework directly on the construction site. For example, in Europe, especially in the North, this method is not as common — prefabricated reinforced concrete structures are predominantly used there. The concept is that building components are manufactured at a concrete product factory and then delivered to the site for quick assembly. This allows for a significant reduction in construction time compared to monolithic construction.
The concept resembles the approach used during Soviet times for constructing panel buildings, but modern technologies differ significantly from those of the Soviet era. They allow for the creation of comfortable buildings with better thermal insulation, offer more architectural flexibility, and, most importantly, ensure substantial time savings. This is controlled construction in terms of cost, timelines, and other factors, which is critical for Europe, where labor is expensive, and much effort is dedicated to minimizing these costs.
In Ukraine, monolithic reinforced concrete construction is prevalent — it is a quality and reliable technology but requires a considerable number of highly skilled workers. When there was a surplus of available labor, this approach was practical because there was ample time, as construction funding often came from investors, future apartment owners. People were paying, and developers were not in a rush to build quickly because, during this time, apartment sales were ongoing, and the construction was financed from these proceeds. It could take up to three years to complete a building, and no one saw this as critical. However, we believe this paradigm will change, primarily because the resources that existed before the war are no longer available. Workers — many of whom have joined the frontline — are now in short supply. Everyone in the construction market complains about the lack of workforce, and this is indeed the case. This situation might even worsen after victory, as two parallel processes could occur simultaneously: an increase in construction volume and a continued outflow of labor. Open borders may lead some workers, including men, to move to Europe, where their families are already residing. Of course, some will return, but it will be a complex process.
For example, our Finnish partners went through something similar in the past — recalling the Soviet-Finnish war. They still remember it well; there are people who lived through those events. They know and warn that the outflow of the workforce will be substantial. A devastated country, an economy in disarray, and open borders can lead to significant labor migration.Therefore, we believe that construction should shift towards prefabricated structures. This approach adds speed and mitigates the workforce shortage.
LDaily: What are the main goals and expectations of Peikko Group for working in Ukraine?
Y. Tromsa: Right now is a period of investing in the future, so our expectations are that Ukraine will emerge victorious and become part of the European market. Even if it doesn’t formally join the EU soon, this war has clearly shown that we are part of the European community and, specifically, the European market. Therefore, when victory arrives and both reconstruction and rebuilding of the country begin, there will be tremendous opportunities for business and the market here.
I’m in contact with many foreign companies that want to enter this market but aren’t ready to act yet – they’re waiting for the end of the war. I appreciate that our investors, unlike many others, are already investing and are willing to take risks to have a presence in the market, create jobs, and pay taxes. Of course, sooner or later, we have to start generating profit – this is normal for business.
LDaily: A factory opening is scheduled for early 2025…
Y. Tromsa: Yes, we plan to open the factory in the second quarter of 2025. It will be located in the Bila Tserkva Industrial Park. This is a relatively small facility compared to Peikko Group’s other international operations, as we aim to start with a pilot project. However, in the future, we expect that the Ukrainian market will be large enough to expand our presence here. Currently, the production space is only 2,500 square meters. We’ll focus on equipping the facility with modern, robotic machinery to balance the labor shortage. Initially, around 20 workers, along with technical and administrative staff, will be employed.
LDaily: Why did you choose Bila Tserkva specifically?
Y. Tromsa: We believe that central Ukraine is the most attractive location in terms of future construction opportunities. On one hand, it’s relatively close to regions that have been impacted and will require substantial rebuilding. Additionally, this location offers fairly even logistics distribution throughout the country. The western region is currently saturated—there’s constant demand for production sites and a shortage of labor. Our goal is to find and retain workers to build a stable workforce. That’s why we decided this region is a better fit. Many people relocating from the east are settling in central Ukraine; they are skilled workers who feel comfortable here and want to stay.
Moreover, having the factory in an industrial park is a great idea. We’re not certain that we’ll use all the privileges it offers, such as corporate income tax exemption. We might take advantage of VAT exemption on equipment imports, though. Being part of a community of modern manufacturers in a well-developed infrastructure is beneficial. The location is convenient – just five minutes from the Odesa highway, which simplifies logistics. Kyiv was also considered, but it’s more expensive with more complicated logistics, even though there were good options for premises.
LDaily: What is the current investment amount?
Y. Tromsa: We’re talking about a few million euros. We can’t specify the exact amount yet because it depends on factors we can’t control – we only have approximate plans. But one way or another, several million euros will be invested over the year.
LDaily: Will the planned factory’s products be supplied only to the domestic market, or will they also be exported?
Y. Tromsa: They will also be exported. It would be great if our production could be fully supplied by the domestic market. We’re working on popularizing our product – mere interest and presence aren’t enough; it’s important that architects, engineers, and designers incorporate our solutions in their projects and embrace the concept of prefabricated structures. Additionally, reinforced concrete manufacturers must be ready to implement it.
There are already a few manufacturers in Ukraine who use our products and are willing to develop this area. However, they say, “If a client requests it, we’ll design and make it.” It’s essential to build a critical mass of companies that see the value and are ready to change their own approaches. Many acknowledge that prefabricated reinforced concrete is a good solution, but when it comes to practice, they find excuses: “Let’s try, but we’ll have to adjust our methods, undergo certification, adapt projects – it’s complicated. Let’s do it later…”
When the market faces a workforce shortage, people will have to try new approaches. And after trying, they’ll see the advantages. These technologies have been used in the West for a long time – everyone builds this way, and it’s neither overly complex nor super-innovative. It’s standard practice. Incidentally, Peikko is celebrating its 60th anniversary this year. So, for 60 years, we have been marketing our products and promoting our ideas and solutions. We know for sure that it works!
LDaily: What challenges have you encountered during the factory construction?
Y. Tromsa: I can’t say at the moment, as construction has only just begun. Additionally, the facility is being prepared for us, so there are no difficulties so far. The industrial park already provides land and utilities – everything necessary is in place. This is the easiest approach, as if we had decided to build independently, somewhere in an open field or on another site, we would have faced countless challenges.
LDaily: Do you mean the preparation of documents and permits?
Y. Tromsa: Yes. With this approach, we avoid these issues, so I don’t see any obstacles in construction at the moment. However, we’re well aware that the main challenges will come during the launch phase. This involves finding qualified personnel – both engineering-technical staff and workers – as well as reserving these people, which is crucial. This is the primary challenge and risk for the company.
When I speak with workers, each one asks, “Will you reserve us?” It’s important. Today’s rule of reserving 50% of employees doesn’t fully solve the issue. It provides some opportunities, but it doesn’t address the core of the problem. That’s why we came up with the idea to maximize equipment use, such as robotic systems or CNC machines, allowing us to employ women where there is no heavy physical labor. Essentially, in the products we plan to make, there should be nothing too massive. We’ll aim to engage young people, train women, and employ men who are reserved.
The main challenge facing the company is building a production team from scratch under these circumstances. It seems like there’s still time, but at the beginning of the new year, we’ll start hiring and preparing for the launch. That’s when the real excitement will begin.
LDaily: What are the company’s plans for expanding its presence in Ukraine? Are you considering opening additional facilities?
Y. Tromsa: 100%, since what we’re opening now is a small pilot project, and out of the full range of products the company manufactures, we will initially be producing only about 10-15%. So, we do have plans for expansion. Theoretically, if the situation in the country stabilizes and the market develops, production could increase several times over. For example, while we currently have 2,500 square meters of production space, in Lithuania, we have nearly 25,000 square meters. Of course, that’s one of our largest plants, but by adding a few lines and products, we could easily expand to at least 7,000-10,000 square meters here.
