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The once-thriving construction industry in Ukraine has ground to a near halt as the nation shifts into battling an invasion by Russia.

Before the incursion, which began Feb. 24, construction sites across the country were booming in many different sectors, according to Morgan Williams, president of the 200-member U.S.-Ukraine Business Council in Washington, D.C.

"There was a lot of construction in Ukraine — work on the highways, bridges, airports, offices and apartment buildings," he told Construction Dive. "In 2021, there were huge public and private construction projects."

Williams said most of the public sector work, under the Ukrainian government's ambitious "Big Construction" program, is "contracted out and those contractors are getting concerned as [Russian President Vladimir] Putin is rattling the sabers." Lenders on private projects are also worried.

"We expect this will have a massive negative effect on the entire construction industry," he said. "The mood is very depressing. Everyone is working from home or remotely."

Rebuilding Ukraine's antiquated infrastructure was a promise of President Zelenskyy shortly after being elected in 2019. His Big Construction program aims to rebuild and renovate roads, bridges and other civil projects, but has been challenged by COVID-19 limitations and charges of corrupt bidding practices, according to Emerging Europe.

Stopping production

Despite the invasion, which has brought airstrikes and shelling to many areas and forced thousands of people to flee the country, the 50-person office of CKS Frame Construction in the central Ukrainian city of Dnipro was open as of Tuesday. The company designs and manufactures steel structures such as entertainment centers and shopping malls in Kyiv and elsewhere.

An employee in the CKS office in Katowice, Poland, named Marek, who declined to give his last name for fear of retribution, told Construction Dive "there's no fighting where we have manufacturing offices but the situation is not good."

He said the company has stopped production on current orders and is pivoting to special orders on steel devices designed to stop Russian tanks.

Asked how long CKS will continue to work during the war before it returns to commercial production, Marek replied "we hope it is over as quickly as possible but nobody knows when."

Zeppelin Ukraine, a dealer for Caterpillar construction, agricultural and mining equipment, told Construction Dive it had suspended business due to the incursion. The 600-employee company also manufactures machinery.

"We have ordered our employees to stay at home and seek safety," said Sandra Scherzer, a spokeswoman with its parent organization, Zeppelin GmbH in Garching, Germany. "Our branches are fixed workshops that cannot be easily relocated. In the combat zones, we have removed the moveable assets and the rest was left behind for the time being."

According to Scherzer, Zeppelin is unable to provide any service to its customers in Ukraine. Nor can the company estimate "whether or when it will resume operations due to the escalating situation." She said no new machines are being imported into Ukraine and machines from inventory cannot be delivered. 

Zeppelin will resume operations in Ukraine, she continued, when the country is "once again freely accessible."

Asked if Zeppelin believes materials costs will surge because of the war and whether it will prevent new construction work, Scherzer told Construction Dive there will be "enormous price pressure" on raw materials in all industries. 

"We will have to wait for the realignment of the market and hope that the increased demand for the conflict will make future business possible," she said.

Uliane Marchenko contributed to this report.

LINK: https://www.constructiondive.com/news/ukraines-construction-projects-grind-to-a-near-halt/619688/