On Thursday 24 February 2022, Russia launched its military offensive in Ukraine. Since then, the EU has imposed on Vladimir Putin's government and those linked to it, including a ban on the export of certain dual-use products. At the same time, several Ukrainian regions are living with the dangers of the armed conflict. Events that obviously have an impact on national economies, but also on an international scale.
Six months after the start of the war, the effect of the Russia-Ukraine armed conflict has also impacted Luxembourg companies.
For Paul Wurth, “the impact of the loss of business in Russia and Ukraine has been significant,” says a company spokeswoman, without providing figures. The Luxembourg-based industrial engineering company has three sites in Russia and one in Ukraine. For the former, "we do not take on new business, we do not ship equipment and we only engage in safety-critical maintenance tasks.” The premises in Ukraine, on the other hand, were destroyed. “Paul Wurth had only a limited number of colleagues in the region. Those who were there are now safe and have even been welcomed in Luxembourg." Contact is maintained with clients whose activities continue in Ukraine.
To compensate for the drop in activity, the company is counting on a reorientation of its resources towards other projects, such as “activities linked to hydrogen and green steel”.
In Ukraine and Russia, factories are slowing down
ArcelorMittal at the beginning of March, for safety reasons. Since then, "of the three blast furnaces at Kryvyi Rih, only the sixth (one of the two smallest) resumed its activity in mid-April, at the request of the Ukrainian authorities to contribute to the local economy,” the steelmaker stated. "The activity level of this blast furnace is at a fairly low level, it represents about 20% of the plant's capacity." ArcelorMittal employs 26,000 people in Ukraine, seven times more than in Luxembourg, where its headquarters are located. Many have "joined the military forces".
Logistics remain difficult. "The ports are blocked, so shipments are made by train to Poland, which then ships back. Mining activities are running at 60% of normal levels. Because of the war, a pellet factory project has been suspended."
Accused of resuming shipments to Russia in early July, and not sourcing raw materials from Russia either.
Before the invasion of Ukraine, relations with Russia were already limited.
Accumalux has a factory in Russia. It is “idling”, says the Luxembourg-based manufacturer of plastics for batteries. It wants to maintain the jobs of its 80 employees on site. The company is following the evolution of sanctions and says that "expansion and development projects in Russia have been stopped". This represents a 20% drop in activity for the group.
Not to mention the impact of rising energy and raw material costs for each company.
American company Guardian, whose European headquarters are in Luxembourg, decided in July to sell its two Russian sites, which employed 600 people. The consequences of this sale have not been specified.
From Kyiv to Stockholm
SES had to close its office in Kyiv. Some of its six employees were transferred to the Stockholm office. The Betzdorf-based company has also "put in place an emergency plan to ensure continuity of service for Ukrainian channels". At the same time, it has stopped transmissions of Russian channels that are subject to sanctions. Its activities in the two countries represent less than 1% of its turnover. "We are working with entities to make our satellite communication solutions available for humanitarian missions," the company states.
Another example is Artec 3D, which announced on Tuesday 23 August that it was to collect evidence of war crimes, crimes against humanity and genocide committed in the country, using its 3D scanner technology.
Luxembourg law firm Arendt & Medernach announced in February the closure of its Moscow office. It has not reopened since, the companny confirmed to Delanos’ sister publication Paperjam, without giving details on the impact of this closure on its business. The firm has also decided not to accept new mandates from Russia.
or stop serving clients from the country. When contacted, none of them could mention the possible impact of the war on services in Luxembourg.
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New routes for transporters
The crisis is also having an impact on transport. DHL states that “inbound services to Russia and Belarus have been suspended". DHL Express has also decided to stop its domestic services to Russia from 1 September.
"All network transports to and from Russia and Belarus have also been suspended" at Dachser. The same applies to Ukraine, to "protect the drivers". Instead, the company launched a freight line to western Ukraine from a Polish hub. "In order to be able to connect Chinese production sites directly to customers in Europe by truck without entering Russia, transport is now provided via an alternative route to the south." However, this has little impact on the Luxembourg branch, which "did not handle many shipments to and from both areas".
Mostly an indirect impact
The Luxembourg Chamber of Commerce and the Belgian-Luxembourg Chamber of Commerce for Russia were unable to provide figures on the impact of the war on business in Luxembourg. "It is felt on all sides: in financial exchanges, in bilateral trade. It is difficult to assess, because the links are not always visible," explains Oleg Prozorov, President of the Belgian-Luxembourg Chamber of Commerce for Russia.
, CEO of the Luxembourg Chamber of Commerce, adds: "Before the invasion of Ukraine, relations with Russia were already limited.” Exports of goods to Moscow represented 0.9% of the total in 2020, and imports 0.1%, according to national statistics bureau Statec. For Thelen, the indirect impact is more important, namely “inflation and supply difficulties”, which affects both companies and households.
This story was first published in French on . It has been translated and edited for Delano.