11 January 2011 Article in Invest Gazeta
Dmitry Firtash: "Time To Invest"
Innovative impetus to Ukraine will be triggered by investments in its industry and the nation’s human capital, is a strong belief of Mr. Dmitry Firtash, Chairman of the Board of Directors of Group DF.
2011 signifies a very special benchmark for Ukraine – the 20th anniversary of its Independence. Two decades is an instant for the history at large but for a country it is a whole era. This is the time when a moment should be taken to look back, analyze and understand where Ukraine was moving to, what it has achieved, in what direction it should advance further and what it takes to succeed.
Along with gaining its Independence, the country also met with a number of systemic challenges that only aggravated over time. The first of these is disruption of “raw materials extraction – processing – production – distribution” chains that had existed under the Soviet planned economy. This disintegration brought about enterprises downswing, moral and physical outdating of production capacities and technologies. Industries that used to be part of an integrated sector of one big country ended up as competitors on both domestic and foreign markets after their privatization. No sustainable production may be achieved as long as one doesn’t invest in development and operates with obsolete equipment and energy-intensive technologies. The titanium market is an indicative example – in as little as 3 years (from 2004 through 2007) Ukraine yielded about 10 percent of the titanium sponge market.
The second systemic problem is the collapse of the previous state social system. In early 1990s, people turned out left on their own overnight. The system that had previously coordinated public health care, education and vocational training, R&D and other essential functions was destroyed and no effective mechanisms of HR development were offered instead. The outcomes are obvious: specialists training in the country suffered a huge imbalance. These days, three out of four university graduates work in jobs unrelated to their education that the government was financing for 5 years. Is it not an apparent waste of time and money? Finding a competent chemical engineer or a mining surveyor is a big problem today while lawyers and financiers flock in undemanded abundance.
Addressing these fundamental issues is critical for Ukraine’s business and economy as a whole. No economic growth may be attained without capital investments in production, new technologies introduction and rational resources use. The industry is in bad need of a powerful innovative impetus which will boost the country’s competitiveness in the world market. This is particularly relevant for export-oriented sectors like chemical industry, metallurgy, agribusiness, etc. Globalization processes are becoming increasingly more intensive and Ukrainian companies have to struggle for their market share against giant vertically integrated corporations from the US, China and Russia. These feature a substantial competitive edge ensuing from their vertical business architecture: same production quality yet at lower production costs. Therefore, vertical integration in production sectors with a good export potential is an imperative of time.
The second essential factor of the Ukrainian economy growth is the nation’s human capital. Even the most advanced and hi-tech piece of equipment is a mere scrap without competent specialists, whereas a professional team is a safeguard of success of any enterprise, even one starting off from scratch. Ukrainian business is suffocating without young specialists, researchers with innovative thinking, advanced technologies and skilled cadre. By investing in functions promoting personality formation – education, health care, culture and science – a country builds a foundation for its economic growth.
Human capital development is a job to be done by a socially responsible business as well. Improving its employees’ quality of living, integration of environmentally friendly technologies, professional training and upgrading – all these are just some of priorities pursued by Ukrainian employers these days. These efforts are exactly about investing in Ukrainians. These are exactly the investments that will eventually pay back with super profits.
No time is better for investing in the country, its industrial potential and human capital. In essence – in its future!