Founded in Turkey, ONUR is a leading construction firm with experience in large-scale infrastructure projects in Ukraine, Croatia, Tunisia, Moldova, Saudi Arabia, and several other countries. The Company has been present in Ukraine for 15 years, giving it a decisive edge over the competition that is evident in its phenomenal growth figures. This success has pushed ONUR to branch out into other growing sectors of the Ukrainian economy, such as agriculture and renewable energy. The group’s chief of the Ukraine delegation explains why they are investing so much in the country, and why other investors should be thinking of doing the same
Why did you choose to move into Ukraine in 2004?
We are an international contractor and have been undertaking construction contracts globally in Europe, Middle East, Africa and Asia over 14 countries, such as Saudi Arabia, Oman, Moldova, Turkmenistan and several other countries. As well as the above, ONUR is also one of the leading construction companies in Turkey. In 2004, we received a privileged invitation from the Turkish Ministry of Trade and Commerce for a visit to Ukraine, where the Ukrainian authorities were discussing the need for a major road construction project in Ukraine at the section between Kyiv and Odessa, to be undertaken by competent contractors. At that time, there were not many companies in the Ukrainian construction market. Therefore, it was a good opportunity for us to exhibit our capacities and capabilities in a new country. We participated in the tender of one of the most difficult sections of the road in the Odessa Region. We were then awarded with our first project to construct roads and we fulfilled our commitment in a very short time. This successful achievement and most importantly our early adaptation to Ukraine and our recognition in the construction market of Ukraine encouraged the company to consider participating in other projects. Since then, ONUR has been delivering successful contracts in Ukraine.
How important is the Ukrainian market for ONUR as a whole today?
As a result of 15 years of remarkable performance, Ukraine has become our second-largest market after Turkey; therefore, the Ukrainian market possesses a high level of importance to us. Besides this, the company’s management as well as its multinational employees hold respect and are glad to work in Ukraine. We are fond of the culture and the people, and we believe that we are able to play a significant role in development of the country. In addition, we foresee several upcoming opportunities in various sectors for our further growth here, which is why it is overall a very important and strategic market for us. As noted above, we have succeeded in significant construction, infrastructure and other sectoral contracts during the last 15 years. Supporting these achievements, we are familiar to the culture, the system and how things work, which gives us a further advantage and encouragement to remain and operate in Ukraine.
In 2018 the company’s revenue in Ukraine was UAH7 billion compared with UAH5 billion in 2017. What is driving this growth, and what is the projection for this year and 2020?
In 2018, the government began the allocation of budgets to infrastructure projects, which increased the number of new contracts nationwide. In parallel, we also started to enlarge our own production facilities and accelerated our investments in Ukraine. As a result of the desire for national infrastructural improvement, we have participated in more tenders, which are financed under local budgets, and we also have been performing in various projects financed by international financial institutions such as the European Bank for Reconstruction and Development (EBRD) and the World Bank. Our forecast for this year is to register revenue that will be at least as successful as last year, but we are positive it will be possible to achieve even more. I also hope that other corporations experience such growth, because it would mean better development of infrastructure all over the country.
ONUR is a vertically integrated company whose construction arm includes quarries and a concrete business. How does the supply chain strategy work in Ukraine, and how has it helped you become a leader?
Fifteen years’ experience in the market means a lot of things. ONUR Group, while passing through difficult times, learned a lot about the qualifying conditions to survive in Ukraine. Our aim in all circumstances has been to never compromise but always maintain corporate quality while undertaking projects on time and with high standards. In order to succeed in quality and client satisfaction at high-value projects, it is a must that the undertaker shall have the ability to effectively and quickly supply, procure or produce the required raw materials at a high quality. Especially, if the undertaker such as ONUR commits to perform at diverse contracts serving for various different clients under the local Ukrainian standards, as well as performing for clients that require projects to be driven by international standards, which are ruled out by the international financers, the supply materials like concrete, crushed stone, steel and other main materials become vital.
A prestigious project may easily fail due to low quality raw material or failure of the timely supply of goods. In order to minimize such risks and to generate efficiency, ONUR gives importance its own production facilities, which opens opportunities and provides efficiency to produce all required goods in accordance to various different projects requirements and individual standards. This also helps to overcome market risks and complications from the material supply chain, such as price fluctuations and monopolist behaviors. For the undertaking of complex projects, several different fabrication facilities had to be established under ONUR’s umbrella. For management of each production facility or establishment, we employ highly trained staff in Ukraine with experience in international contracts and local regulations, and this gives us an advantage. As well as the above, ONUR also maintains very strong business and trade relations with Ukrainian producers and suppliers, which produce and supply to our standards, which also provides the advantage of having the possibility to run commercial businesses between Turkey and Ukraine. In consideration of the above, if you keep this up, you eventually become a leader. We are always looking at how we can be even more helpful to the development of infrastructure.
You have 20 to 25 projects in the pipeline. How do you select them and weigh the risks?
Construction is our key sector, as we have been in the construction business for 40 years. Therefore, initially we have been dominantly interested in the infrastructure and construction projects in Ukraine. Our achievements have resulted in a strong reputation for ONUR in Ukraine. The expanding development of the country has demanded multi-level corporations, so we have been encouraged by our clients to undertake diversified projects.
Specialists drive our projects and sectoral establishments, and all risks and the opportunities of the selected projects are evaluated, analyzed and concluded. We prefer either to be a specialist in the sector we aim to operate in, or to keep distant from the areas where we are not able to manage the risks. As stated above, we operate globally at various sectors, and in parallel we bring our expertise into Ukraine with our various investments in other sectors in several regions. We have plans to build a complex in Ukraine with a hotel, a multipurpose convention and exhibition center with room for 3,000 people, and several IT business centers. We want it all in one place in a good location in the Lviv region. One of our specialized areas is tourism. Therefore, we have plans for investing in the tourism sector. In Turkey we have an aviation company and we manufacture prefabricated buildings. We have also invested in sea transportation, so we have a presence in all forms of transportation.
You own your own equipment, which is rare, and you have said you still want to expand your machine park?
We are one of the strongest road construction companies in Turkey. Our previous experiences and current achievements prove that one of the parameters for success in the construction business success is relied upon possessing high tech machinery, equipment and operating them efficiently. Therefore, the company owns the machinery and operates it efficiently, and as a result, we have overcome many challenges that others may fail at due to shortage of equipment. This is especially true if the machinery rental sector or leasing is not up to a certain level. Therefore, the contractors planning to work in Ukraine should own and operate their equipment to achieve their undertakings. In order to mitigate our machinery demand for our Ukrainian and other international contracts, we dynamically procure new equipment in Turkey, and this gives us a huge advantage in terms of mobilizing resources for projects. Other companies, after winning a tender, need to lease the equipment and this causes delays of months. We don’t have this problem. In Ukraine we have around 2,000 machinery and equipment, and if we get more projects, we could raise this to 3,000 by late next year. As for staff, we have 5,000 employees here and will keep growing this number as well.
What about your latest investments in promising sectors in Ukraine?
We have our latest investments in the agricultural sector. As it is worldwide known, Ukraine has very fertile soil and large amounts of lands, which has the capacity to produce agricultural products that would be enough to feed many other countries. Therefore, ONUR is participating in the agriculture sector and we aim explore this opportunity in Lviv region, where we are investing in land. We already have around 5,000 hectares. But it is a new sector for us, and we need to prove our success before making further steps such as exporting crops to other countries. If we are successful, more investment will follow. Considering the sustainable growth of Ukraine, we see that the energy demand will continue growing. Therefore we also recently commenced investments into renewable energy projects and have around 100MW of solar energy already, which the Government provides guarantees for purchase and fixed tariffs. We have also invested in the wood sector, and have bought a timber manufacturing plant for export to 14 or 15 countries.
What would you say to US investors about coming to Ukraine?
Because Ukraine is a developing country in Europe, there is a lot of opportunity for development here right now. We are seeing reforms every day to attract investors. I think investors should be interested in Ukraine. The government is very interested in attracting FDI and foreign companies, so there are big opportunities. They are open to negotiations, to making things easier in terms of business, investment, growth and all other features of prosperity.
Why should investors work with ONUR?
ONUR has built a reputation for reliability in Ukraine and developed trustworthy business in each sector where it operates. Additionally, ONUR is an institutionalized global firm where business ethics are carried through many contracts, in many countries and certified by global clients. ONUR has been a pioneer in several sectors in Ukraine. To any corporation who is interested in collaborating with an experienced company, we are ready for them.
Lots of investors see the potential, but they may be a little nervous due to what they’ve read in the news. What would you say to them?
When I go to Turkey, sometimes people ask me about any tension or conflict in Ukraine. ONUR has been present in Ukraine the last 15 years without our operations being interrupted or disturbed. Our existence here is proof to all investors of the security of investments and safety of machinery, equipment and manpower. Life is going on normally and regular business is being conducted here every day, and this needs to be known too. Ukraine needs to promote itself much more than it has to date to overcome the negative publications. I would say to the investors that perhaps it is better to proceed thinking for investing in Ukraine sooner than later as it might be too late then. We see and experience full support for investors from the Government.
What is your final message on behalf of ONUR?
I can proudly say that we are a leading construction company in Ukraine and we want to expand our presence even further. We will be very happy to collaborate with investors, talk with them and share our experiences.