A region’s strengths alone cannot kick-start production. Agricultural raw materials do not guarantee processing, proximity to the EU does not guarantee exports, and an industrial park does not guarantee investment.

A whole system of decisions lies between potential and a new enterprise: affordable energy, skilled labour, logistics, financing, business cooperation, regulatory conditions, and a team capable of bringing all these factors together into a single project.

Participants in the Produce! training initiative “Leadership in Economic Development through Production” analysed this system. The initiative is implemented by the KIEF Academy under the auspices of the Ministry of Economy and Environment of Ukraine, with the support of the Swiss-Ukrainian “Ukraine’s Cohesion and Regional Development” (UCORD) project.

Teams from Vinnytsia, Volyn, Odesa, Sumy, Ternopil, and Khmelnytskyi regions participate in Produce! – representatives of public authorities and local governments, regional development agencies, the business sector, and educational institutions. Their task is to prepare regional development projects that can be presented in detail to the Government, the Office of the President, and international partners.

During the SWOT analysis session, the teams evaluated their ideas in light of the regions’ actual capabilities. Some teams considered industrial traditions and manufacturing infrastructure to be key resources, while others identified agricultural raw materials, geographical location and a concentration of entrepreneurs as important factors.

However, different ideas have revealed similar limitations: a shortage of specialists, poor cooperation, constraints on energy infrastructure, a lack of high-quality industrial sites, high costs, and regulatory rules that do not meet the needs of business.

Electric mobility: From an ambitious idea to a realistic niche

One of the areas analysed by the participants was the development of electric mobility. The idea is to combine the production of individual components with the provision of charging infrastructure, servicing and repairs, and the recycling of used batteries.

The development of this sector may be facilitated by favourable transport location, the presence of industrial parks, educational potential, a historical foundation in electrical equipment manufacturing, existing electric transport production facilities and opportunities for the development of renewable energy.

At the same time, the SWOT analysis revealed several weaknesses: a shortage of skilled labour, poor coordination between the government, business and education sectors, limited investment resources, and an absence of battery recycling facilities in Ukraine.

A key step was to clarify the scope of the project. Rather than attempting to create a full battery production cycle, the aim is to identify a realistic niche – establishing the conditions for the development of component manufacturing, servicing, charging infrastructure, and circular recycling.

This raises several practical questions: where to source raw materials; which existing enterprises could be integrated into the production chain; which specialists need to be trained; and what decisions are required at state level.

Light industry: How to move from a large number of manufacturers to a shared competitive advantage

Another scenario that was considered during the workshop concerned the light industry sector.

The starting point here is the existing base of small and medium-sized manufacturers, specialist education and training, experience of cooperation amongst entrepreneurs, and proximity to European markets.

Rather than competing for the low-cost mass-market segment, the prospect lies in producing goods with higher added value, developing own brands, and undertaking contract manufacturing for European companies.

At the same time, the SWOT analysis revealed issues that individual enterprises cannot overcome alone: a shortage of managers and skilled workers, a lack of interest among young people in manufacturing jobs, the shadow economy, reliance on imported raw materials and competition from unofficial imports of ready-made clothing.

Therefore, in this case, the regional development project should seek solutions at the level of the wider ecosystem: shared business services, modern staff training, technological modernisation, and the development of textile waste recycling.

Biomethane: When waste becomes an economic resource

Another sector has demonstrated an entirely different approach to generating added value: the production of biomethane.

Its resource base can consist of arable and livestock farming, poultry farming, and sugar factories, among other enterprises, whose waste products can serve as raw materials. This model enables the combination of waste utilisation, energy production, and the export of a product in demand on the European market.

However, the availability of raw materials alone does not mean that a project is ready to launch. The analysis identified several barriers, including limited access to finance, a shortage of engineering expertise, reliance on equipment and lengthy permitting procedures.

Possible solutions discussed included providing support to strategic investors through a ‘one-stop shop’ approach, localising the production of some equipment and training the necessary specialists.

This case study clearly illustrates one of the key principles of SWOT analysis: having a resource is only the first step. A regional project begins with answering the question of how to transform a resource into a functioning economic chain.

Potato farming: processing begins with cooperation

Another case study examined how the potato sector can be developed through farmer co-operation and the establishment of processing facilities.

The economic rationale behind this is to shift the focus from selling raw materials to producing goods with a higher added value: dried potato flakes, starch, crisps, and other processed products.

Importantly, this idea already has a practical foundation: a core group of 16 farms, laboratory work on improving seed quality, a “smart” greenhouse and preliminary work on the processing complex.

However, a SWOT analysis revealed that the most challenging aspect of such a project is not the processing technology itself.

The future production facility requires consistent raw materials for stable operation. This means having common standards and harmonised grades and process specifications, as well as storage facilities and farms willing to coordinate their actions.

Thus, one of the project’s key strengths is not only its raw materials or future processing capacity, but also its producers’ ability to reach agreements amongst themselves and ensure consistent product volumes and quality.

Clusters: An organisation can be set up, but economic links must be forged

A separate discussion focused on developing clusters in mechanical engineering, agri-processing, and alternative energy.

Such models may require reserves of agricultural and mineral raw materials, an industrial and educational base, industrial parks, strong business associations and established manufacturing expertise.

However, a SWOT analysis also revealed common regional constraints: an insufficient electricity supply, a shortage of ready-to-use industrial sites, logistical issues, population outflow, and a mismatch between employers’ requirements and the skills of the workforce. An additional risk factor is the tightening of the CBAM mechanism, which will require manufacturers to adapt to the EU’s new carbon requirements.

However, the most important conclusion of the discussion concerned the concept of clusters itself.

A cluster cannot be formed simply by deciding to set up an organisation. Rather, it must deliver economic benefits to its participants through joint research and development, skills training, technological solutions, investment, and new production chains. It is precisely through this process that trust is built; without it, cooperation remains merely declarative.

What should remain after the SWOT analysis

The participants were led to a common question by ideas that varied in scale and focus: what exactly should change in the region’s economy as a result of the project’s implementation?

The discussion that followed the presentations encouraged the teams to consider more than just individual business ideas. Rather than creating just one production facility, a regional development project should aim to create the conditions under which several production facilities, new value chains, a skilled workforce and sustainable partnerships can emerge in the region.

The next step is to identify the barriers to this at different levels.

What can businesses themselves do? Which decisions depend on regional authorities and regional development agencies? Where are changes needed in government policy, legislation, or financial instruments?

Instead of a general presentation of the region’s strengths, the outcome should be a clearly structured project. This should include an explanation of the problem it solves, the conditions necessary for its implementation, the available resources, the resources lacking, and the specific request being made to the state and its partners.

Such projects, with clear economic logic, defined roles, and straightforward tools, should be the result of the work carried out by the six regional teams.

Having moved beyond discussions about why production does not materialise simply due to a vacant plot of land and the regulations under which Ukrainian producers have to operate, the Produce! teams are now designing their own regional solutions.

 

Read more about the first day of the final module in the articles on the Decentralisation portal:
From resources to factory: what regional teams learn through the Produce! initiative
When production conflicts with the rules of the game: Produce! lessons by Oleksandr Sokolovskyi