Economic impact of the invasion of Ukraine is not that bad: “But this will affect all companies”

A spokesperson for MKB-Nederland notes that at this stage it is virtually impossible to indicate what the war in Ukraine means specifically for North Holland companies. “But this is going to affect all businesses eventually, directly or indirectly.”

The West and Russia have been diametrically opposed before, in 2014 after Russia annexed Crimea. The US and European sanctions that followed have had a clear effect on trade with Russia. Dutch exports to Russia almost halved.

Machinery export

The Netherlands mainly exports machines to Russia, but Russia is not a major sales market for the Netherlands. To clarify: a quarter of all exports from the Netherlands to Russia consist of machines, but the Russian market only accounts for 1.2 percent of the total Dutch exports of machines worldwide. This is shown by figures from Eurostat.

Noord-Holland does not have a large share in machine exports in the Netherlands, so there is little noticeable effect of the crisis in this sector. Most exporters are located in North Brabant, says a spokesperson for H&G export tractors in Callantsoog.

“We hardly notice it yet, but we are concerned about it,” says Kees van Diepen of Rabbit Construction Machines in Uitgeest. “But it doesn’t have the same effect now, the war started only five days ago of course.” It quickly becomes a bigger problem if the war also affects the surrounding countries, such as Poland and Bulgaria. “We also deliver there and if those orders all fall away, then we do have a problem.”

Transport and logistics

The war in Ukraine and the increasing tensions in the surrounding countries are causing problems in the logistics sector. Polish customs have confirmed that the borders with Ukraine are open. Drivers must, however, take delays into account. The border with Moldova is open, the one with Transnistria is not. This is reported by the organization Transport and Logistics Netherlands.

Wood and construction sector

North Holland has more than 41 thousand construction companies and is the largest sector in North Holland after business services and retail. This is evident from figures from BoldData. Much of the wood we use in construction and for pallets comes from Russia and Ukraine.

“We have already received messages from suppliers who can no longer deliver in the coming weeks,” says Frank Meddemeers of Palletcentrale Noord-Holland. “Now nothing comes in. There are no more truck drivers, there is no more gas and the Swift has been taken off, so you can no longer pay.”

The wood comes mainly from Belarus, Ukraine and Russia. Frank buys it through timber traders in that region. It is processed there, but the logs (the ’round wood’) also come from there. “So I can’t order from sawmills in Germany either. They say they can’t supply planks, because they no longer receive round wood.”

The wood price is skyrocketing, according to Frank. “The supply is declining rapidly, and the transport costs are only increasing. The quotes I now receive are already considerably higher than last week.”

Bakeries and breweries

Russia and Ukraine are two top wheat producers in the world, but it is not yet clear what consequences this war will have in ‘Europe’s breadbasket’. Much still depends on sanctions against Russia. What is clear is that the Netherlands does not get its wheat and grain from Russia or Ukraine.

We mainly import our grain and wheat from France and Germany. “And what’s more, the harvest for this year has already arrived,” says Meint Waterlander of the Centraal Brouwerij Kantoor (CBK). So far, the crisis has had little impact on Dutch beer brewers.

There is no panic among the bakers either, says Wim Kannegieter, the director of the Dutch Bakery Association. There are 720 bakers located in Noord-Holland, 19% of the total in the Netherlands, according to figures from CBS from 2021.

“We are not yet receiving any indications of problems with availability,” Kannegieter told NH Nieuws. “France and Germany are really the most important to us, but Ukraine is certainly a sub-topper. A kind of AZ in North Holland.”

According to Kannegieter, it is not the case that we will not be able to eat bread in the coming year. The silos in Western Europe are still full with last year’s grain harvest and we can live on that for a while. “But towards the spring and summer it can cause problems.” The grain from Ukraine is in fact counted on in the future. “And if that is not available to us because of the war, then that is a problem,” concludes Kannegieter.

The crisis in Ukraine may force buyers to switch to wheat of other origins, mainly from the EU. That would be a boost for European exports.

flower trade

These are uncertain days for flower growers in North Holland as well. For example, they fear that Russia will boycott their products in response to EU sanctions in the Ukraine crisis.

Also tulip grower Arjan Smit from Spierdijk keeps a close eye on the news. “We’ve got corona behind us and now this crisis situation, let’s not make it more difficult than it already is.”

In Anna Pauwlowna the consequences on the flower sector eagerly awaited† “I don’t know what effect that will have on trade relations,” says Leo Kapiteyn, sales manager of flower bulb nursery and exporter Kapiteyn from Breezand. Although the future of exports is still uncertain for the company, that is not its main concern. “Trade is of course also very important, but the human factor comes first,” says Kapiteyn.