Global TOOL Manufacturers and Construction Stand by Ukraine

Aside from the awful humanitarian crisis and terrible occurrences happening in the Ukraine. It is great to report that the tools sector and construction industries standing up and being counted. And whilst Russia looks set to push east west relations back 40 years, there will be no building of a new Iron Curtain…as they will not have access to the tools to build it. That said at TOOLKiT, we wonder if there are more tool manufacturers to impose trading sanctions against Russia in support of Ukraine?

Sector information from GlobalData reveals that some leading construction original equipment manufacturers (OEMs) including Hitachi, Komatsu, JCB, Caterpillar, and John Deere have suspended their Russian operations.

Hitachi decided to gradually halt its production in its Tver plant and ceased its Russian shipments from Japan. In FY2021, the company’s business operations in Russia and the Commonwealth of Independent States (CIS) region accounted for 2.8% of its total revenues.

Similarly, Komatsu announced that it will temporarily halt the supply of construction machinery to Russia, citing supply chain constraints as a result of geopolitical instability. Russia and the CIS region accounted for 5.1% of its total revenues in FY2021.

Caterpillar suspended its manufacturing operations in Russia due to supply chain disruptions.

John Deere operated an office in St. Petersburg and parts distribution facility in Moscow. In FY2021, John Deere derived 6.1% of its total revenues from the Central Europe and CIS region.

GlobalData identifies some of the major construction companies that have suspended their operations:

AECOM

Global construction giant AECOM is discontinuing its business operations in Russia, thus bringing all of its ongoing construction projects in the country to a halt. AECOM has around 350 employees at its Moscow and Saint Petersburg offices.

The move is not likely to have any impact on its financials, with impact limited to a one-time loss of $40-50 million during the second quarter of FY2022, which it planned to write-down its assets in Russia. In addition, the company expects a cash impact of $10 million.

Worley

Worley, which decided not to initiate any construction contract from Russian companies, also confirmed that its withdrawal will not have any financial impact on its global business.

SRV Group

Finland-based construction service provider SRV Group stopped procuring building materials from Russia to use at its construction sites in Finland. However, it will continue to operate three of its shopping centers, where it has partial investments. The company generated 0.7% of its revenues from Russia in FY2021, which amounted to EUR6.8 million.

Real estate companies

Several top global real estate companies comprising CBRE, Jones Lang LaSalle, Colliers, Knight Frank, and Savills have also shut down their operations in Russia. In FY2021, CBRE recorded less than 1% of its total sales from Russia. Savills, which suspended its franchise relationship with a Moscow-based agency, generates less than 0.1% of revenues from clients in Russia.

Additionally, many European architect firms such as Foster + Partners, David Chipperfield Architects, MVRDV, Zaha Hadid Architects, Bjarke Ingels Group, and John McAslan & Partners have already halted their operations in Russia.

Meanwhile, the Russian government is devising plans to seize assets of foreign companies that have withdrawn their operations from the country. Looking at the market conditions, global construction companies will not be significantly impacted by such moves. However, the crisis will have far-reaching consequences for the construction industry in the months to come via the impact on steel, oil, and energy prices.

For more information about how the Russia-Ukraine crisis is affecting industries, download GlobalData’s Ukraine Conflict: Executive Briefing

About GlobalData

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