Statistics

According to the data from the survey, I quarter marked further decline in the production output (-7% balance). Yet, 36% of the industrial enterprises increased own output in I quarter, which share is higher, than in the previous quarter.

Such seasonal production movements used to be explicit in the industry of Ukraine: thus, downward trend in the output in IV and I quarter used to be recorded over the whole observation period.

However, some of the industries featured further growth in the output: timber (+18%) and machine building (+14%) industries features good production rates over the four consecutive quarters. The latest two quarters featured considerable production growth in industries such as glass & porcelain ( +44%), printing & publishing (+24%) and ferrous metallurgy (+32%). There were also another industries that reported production growth, although less considerable. For still other industries zero balance was derived given stability of their production processes. The latter include non-ferrous metallurgy, energy production and the enterprises found in "other productions" in IV quarter of the previous year these industries featured strong growth in the production output (-63%, +78% and +17%, respectively). Yet. basically, I quarter 2000 marks a certain decline in production output in the industry of Ukraine. It was the strongest at the enterprises of consumer goods (-9%), fuel production (-33%), construction materials production (-51%) and food (-21%) industries. Although the movements recorded at the two latter industries are likely to come out from seasonal factors, it's these movements that affected overall production dynamics in the industry.

Another surprising point is that unlike previous quarters, growth trends in respect of both production output and sales was confined to private sector (+25% balance of both indicators ), whereas in collective and public sectors there was a strong decline in production output (-7% and 4%. respectively).

Current production output was assessed by the respondents in the traditional way. e.g. as too low: thus, in I quarter only 2% of the respondents assessed it as high and 66% - as low.

Sales (depending on effective customer demand) in the industry also featured a strong decline in I quarter (-12%). Overall downswing in sales came out of shrinkage in sales at internal market as well as similar trend in exports, the balances concerned being -18% and -10%, respectively. Of the industries, the strongest decline in sales was derived for construction materials production (-50%), fuel (-33%), food (-23%) and flour-grinding (-9%) industries, e.g. correlated with similar trends in production output over this quarter.

Effective customer demand, according to 43% of the respondents, was "low" on the whole area of Ukraine, with 46% of them giving similar estimation of export demand. However. 48% of the enterprises assess internal demand for own products as "satisfactory", and 7% of them even believe it to be "high", just like in the previous quarter. Regrettably, in respect of export demand the latter figures are more than twice lower.

Internal market in I quarter accounted above 81% of the total industrial production, just like over the year before, of the enterprises who reported on price movements, price rates of principal products grew by average 12,8%. Such skyrocketing of prices was recorded only twice over the whole observation period, this time being the second: thus, a very high growth was observed in IV quarter 1998. being 15.4%.

As regards stocks of finished products, their level is considered high by only 11% of the respondents. The value of this indicator has been down over many quarters- Such tendency is positive indeed when it comes to the national industry, since it points to the majority of the enterprises having been a success to get rid of vast stocks of idle goods and, at the same time, avoid to add up own stocks, meaning, that their circulated assets are involved in business process given their stable turnover rates.

At the same time, stocks of raw materials and parts was assessed as "low" in I quarter by 69% of the respondents. In modem "high technology" production sphere where raw materials or parts are forwarded to production process almost as soon as they are supplied (which enables a company to reduce costs for their stoking), such figures should be perceived as positive enough. Yet, in the conditions of the national economy they are much more likely to indicate on the shortage of raw materials and parts faced by the majority of local producers.

Average coefficient of production capacities utilisation in I quarter makes about 39%. Its by industry distribution can be seen from the graph and the table below. A most part of the enterprises, like in previous surveys (94% of the respondents), stress, that their available capacities are "normal" or "above normal" in relation to their order books, which indicates on considerable under utilisation of production capacities. Only 5% of the total number of respondents report they are short of capacities.

Order books performance at the sector is such that can provide for normal business not longer than the next 4 months. Order inflow is relatively thicker in electric energy production (10,9), fuel industry (9,1), coal mining (8,4), ferrous metallurgy (6,9), glass & porcelain industry (6,0). The thinnest inflow of orders is recorded in the enterprises found in other production, e.g. average 1,8.

Of the factors liming production most considerably, managers stress upon the following: shortage of circulated assets (54%); poor customer demand (52%); taxes (47%); shortage raw materials and parts (46%); out-of-date equipment (20%); out-of-date distribution system (17%); exorbitant tariffs imposed by natural monopolies (14%); tough competitive pressure by home-made analogues (13%); tough competitive pressure by imported analogues (11%); poor electricity/energy supply (8%); shortage of equipment (4%); shortage of skilled staff (3%); shortage of powers and authorities at the management of the enterprise(3%). This time 1,4% of respondents report they have no business constraints.

Employment situation in the sector has been gloomy since long now. Nearly 1/4 of the employees are involved part-time (a part of a working day or week), and the share of out-of-work employment at the main job makes about 13%.

An outcome of the situation referred to is long-standing tendency towards shrinkage in the mausmal personnel. In I quarter employment in the staff was reduced at 45% of the industrial enterprises.

Average monthly wage in I quarter 2000 was reduced at 24% of the enterprises, according to the data from the survey, which, in view of persistent price growth, led to further aggravation of living conditions of the employees. Overall balance in this respect makes -5%. Furthermore, 17% of the respondent enterprises reported on increasing pressure of default in labour payment, whereas at 40% of them the rates of the default didn't change.

Recession trend in respect of overall situation in production didn't seem to affect heavily financial & economic performance of the enterprises. Like in course of the three previous quarter, the balance varied from 58 to 61%, e.g. each quarter nearly 60% of the enterprises report their financial & economic performance as being worse in relation to the preceding quarter. In I quarter 39% of the respondents assessed own performance as "satisfactory" (that makes 2 percentage points higher than in the previous quarter). The share of the enterprises who is supposed to be "good" at financial & economic performance didn't change and makes 1% of the total number of the respondent enterprises.

By far and large, financial & economic performance of the enterprises is affected by a large share of barter in the total output of the transactions. Barter is practised by a major part of the enterprises. Average barter share in the sector makes 35,1% of the total output of the transactions, having reduced by 3% in relation to the previous quarter. The extent of barter practice by industry can be grasped from the chart and the table attached to the text. The output of production sold for cash (by monetary scheme) also reduced in I quarter, although 28% of the respondents reported on its growth.

It's absolutely and inevitably clear, that downward trend in respect of both barter and cash transactions follows precisely the one in respect of both production output and its demand, which is stressed above.

The managers shared information in respect of production problems and proposed ways of their solution. Their overwhelming majority rise the problems similar to the previous quarters. They stress upon the need to take the following measures:

to cut VAT on imported parts supplied for production purposes;
to cut tariffs on land, water, natural resources;
to stabilise energy market;
to introduce imports quotas;
to cut rates of fines and penalties;
to entitle producers to use funds on own account the way they want;
to enforce customer discipline when it comes payments on completed contracts;
to cut interest rates on bank loans, this must also concern the National Bank of Ukraine;
to grant producers favourable loans targeted to meet production needs;
to cut or abrogate deductions to off-budget funds;
to improve customs code, to simplify customs procedure;
to simplify the procedure to receive investments in the sector;
to cut taxes, to impose single tax in the sector;
to restructure budgetary debts of enterprises;
to enforce government contracts on "strategic purpose" equipment and machines;
to impose excise duty on alcohol and its products in the national currency of Ukraine;
to abrogate VAT on excise duty;
to provide for a favour-able loan for enterprises meant to internal development.