Business Editor Mike Hughes gives his view of the implications for North East businesses as the Ukraine situation continues to escalate

 

The battlefield of the Ukraine will be watched with mounting horror in boardrooms across the North East, with frantic calls to check that partner firms and employees are safe.

The human cost is unimaginable and unbearable, but there will inevitably need to be vital decisions made on investments and relationships there and in Russia. 

As markets crash and disappear, businesses here will already be redrawing their strategies and wiping out previously vital and lucrative deals.

The role played by energy companies will be particularly in the spotlight as alternatives to international supplies become paramount. Part of the reason for the vast pivot of firms like BP, which is investing so much money in hydrogen and carbon capture on Teesside is to overcome the reliance on international markets and their social, political and financial pressures.

The energy giant told The Northern Echo it was closely monitoring the situation in the Ukraine.

In an article on business and financial news network CNBC last week, BP CEO Bernard Looney said the situation as it was then was having no impact on its operations in Russia. CNBC said BP has had a presence in Russia for more than 30 years and is the largest foreign investor in the country via a 19.75% stake in the national oil company Rosneft.

Speaking at an oil and gas exhibition conference in Cairo, Egypt, Mr Looney told the network BP was continuing with the “business of business” in Russia.

Read more: BP plans Teesside jobs boost at power plant and hydrogen projects

“We, along with many of our peers have a large presence in Russia and, quite frankly, there is no impact on our ongoing operations in Russia,” Mr Looney told CNBC’s Hadley Gamble at EGYPS 2022.

But this is literally a different world now and decisions that will change countries and companies for years to come will be made in this moment.

John McCabe, chief executive of the North East England Chamber of Commerce said: “Our thoughts are with the people of Ukraine. The current situation there is a stark reminder of how global issues can make a negative impact on our local businesses, no matter what the geographical distance.

"We will all expect to feel the consequences of what is being played out in terms of rising energy prices, supply chain problems and uncertainty in some marketplaces.”

Cummins, which has a huge plant on Yarm Road in Darlingtion, has had a presence in Russia dating back to the middle 1970s, when its engines entered the market in imported mining dump trucks.

A regional office was founded in Moscow in 1985, followed by the establishment of the distributor office in 2003 and the joint venture with the leading local truck manufacturer KAMAZ in 2006. There is a branch in Kazakhstan and Belarus and a network of over 100 Cummins authorised dealers and partners.

Currently Cummins business in Russia and the Commonwealth of Independent States is a well-diversified sales portfolio serving more than 30 customers in the territory.

Newcastle Airport has been the gateway for many business deals in Russia and Ukraine, but as flights between the UK and Ukraine were suspended, the Foreign Office updated its travel advice to warn that British nationals in Ukraine “should not expect increased consular support or help with evacuating”, so the airport will be closely monitoring the situation, along with so many horrified businesses in the region.

 

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