Initiatives to build underground enterprises once again indicate that the war is with us for a long time. Experts are not enthusiastic about new ideas and say: underground production will be unprofitable, so building underground, for example, a food processing plant or a chemical plant, is irrational.
Ukraine was advised to build air defense-protected economic clusters and hide factories underground. How appropriate and realistic is the idea of moving factories underground and where to get the money for this?
Mixed feelings: appropriate, perhaps, but there are nuances
Ukraine should build economic clusters protected by air defense systems, and closer to Russia, generally hide factories underground. This is stated in the advice of the Advisory Council on Economic Policy under the Ministry of Economy.
Moreover: these tips are presented as one of the steps aimed at accelerating economic growth.
“If air defense systems are too expensive or unavailable for other reasons, there is a somewhat non-standard option - the use of abandoned coal or salt mines (there are many of them in all regions of Ukraine). Many cities also have previously built underground networks. Some of them can also be used as production sites,” the advice states.
But while the need to create weapon-protected economic clusters in relatively safe regions of the country is beyond doubt, the proposal to build underground enterprises gives rise to mixed feelings among experts.
“Of course, such an idea is appropriate and possible, but it is only practical in relation to production facilities that cannot be located abroad,” says economist Vladislav Bankov. “Due to the additional labor intensity and loss of time, this is advisable for a limited range of production facilities that cannot be located in neighboring countries.”
Ukrainian business cannot exist in isolation from global markets; accordingly, the idea of building factories underground will lead to too high prices for the products of such enterprises. This will make their products uncompetitive in the market, adds Dmitry Churin, director of the analytical department of the investment company Eavex Capital. In his opinion, in the context of the constant threat of missile attacks from the Russian Federation, first of all, there must be a reliable air defense system. And secondly, physically protected individual critical infrastructure facilities, such as transformer substations of electrical networks. But, for example, a food processing plant or a chemical plant underground is irrational. “The costs will be too high to somehow recoup them later without subsidies or grant assistance from international partners,” noted Dmitry Churin in a commentary
There are examples: what underground production facilities are known in the world
According to Maxim Oryshchak, an analyst at the Center for Exchange Technologies company, in history there are separate cases of the creation of private factories underground. The most famous of these is the Brunson Instrument Company optical manufacturing plant, which was built in 1954 in the limestone bedrock near Kansas City. The enterprise is still operating.
Almost always, private enterprises underground are a unique technical solution, not a political necessity
“The point of such an unusual placement was the high vibration requirements,” explains the expert. “It turned out to be easier to create the necessary conditions underground. There are few other such striking examples. There are operating enterprises in Sweden. For example, in mining operations it turned out to be cheaper to repair drilling equipment at depth than to lift it to the surface.”
But you need to understand that almost always private enterprises underground are a unique technical solution, and not a political necessity, the expert continues. As for linking the underground industry to the war, Germany was a pioneer here during the Second World War. Then European countries, the USA, the USSR, and Japan took this experience.
“Most often, the underground factories were used to produce aircraft. This provided protection from air raids and artillery strikes. But they also produced other military equipment. That is, we were always talking about state-owned underground enterprises, where commercial gain was secondary,” explains Oryshchak. — After the war, such industries were mothballed or liquidated, although economic studies can find justification for the advantages of locating enterprises underground. But for private businesses, such stories will mean greater capital investments and increased responsibility for safety. Experience shows that this is not the best combination. Business is used to saving on everything.”
Theory and practice: possible, but very difficult
According to analyst Alexey Kushch, for industries that are not associated with energy-intensive or chemical processes, building factories underground may make sense. For example, for the assembly of drones, in particular marine ones: these are small production facilities for several dozen people that use imported components. At the same time, the expert says, it is very difficult to imagine an underground powder factory or, for example, an underground factory for the production of tanks or artillery pieces, where casting, welding or complex chemistry processes take place.
Theoretically, it is possible to build underground production, but in practice it is so difficult and expensive that it is practically impossible
“Of course, nothing is impossible, but I would compare these ideas with the ideas of building underground thermal power plants. Theoretically, this is possible, but in practice it is so difficult and expensive that it is practically impossible,” noted Alexey Kushch in a conversation with Focus. — Firstly, the price: such production will cost tens of billions of dollars. Secondly, very complex ventilation and air conditioning systems that will require huge amounts of electricity. And with our problems in energy supply, this is impractical.”
Maxim Oryshchak agrees: when it comes to placing factories of the military-industrial complex underground, it makes sense, provided that there is a resource and time for it. Otherwise it's a meaningless story.
“Now the Ukrainian state does not have the funds for something large-scale,” noted Maxim Oryshchak in a conversation with Focus. — The budget is in deficit, the national debt is off the charts. Some enterprises, judging by statements from the authorities, are already operating underground, but no more. Private Ukrainian business is not ready for such large-scale investments at its own expense. Only foreign business remains. To reach a higher level, it is necessary to connect large enterprises in Europe, the USA and other developed countries. They are the ones who are trying to get involved in thinking about the underground industry of Ukraine. But paradoxically, until the war is over, they are unlikely to build anything. And without war, the meaning of underground placement disappears.”
As for counting on $50 billion from the West, which they promised against the security of income from Russian assets, then, experts say, no one will immediately pay tens of billions of dollars to Ukraine. “In the near future, we have been agreed upon for 1.5 billion euros, and other tranches will be similar. The promised 50 billion will be spread over five years or more. In addition, they will fund social programs and repairs of critical infrastructure. I very much doubt that Western partners are ready to finance the construction of Ukrainian underground enterprises,” Kushch emphasized.
In addition, the analyst continues, there is also a psychological aspect here. Initiatives to build underground factories, as well as underground schools, are an attempt to normalize war. But this is unnatural; war will never become a part of normal life. And everything that is unnatural is unviable, the expert concluded.
