Ukrainian Cluster Alliance Annual Report
Ukrainian Cluster Alliance (UCA) annual report summarizes the main stages and results of the clusters’ unification development in 2022. Since its creation in March 2022, UCA has undergone rapid growth and today unites 48 clusters of the country.
The main results of UCA activity in 2022
In 2022, UCA clusters proved that they can help both their own members, small and medium-sized enterprises (SMEs), and entire sectors of the economy at the regional and sectoral levels. Ukrainian clusters are becoming important actors of economic stability, drivers of innovative development among SMEs and reliable partners of the government, territorial communities and business in supporting critical infrastructure and critical industries, as well as in planning Recovery programs.
International partnership – 14 partnerships with EU and US organizations
Innovative fundraising – 50+ involved SMEs, 700,000 euros
Aid to the Armed Forces of Ukraine, Territorial Defence Forces and the population – more than 2 million euros
System policies – dozens of strategies, concepts and reports
Number of international events for 2023 – 7
Establishment of new services for clusters – 6
Content
Policies and strategies of the cluster movement, their implementation in 2022
The main paper of the cluster movement, the project “National program of cluster development until 2027” did not receive any promotion in 2022, it remains unconsidered by the country’s government. UCA lacks resources to activate the GR direction, and this issue solution started only at the end of the year.
The main results of UCA work in 2022 were manifested in Export- Internationalization. In conditions of rapid decline of the domestic market, this direction of work has become the main one, both from the point of view of supporting existing exports, and new ways – methods of international cooperation and assistance.
In June 2022, the UCA created the paper “The program of export-internationalization for industrial and high-tech sectors: recommendations for the government”, which de facto establishes the course that UСA and the previous cluster committee Industry4Ukraine have already followed since 2019. We are talking about 3 key directions:
- Expansion and better support of the “Buy Ukrainian” program from the Entrepreneurship and Export Promotion Office.
- Integration into GVC: programs to support Ukrainian enterprises’ integration into European and international value added chains.
- Inno-Integration: programs of accelerated inclusion and support of Ukrainian innovative enterprises in the relevant European programs of innovative development, twin digital and green transitions.
UCA systematically implements separate measures based on the proposed initiatives and within its own capabilities and budgets, but government support is weak.
“UCA Roadmap for 2022-23” – this paper is an internal short-term plan of UСA clusters. The set of measures, developed with the support of GIZ, has been implemented for most of the proposed actions for 2022.
It is worth adding to UСA 2022 achievements, which belong to the category of policies and strategies:
- Guide “Top 10 UСA initiatives in the field of Advanced Manufacturing” – the first paper that synthesizes UСA clusters’ project initiatives of in the field of EAM and Industry 4.0-5.0.
- The “5 Roles of Clusters” white paper – synthesizes the collective reflection of several clusters and the UCA management regarding the clusters’ key roles during the current crisis in Ukraine.
- The concept of “Rapid Response Centers” is the first attempt to substantiate why UСA clusters need to unite into resource pools (centers) and what it should look like.
- The “Ambassadors of Industry4Ukraine” concept – similarly, this paper sets the parameters of the initiative to create a network of international partners.
In 2022, all these program papers served to coordinate and establish effective interaction of UCA clusters, their results are discussed in the following sections. UCA structures all policies, strategies, best practices on the website – see section “UCA Knowledge Base”.
Export – Internationalization
UCA successes in this area are the greatest and illustrate a conscious focus on this area of work. Among them, the following activities were the largest in terms of resource contribution.
International events and activities: more than 50 events were held online and more than 20 offline. It is worth noting among the most significant and effective:
- Participation in the cluster conference in Prague: it was there that the face-to-face meetings and presentation of the leadership and 6 UCA clusters to the wider community of European clusters and the European Commission took place.
- Participation of UCA as a partner in 3 large business forums organized by the International Trade Council – in Istanbul (July), Tallinn (October) and online (December). In total, they were visited by more than 2,000 foreign specialists.
- The Ukrainian delegation participation in the MSV exhibition in Brno – a memorandum was signed with 4 Czech partners and this was the beginning of implementation of the bilateral agreement between Ukraine and the Czech Republic in the field of Industry 4.0.
Signing Memorandum of Understanding (MoU) and joining leading EU and US associations – we have a total of 13 such agreements or accessions. Some of them made a significant contribution to UCA achievements in 2022: first of all, let’s note the European Cluster Alliance, the International Trade Council (ITC), the US Control System Integrators Association (CSIA) and EIT Manufacturing. Thanks to the partners’ efforts, we had various types of support, and in addition to financial support, constant attention, coordination of actions and involvement of a wide range of stakeholders with partners were no less significant.
Attracting and developing relations with our foreign ‘ambassadors’ – professionals from various organizations who maximally supported UCA and our initiatives. See details in the special review of Award Professionals4Ukraine, where we highlight 13 partners.
Development of internationalization system tools. From the first days of the war, UСA, together with Ukrainian and European partners, contributed to creation and involvement of Ukrainian SMEs and clusters in such platforms as EU Clusters support Ukraine, Supply chain resilience, Solidarity Lane. In December, together with EEN-Ukraine, another critical infrastructure support tool Electric Energy matchmaking platform was launched.
The main results at the end of the year, which shape the outlook for 2023, are the following:
Development of relations with the European Commission (DG Grow) is a guarantee in our next actions to receive support from the Ukrainian government. In particular, significant progress on these changes, as well as on a number of European integration initiatives, is expected during the Clusters Meet Regions forum for Ukrainian clusters scheduled for March 2023 in Slovakia.
Membership in the European Cluster Alliance and the global TCI Network cluster alliance opens up new perspectives and horizons for cluster cooperation in most countries of the world, as well as finding partners for participation in international projects.
Partnership with EIT Manufacturing has already enabled Ukrainian companies and start-ups to participate in the EIT Jumpstarter and the EIT Community Artificial Intelligence. Starting from January 2023, a number of events and projects involving Ukrainian clusters and companies are planned.
In addition to the large-scale forum in Slovakia at the end of March, where 200 representatives of Euro-clusters are expected, we have 7 more confirmed forums and conferences for 2023.
As for entering into joint projects with European clusters, progress in this area is insignificant. In fact, such projects are the most important result of partnerships, but they take time to create and harmonize. However, we have certain results in 2022. It is worth noting 2 projects of the Ukrainian Automotive Cluster – the EVOLUTE and REMOBILISE projects.
Many of these activities and the obtained results were supported by donor resources – we note the help from GIZ-Ukraine and the EaP Civic Society Facility project.
Among the most important challenges, it is necessary to note controversial policy of the Ukrainian government. On one hand, the government recognizes that export and integration into European chains are the top priority of the country’s economy. On the other hand, during 2022, we practically do not see any programs to support these declarations. In particular, the ban on traveling abroad for men may disrupt most of the already planned international conferences for 2023. In 2022, the government did not find a systematic solution to this issue.
Resilience of clusters – helping the Armed Forces and territorial defense
In the first months of the war, citizens of Ukraine, businesses and public organizations massively supported the Armed Forces of Ukraine and territorial defense and quickly responded to urgent needs. Many heads of clusters and members of boards became servicemen of the Armed Forces of Ukraine (in the photo, Vladyslav Bashchevandzhi, member of the Board of the Zaporizhia EAM cluster).
UCA clusters also collected funds, medicines, clothes, thermal imagers, walkie-talkies, etc. Many products profiled for cluster activities were manufactured and supplied for the needs of the military and civilians at their own expense. Many managers and board members from Kharkiv, Zaporizhzhia, Mykolaiv, and Kyiv clusters became military personnel and are now in the ranks of the Armed Forces.
UCA clusters still continue this volunteer activity. Let’s note those who provided information for the annual report.
The Cluster of Industrial and Craft Producers originates from the city of Melitopol, Zaporizhzhia region, which is still under occupation. Accordingly, the cluster management completely switched to the task of providing assistance to the Armed Forces of Ukraine and the Territorial Defense. During the 10 months of the war, the cluster handed over more than 50,000 units of ammunition, food, hygiene products and medicines, food kits, etc. to the military, in total – in the amount of more than 28 million hryvnias. In a number of initiatives, in particular, fundraising for cars for the Armed Forces, the Cluster of Industrial and Craft Producers acted together with the Zaporizhia EAM Cluster.
Members of the “Rivne Interregional Medical Cluster” public association took active part in helping the Armed Forces since 2014. Then there was a huge need for tactical first-aid kits and knowledge of how to use them correctly. A member of the cluster, PE “Pharmix” completed and handed over more than 5,000 first-aid kits to the army. Training on how to use them correctly and the entire course of tactical medicine in accordance with NATO standards were conducted by tactical medicine instructors of the NGO “Rivne-takmed” (founders of the cluster).
During the entire period of the war, the instructor group of 10 people trained about 30,000 military personnel and about 5,000 civilians. The training was conducted at various training grounds, in the area of anti-terrorist operation/surveillance, various units of the Armed Forces, National Guard, National Police, Azov, Border Guards, Volunteer battalions, Territorial Defence Forces, Local Communities Volunteer Formations. Also, “Rivne-TAKMED” NGO delivered 31 vehicles for the Armed Forces.
Kharkiv “International Medical Cluster” public association continued to actively operate throughout the entire 10 months. The main directions of the cluster’s activities are medical evacuation of the wounded and handicapped population groups, humanitarian aid to civilian population and medical aid in the de-occupied territories of Kharkiv and Mykolaiv regions, development of projects to participate in reconstruction of Ukraine’s medical business. Direct contacts have been established with EU doctors and clinics and hospitals in Israel, the cluster participates in humanitarian programs of medical aid, namely the program of the Charite University of Berlin, the Schleswig-Goldstein University of Kiel and Lübeck (Germany), the GIZ MP2021 “Fit for partnership for Germany” from the organization of health protection and Funds “Frida” Israel, Kyiv СF “Drevlyany“, and A.N.A.S. Sardena, Italy.
The Ukrainian Furniture Association (UFA) provided various types of assistance to the Armed Forces of Ukraine, Territorial Defence Forces, and internally displaced persons (IDPs), including furnishing of temporary premises. The total amount of funds collected by Association members is almost 3 million hryvnas. In addition, UFA implemented a grant of UAH 4.5 million from USAID – humanitarian aid was purchased and 1,100 beds were made for IDPs.
The Khmelnytskyi ‘Ppodilliya Fashion Cluster’ produced clothes for the Armed Forces of Ukraine the Teritorial Defence Forces at its own expense, and there are also many stories in the cluster of sewing companies that made projects on their own. This is production of flags for the Red Cross, unloading and body armor, underwear, first-aid kits, safety nets, sleeping bags, chevrons for Teritorial Defence Forces and peacoats, etc.
The Ivano-Frankivsk business association became a co-founder of the regional fund “Save Ukraine NOW”, which collected more than 2 million US dollars for the needs of the Carpathian battalions of the Armed Forces of Ukraine.
Most of the participants of the Maritime Cluster of Ukraine (MCU) in the conditions of constant shelling and due to the specifics of the shipbuilding industry did not have the opportunity to relocate. Artem Vashchylenko, MCU board chair, headed the humanitarian headquarters, which distributed tens of thousands of tons of goods for the needs of the Armed Forces of Ukraine, Territoial Defence Forces, hospitals and local population.
Separately, it is worth noting participants of the clusters of Kyiv, Kharkiv, Vinnytsia, Khmelnytskyi, Mykolaiv and other regions, who took part in execution of defense orders.
The given examples testify to the important role of clusters in supporting the country’s volunteer movement, supporting the Armed Forces of Ukraine and Territorial Defence Forces, as well as local population and IDPs. It is clear that this assistance will continue.
Resilience of clusters – focus on strengthening VACs
Almost 35% of UCA participants are clusters from eastern and southern regions of the country. Less than half of them were able to relocate to safe regions completely, that is, including production assets. Most of areas of Chernihiv, Kharkiv, Luhansk and Donetsk regions had to evacuate only personnel, while clusters of Sumy, Mykolaiv and Zaporizhzhia did not leave their cities. In all these cases, cluster activity was reduced or completely stopped. Activities of several clusters in central and western regions, which were developing medical tourism in Ukraine, were also suspended. Instead, many of these clusters switched to humanitarian front and assistance to the Armed Forces (section 3.4).
Among the clusters that actively continued their work, the following organizations should be noted:
Ukrainian Furniture Association was the most active among UCA clusters in export activities. UAFM organized departure of 67 factories to 5 international exhibitions and, as a result, received pre-orders in the amount of more than 2 million euros. UAFM also promptly solved problems of internal production cooperation and coordination in the Telegram group (450 subscribers), and numerous internal offline and online meetings.
Ukrainian Automotive and Mobility Cluster (UAMC) strengthened its relationship with the European Automotive Cluster Network and was also involved in the EVOLUTE and REMOBILISE projects and the ClusterXchange programs. Since most of the cluster members are component manufacturers for western brands, UAC’s role in changing relationship of headquarters and keeping orders flowing during wartime is important. In particular, a large campaign was carried out during March, and in April most factories resumed work.
Similar to UAM, U-Food cluster not only promoted exports (there were 5 trade missions), but also tried to solve problems of food enterprises by organizing services to support production activities. There are 70 individual specialists in the base of the cluster providing services for food enterprises.
Kharkiv EAM cluster helped several of its relocated members restart production in the Vinnytsia and Ivano-Frankivsk regions, and took an active part in all UCA activities.
In Vinnytsia, Kharkiv EAM cluster together, also the poultry and compound feed cluster closely interacted with the local cluster.
Association of Industrial Automation of Ukraine (APPAU) conducted several activities to mobilize its members to support critical infrastructure and organized an international webinar on this topic with the Belgian association BEMAS. UCA, through APPAU, as a member of the EEN-Ukraine consortium, contributed to the launch of the Electric Energy matchmaking platform.
There are dozens of similar examples of clusters’ influence on strengthening VACs in their branches and regions in UCA. According to UCA survey data at the end of 2022, 25% of UCA clusters have increased the level of activities, including an increase in the number of their members. At the same time, most clusters lack a more systematic and powerful focus on strengthening VACs in their regions and industries – this challenge is one of the key ones for 2023, including preparation of Recovery projects.
Innovative fundraising for SMEs
Development of innovations, twin digital and green transition are the basic principles of European cluster policies, and for Ukrainian clusters, following these priorities is a challenge. Most of them are lagging behind in this area.
In April, APPAU provided access to the EIF program for all UCA clusters. The program created at APPAU in 2021 is aimed at development of innovative fundraising among innovative SMEs and startups. APPAU is the contact point of the I4MS/Horizon program in Ukraine, maintains a project office for conducting this activity, and from 2021 closely cooperates in this activity with the Digital Innovation Hub (DIH) of Kyiv Polytechnical Institute.
The following activities were held from May to December:
- 12 informative webinars, 1 large campaign to attract clusters to innovative grants and 2 offline events.
- Trip to the final European meeting of I4MS in Budapest.
- About 20 DIH experts of KPI were involved in active promotion of I4MS grants.
- A number of exchanges took place with Ukrainian and foreign partners regarding the development of DIH in Ukraine.
- A consortium of 6 foreign and 5 Ukrainian partners was created to participate in the EIC startup support competition (€20 million). The results are still unknown at the time of the report.
The main results of this activity at the end of the year are the following:
- 8 calls in the I4MS and EIT programs won.
- 15 Ukrainian organizations became beneficiaries: 12 SMEs, 2 DIHs and 1 association.
- The total amount of funding received is more than 700,000 euros.
- Under the influence of the EIF program, a number of SMEs intensified their own work and submitted applications for other programs independently – the estimated amount of funds received is 300,000 euros.
The experience and knowledge gained will be used in another 1st large-scale project, which was launched in 2022 by our partner, Center 4.0 “KHAI” on the basis of Kharkiv Aerospace University “KHAI named after Zhukovsky”. Consultations with the involvement of APPAU and UCA members began in December 2023. The project has every chance of receiving funding of up to 2.5 million euros.
APPAU’s investment in the work of the project office during 2021-22 is its own and amounts to about 25,000 euros (matchmaking platform, events and payment to the staff involved). Given the results of 2022, it is clear that this activity is profitable and very necessary for innovative development of the country’s SMEs, especially in the field of Industry 4.0-5.0 (digitalization of industrial sectors), which has traditionally been ignored by the country’s government for many years.
At the same time, it is worth noting that in order to scale up activities at UCA, where we are talking about potentially hundreds of SMEs, this project office must be financially supported – UCA does not have funds to pay for the work of office managers and also to support another 2-3 dozen involved experts. UCA is looking for sponsors or donors to support this type of activity; the amount of investment is 55 thousand euros.
Regional initiatives and projects. Cooperation with public bodies and local authorities
In 2022, a lot of attention was paid to certain measures in this area. On one hand, regional aspects are natural for UCA, as most of UCA clusters are regional.
Support and position of GIZ-Ukraine influenced organization of the events – thanks to them, UCA organized 3 events in Cherkasy, Zhytomyr and Ivano-Frankivsk.
We also interacted with individual cluster initiatives, first of all, it is worth noting Pavel Yarmiy and his team (Kherson Cluster “Salt Road”, relocated to Uman). In Uman, Pavlo did a lot of work on creating a new cluster initiative for development of agro-tourism, and the results were presented at 2 conferences.
Another driver of regional cooperation is mobilization and growth of requests from the communities themselves. We had numerous exchanges and discussions of cluster initiatives and projects in the areas of Zacarpattia, Prycarpattia, Volyn, Sumy region, Rivne region, Kyiv region, Chernihiv region, Vinnytsia region, and Zaporizhia region.
The most active in UCA regional initiatives was the Resource Center “Utility” (A. Dolynnyy), as well as heads of regional clusters and initiatives – O. Demchuk, V. Vintonyak, P. Yarmiy, Y. Gladenko, Y. Klymenko, V. Goncharenko, A. Karpenko, Y. Zhukov, T. Vorontsova, and O. Sytnyk.
The final UCA conference on “Best Practices” on December-22 formed the first benchmark for work with the united territorial communities and positions the local authorities as potential best partners of cluster development. It is obvious that this line of activity will actively develop in 2023.
As for cooperation with the Central Government, the level of cooperation remained the same as in previous years. That is, formally good relations have been established with a number of ministries and state agencies, but no particular changes occur. Despite the lack of a whole range of policies and strategies in the field of industry, innovative development, digitalization and smart specialization, the government is in no hurry to change the situation and does not yet consider the cluster movement as a partner in ensuring the stability of the country’s economy. The main document of UCA in 2022 on the shift in the issues of export and internationalization did not receive response from the Ministry of Economy, there was no response to other requests. The exception is a certain interest from the State Agency on Energy Efficiency and Energy Saving, shown at the end of 2023 – here we are talking about systemic interaction in the development of energy clusters in several regions of the country.
Certainly, advocacy of our programs at the level of the Central Committee is a challenge for UCA in 2023.
UCA services and tools for Alliance clusters
UCA Coordination Center worked a lot in 2022 to create or unify individual services for Alliance members and bring them to a certain level of quality standards. We are talking about sharing services, which can be established not only at UCA management level, but also belong to individual clusters, but which are provided for everyone.
At the end of December, these services were divided into 6 categories:
- International networking and cooperation of UСA clusters. This service was created in 2022 and has a number of components: organization of international meetings: 7 large business missions are already planned for 2023; preparation and implementation of bilateral agreements by cluster groups. The example of cooperation with the Czech Republic is precisely from this category, and in 2023 we plan to deploy such agreements with Poland, France and Lithuania; a number of meetings and participation in programs that will be developed at the level of the European Cluster Alliance and the European Commission.
- EIF fundraising program. In this area, UCA has created a project office, which is developing activities and already provides services in 2 key directions: support in fundraising for general purpose grants; fundraising support for innovative grants. Processes in innovative fundraising were developed at APPAU throughout 2021-22 and today are scaled to a wider range of fundraising projects. In 2023, it is planned to significantly increase funding for general purpose grants – because it is obvious that the number of clusters and SMEs that need this support in UCA is many times greater.
- Land4Developers marketplace is a new UCA tool for exporting innovative SMEs from industrial sectors, as well as engineering companies. This tool also demonstrates our ambitions in another category – it will gradually become the main information and networking UCA hub for all of Eastern Europe and the Eastern Partnership countries.
- Ukrainian Brave Business virtual event platform is another export tool. UAFM (furniture clusters) and APPAU (available for all EAM and APPAU clusters) are responsible for its implementation.
- UCA communication tools include a website, Facebook pages, Linkedin, Twitter and 10+ Telegram groups for internal use. APPAU and ASTAR created the UCA communications committee, where they started agreeing on common standards and rules of mutual support.
- UCA Analytical Center products are yet being developed, but several services are already available. In particular, the most obvious and sought-after service is the research on cluster potential in regions. This service has already been demonstrated in Zhytomyr region, and now there is demand in Volyn, Prykarpattia and Chernihiv region.
The set of these tools, their quality seems to be sufficient for UCA clusters and taking into account that UCA membership remains free during martial law. A more active position of cluster coordinators and their work to involve SMEs and other stakeholders in using these services appears to be a bigger problem.
The main directions of development for 2023
The main directions of UCA development for 2022-23 are detailed in the “Road Map” developed in August 2022. As of December, they remain unchanged, we are talking about 6 directions or vectors of development.
Detailed planning in these areas is beyond the scope of this report and is the subject of subsequent discussions in UCA.
At the same time, and taking into account the conclusions and data presented above in this report, there are 3 common priorities in the implementation of these strategies, which can be called key success factors and which are worth noting.
- Clusters preparing for wide presentation on the international arena need to achieve Basic level criteria in the 1st quarter of 2023. These parameters were specified in the UCA maturity model (Industry4Ukraine) in 2021, and are aimed at setting up and aligning 5 basic functions in clusters, – talk about cluster management, regular networking and matchmaking, communications and fundraising. This alignment is necessary for faster closing of gaps between mature and young clusters.
- Young clusters should quickly unite into Common Resource Centers (CRCs) by industry. CRCs’ task is to speed up the joint solution to the problem of finding the necessary resource or competencies, as well as to establish collective work in the development of joint projects.
- In the many initiatives and plans of UCA for 2023, another critical success factor will be quality coordination and communication with key partners. First of all, GIZ-Ukraine belongs to them, but this factor is equally important for a number of foreign partners and our cooperation with state structures.
UCA leadership would like to thank all cluster heads, board members, our partner international organizations, and cluster members for their fruitful work in 2022. The cluster movement has strengthened and undergone development, unprecendented in the last 10 years. Accordingly, we see 2023 as a year of no less rapid growth and for strengthening the country's economic front. Sincere congratulations and thanks to all clusters and to all partners who supported us. Слава Україні - Glory to Ukraine!