June 29, 2022

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Ukraine War Reverberates in Europe’s Factories and Warehouses

2 min read

PARIS — The shoes, 600 pairs in all, lay untouched inside an Italian warehouse: magenta sandals, décolleté heels and gold ballerina flats, destined for Russian boutiques but stuck in a limbo of sanctions and economic upheaval from Russia’s war in Ukraine.

Sergio Amaranti, the Italian shoe company saddled with the mountain of unpaid merchandise, is among thousands of European businesses grappling with a widening blowback from the conflict.

“It’s scary,” said Moira Amaranti, who manages the company founded by her father and uncle. She said she worried that the sudden financial loss could destabilize the 47-year-old firm, which sustains her 20 longtime workers and their families. “Russia is half of our business,” she said. “And now we have a problem.”

Russia’s monthlong war on Ukraine is lashing Europe’s economic rebound from the Covid-19 pandemic, threatening its job-rich recovery. Manufacturers and retailers that were benefiting from renewed growth are adjusting to wild swings in business conditions that have injected fresh uncertainty into economic decision-making.

Sanctions intended to punish Moscow for its invasion are blowing back to companies in unexpected ways, undermining confidence and their ability to plan. Small firms like Sergio Amaranti face a hazy future as exports to one of its key markets grind to a halt. Large multinationals that have been pulling back from Russia are assessing the risk of asset seizures or nationalization.

The war’s reverberations on surging energy, food and commodity prices are causing even wider problems, forcing European turbine makers, glass factories and zinc plants to slow or pause production. Growing congestion in logistics and supply chains has added to inflationary pressures, prompting retailers to pass rising costs onto consumers and find alternative supplies. Annual inflation hit a 40-year high of 7.5 percent in Europe last month.

As the disruptions pressure European businesses and their workers,…

Liz Alderman

2022-04-05 05:00:23

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