Rubizhne, in the west of Luhansk Oblast in the east of Ukraine, once had a large hosiery factory that employed many of the city’s 50,000 residents, including Oleh Misiurenko, a technician who monitored and adjusted the factory’s knitting machines.
But after the Soviet Union collapsed the factory went into decline, and later it shut down for good, along with dozens of other enterprises. So Oleh and his brother Hennadiy, now unemployed, began to think about starting their own business.
So in 1994 the two brothers launched their own small business making socks and stockings.
Olha Ushakova, the company’s commercial director, says it’s natural the brothers would look to socks for a business idea.
“Why socks? That’s simple – Oleh already had significant experience working with knitting machines,” Ushakova says. “So, the brothers bought two machines and started making socks together. Oleh knitted and looked after the equipment, while Hennadiy sewed.”
Demand for the Misiurenkos’ products, which they sold themselves at a local wholesale market, turned out to be higher than their business model at that time could cope with – so they hired employees, rented a workshop, and started buying more equipment.
By 2011, the business had grown so much that it no longer qualified for Ukraine’s simplified tax system, and the brother’s small business became a limited liability company – Rubizhne Hosiery Manufactory LLC.
Challenges of war
The company experienced its first crisis not long after, in 2014, when Russia occupied and then claimed to have annexed Crimea. Soon after, Russia occupied parts of Donetsk and Luhansk oblasts in Ukraine’s eastern Donbas region.
Up until then, the company’s key sales markets had been in the east of the country, but these were now inaccessible and demand plunged. The brothers began to look west for fresh markets.
“There were no doubts about the quality of our products, so we quickly found new buyers,” Ushakova recalls. “But we soon faced an obstacle: either we increased our (production) volumes, or (our buyers) wouldn’t be able to work with us.”
Despite the risk of a worsening war, the company decided to invest in expanding its production lines in Rubizhne. After three years, the company was producing twice as many socks and tights as before. The products’ fresh and bright designs were a hit with Ukrainian consumers, and the number of the company’s employees also doubled.
The growing factory moved to new, modern, and energy-efficient premises, taking over an abandoned Soviet-era industrial building, which it renovated and fitted with modern production equipment.
Full-scale war
On the eve of Russia’s full-scale invasion of Ukraine, the owners of the Rubizhne Hosiery Manufactory, like millions of other Ukrainians, were pondering their plan of action in case wider war with Russia broke out.
“In the end, we decided to move part of our equipment and people to Lviv Oblast,” Ushakova says. “It was an insurance plan – having survived 2014, we expected a similar scenario. The (full-scale) war seemed inevitable to us, but we hoped it would be short, and in the worst case we would only have to stop manufacturing for a few months.”
So just two days before Russia launched its full-scale invasion of Ukraine, on 22 February 2022, a small group of the company’s representatives left for Lviv to look for premises where they could set up part of their equipment. Little did they know that they would never see their modern factory again, where, on 98 knitting and 40 sewing machines, 162 workers had produced thousands of pairs of socks and tights every day.
Rubizhne soon came under threat from the invading Russian forces, and by 12 May 2022 Ukrainian forces had retreated to stronger defensive lines to the southeast, in the town of Severodonetsk, with the partially destroyed Rubizhne coming under Russian occupation.
As soon as the invasion started, however, the company stopped production, and sent employees home to look after their relatives. A few weeks after the start of the full-scale invasion, the factory building was hit by shellfire.
Whatever was not destroyed by the explosion and fire resulting from the shell impact was stolen by looters. A company with a 30-year history was back at square one in an instant. The only things it had to its name were three containers of yarn in the port in Odesa that had not been yet delivered to the factory, and UAH 11 million ($280,000) in loan debts.
Restoration
Under such conditions, there was no hope of the company taking out more bank loans, but the Misiurenko brothers were not prepared to give up on their business. During their first attempt to expand to the western regions after 2014 they had met the owners of a famous Ukrainian sock brand, Dodo Socks, and they had later become true friends and partners, with the Rubizhne company producing socks for the brand.
It was Dodo that gave the first interest-free loan to the brothers and helped them find premises where the company could resume production. Seventeen company employees who had moved from Rubizhne to Lviv began to rebuild the Rubizhne Hosiery Manufactory from scratch.
“We were burdened by debt, and lacked equipment and personnel; we actually lost some of our brands as we no longer had the special machines (needed) for their production,” Ushakova recalls. “Access to loans was blocked. So we started looking for resources from grant programmes. We applied to all of them that we could find. Some things worked, some didn’t. But even the failures gave us invaluable experience.”
The funds the company received in the form of grants were mostly spent on buying equipment and raw mat erials. For example, a European Union grant in the amount of EUR 50,000 helped the company restore the production of women’s cotton tights and increase the capacity of knitting department by 10%. The production of women’s tights under the company’s own Lady May brand was launched in August 2023 (the volume in August was 2700 pairs) with a gradual increase in production to 12,000 pairs per month as of December 2023. Using the donors’ funds, the company bought the special high-speed knitting machines it needed, thanks to which 31 new jobs were created.
What’s next?
Just over two years after the start of the full-scale Russian invasion and war, the Rubizhne Hosiery Manufactory has achieved 50% of its pre-war production volumes. The company has already resumed deliveries to the Czech Republic, the Netherlands, and Spain, supplying customers it had won before the start of the full-scale invasion.
“We’ve received a positive feedback on our products from potential buyers in the United States,” Ushakova adds. “But exports there will require a bit more time on solving logistics issues.”
Demand has never been a problem because of the niche market the company chose – unique designs of socks and tights, which allow it to remain competitive even in Ukraine’s saturated market. The company is now working on creating a line of sports socks.
“This particular type of product requires significant experience, skilled workers, and (special) equipment,” Ushakova explains. “But for us, such a business direction is now vitally important, as renting premises consumes a lot of our resources. If we just produced ordinary black socks the business would go bankrupt.”
Meanwhile, in common with a lot of Ukrainian businesses, the company is facing labour shortages due to many Ukrainians becoming refugees abroad or being internally displaced within the country. With only 65 employees, there aren’t even enough hands available to load all the new equipment the company has bought.
All the same, thanks to the grants from the EU, Rubizhne Hosiery Manufactory is looking to the future with confidence. Its next goal is to create an exemplary carbon-neutral and energy-efficient enterprise, and be able to step into new markets with its own bright new brands of socks.
