by Dr. Balazs Csorjan, investment promotion specialist 2014 edition How to select your new automotive manufacturing site in Hungary
[NOTE] These slides are designed not to present but to read as a document. Switch to Fullscreen View, please!
[overview] track record labour market business parks infrastructure
Hungary Hungary is a low-cost manufacturing location inside the EU market. Beside pharmaceutics, electronics, SSC, tourism and food processing, automotive industry is undoubtedly one of the leading branches in the country. These few slides try to help you when its about automotive industrial site selection.
Did you know? There are 4 OEMs and 600+ suppliers in the Hungarian automotive manufacturing industry, which produced 200k cars in 2012, and expected to produce 400k cars in 2014. Car manufacturing per capita is similar to Spains numbers. There are a traditionally strong vehicle component manufacturing focus in the Hungarian economic policy. Hungarian governements think, suppliers (component manufacturers) provide stability to automotive industry, and deeper embedement to the Hungarian economy. New OEMs are welcome in Hungary, but suppliers are highly welcome. Hungarian government agencys Subcontracting Department supports the matchmaking of suppliers.
Automotive clusters The main automotive manufacturing region is the North Western part of Hungary, located in Gyr (Audi), Esztergom (Suzuki), Szombathely (Opel). Suppliers like Alcoa, Continental, Dana, Denso, Delphi, Hirschler, Johnson Controlls, Kirchhof, Magna, Rba, Valeo, Visteon etc. doing business in this part of the country.
Automotive clusters The settlement of Mercedes-Benz new small car manufacturing plant in 2008 in Kecskemt shows the emerging importance of Eastern Hungary (see later the whys) Suppliers like Bosch, Delphi, Eismann, FAG, Hajdu Auto, Hirschmann. Johnson Controlls, Knorr-Bremse, Magna, Modine, Remy, Shinwa, ZF etc. doing business in this part of the country. Next slide: short video about Mercedes-Benz Eastern Hungarian plant
Unemployment Unemployment is maybe the most relevant difference between the Eastern and Western part of Hungary. Western Hungary has shortages in many professions and in many labour market segments, while Eastern Hungary is a human mine. With an example: the entire Western Hungarian Region has a similar number of job seekers (30k+) like a single Eastern Hungarian town, Hajduboszormeny and its vicinity (25k). Government grants and programms try to support the business expansion in the Eastern Hungarian locations
map: KSH Labor costs Not independently from unemployment, Budapest and Western Hungary have the highest labor costs. In numbers, the average monthly gross earnings of employees was 270 thousand HUF (approx. 900) in Budapest, 200 thousand HUF (approx. 670) in Western Hungary, and 180 thousand HUF (approx. 600) in Eastern Hungary, in 2012. In Eastern Hungarian automotive industry, a well-trained, experienced, skilled worker earns monthly gross 150-250k HUF and an engineer between 300-600k HUF.
Education The Hungarian vocational education follows the German modell. The so called dual education means: vocational school students learn practical skills at companies. There are no relevant differences between Western and Eastern Hungarian vocational education, however the leading universities are in Eastern Hungary (Miskolc, Debrecen, Szeged). Foreign language education at vocational level is an issue, but there are planned projects for low-level, highly industry-specific and large- scale tech language education.
Labor regulation The new Hungarian Labor Code has 4 benefits: it provides more simple termination of employement contract, more flexible rules for compulsory minimum salaries, more flexible working time, and finally: more overtime.
Industrial property supply In Central and Eastern Europe, there are approx. 1,000 industrial parks. More than 20% of CEE industrial parks are in Hungary (in Poland there are less than 100 industrial parks). The developed Hungarian industrial park network provides excellent road and rail transportation connections. In Eastern Hungary, some business parks provide direct motorway access on a very low-cost level.
Real estate costs Industrial land average sales prices are between 20-30 per sq.meter in larger cities, and under 20 in smaller towns. 10 per sq.meter can be regarded a very good deal, however some municipailities offer a free of charge industrial land. Manufacturing rental market is small outside Budapest, but the average rental fees are between 2.5 and 5 per sq.meter per month.
Motorways The 1400 km long Hungarian motorway system is the most wide- spread network in Central and Eastern Europe. Hungary has 7 neighboring countries, and almost all these countries can be reached via motorways (Romania and Ukraine will be reached in 2015). From road transportation point of view, there are no relevant differences between Western and Eastern Hungary.
Air access There are 3 international airports in Hungary. Budapest Airport: the 2nd largest hub in Eastern Europe, more dozen daily flights inside Europe. Debrecen International Airport (Eastern Hungary) has a strong air cargo focus; passenger flights to Western Europe and to Mediterranean Sea. The Fly Balaton Airport in the Western corner of Lake Balaton has a strong low-cost air flight focus.
International schools Budapest: more international schools in more languages (English, French etc) Eastern Hungary (Debrecen): international school in English; bilingual high schools (e.g: German- Hungarian) and an English-Hungarian grammar school other cities: bilingual high schools
Industry association The strongest organization is AHAI, the Association of the Hungarian Automotive Industry (in Hungarian: MGSZ). Its members cover almost the entire industry, and has working groups for governmental relations, communication and labour market. The networking events of AHAI can be a perfect first step in the Hungarian market.
About us Manufacturing Hungary Blog is an information source about the manufacturing topics in Hungary and Eastern Europe. Our goal is to support site selection teams job, providing useful information. Dr. Balazs Csorjan, investment promotion specialist, the former regional director of Hungarian governmental investment promotion agency. Dr. Csorjan has taken part in more hundred site selection projects - he knows your questions.
E-mail your questions or ask the original maps, graphics, slides: firstname.lastname@example.org