December 16, 2013

Manufacturing Hungary Blog's performance in 2013

We have no secrets, and with this insight we wish you and your company a merry Christmas and a happy new year! Our statistics about 2013:

November 29, 2013

Site selection tools: a blank questionnaire

You don't need it every day, but when you seek it suddenly, probably won't find a good site selection questionnaire.


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October 31, 2013

Flexible labour regulations inside the European Union

Flexible labour markets are essential when you seek a location for your new manufacturing plant. This short overview provides an insight to the labour regulations of Hungary, Poland, Slovakia and the Czech Republic.

Need for a flexible labour market in EU
These low-cost Eastern European countries are the member states of the EU, have relatively good infrastructure and last but not least: have pretty good labour market regulations. Lets see some key strengths:

#1 Simple termination of employment contract
Eastern European Labor Codes allow employers to terminate employment contract with notice or immediately, if employee seriously breaches work regulations. In the case of notice of termination, employer has to state the reasons for terminating the contract. Reasons can be related to company's operation (organizational restructuring) or to employee's skills (incapacity for work, unsatisfactory performance etc). The notice periods (when the employee gets his/her full salary) are between some weeks to some months. 

#2 Flexible working hours and overtime work regulations
Multi-shift and uninterrupted work are typically not related to the work schedule of the employee but to the activity of the employer. Overtime work can be ordered by employer, but the total amount of annual overtime work is maximized in 150 hours (excluding Hungary, when the maximum annual overtime work is 250 hours). Overtime work bonuses (the additional wages over the overtime hours worked) are 20-25%. Work can be scheduled for Public Holidays, weekends and nights, with higher (50-100%) bonuses.

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#3 Week trade unions
All Eastern European countries allow the free establishment and competition of trade unions, employers cannot restrict this principle. However, the members of trade unions represents approx. the 10% of all employees (changing country to country) and first of all: Eastern Europe is not the home of large-scale strikes.

#4 Low minimum wages
Eastern Europe has a low wage level. The regulation of minimum wages (you cannot pay wages under this guaranteed level) is also flexible, provides more moderate minimum wages in regions and industries with high unemployment.

Background: a 2-minute video about the need of European labour market reforms:


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October 18, 2013

Low-cost Chinese manufacturing is dead. Long live nearshoring!

China doubled its GDP per capita in last decade.  That achievement took the industrializing United Kingdom 150 years. It raises some questions, and McKinsey & Co analyzed these questions.

Average monthly labour costs of Shenzen, China vs. Eastern European locations.
Source: Will Eastern Europe provide lower labour costs than China? - Manufacturing Hungary Blog

China economic model from the late '70 was built on low-cost manufacturing and export-driven growth. McKinsey and Company's recent article says: China needs a new story, a new growth model, because the challenges before manufacturing in China are huge. 


McKinsey's identifies 4 challenges before the future of Chinese manufacturing:

#1 Rising factor costs. in 2011, Shenzen wage inflation was 100%. It was 'only' 60% in Shanghai.

#2 Rising consumer sophistication. In 2020, the half of urban population is expected to become the part of upper middle class. This group demands innovative and high-end products, what local Chinese companies probably cannot manufacture. China will loose market shares not just abroad, but at home, too. The today strong Chinese supplier base also will weaken.

#3 Rising value-chain complexity. Product diversity, product customization and e-commerce aren't terms for Chinese manufacturing. Also the demanding Chinese middle class will need more customized products in shorter delivery time - and what about oversees consumers?

#4 Heightened volatility. The global economic crisis hit China, as well. The rising uncertainty makes business planning uncertain. "Volatility at such levels makes planning difficult for China’s manufacturers. This is problematic for companies that routinely make large, long-lived capital expenditures whose returns are crucial determinants of performance."

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In its article, McKinsey provides some solutions for the challenges above, but we would like to add a new one: let's think about nearshore manufacturing in alternative, low and stable costs locations closed to your consumers.

China's next chapter: finally, a 3-minute video about how McKinsey sees the challenges in Chinese manufacturing.

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October 4, 2013

6 low-cost Hungarian business parks with direct motorway access

Motorways are key assets to manage smooth supply chains. Some Hungarian business parks have excellent link to motorways.

EU motorways system in 2011. Graphics: European Commission

In Hungary, along the Budapest bypass route M0 Motorway, there are a tons of business parks and industrial facilities. However, some business parks in Eastern Hungary provide direct (within 2 kms) motorway access on a much lower cost level.







M35 Business Park
The local government-owned M35 Business Park is located directly at the Hajduboszormeny exit of M35 Motorway. Its offer involves 25k job seekers in 20 kms, a dedicated vice mayor to support investment projects - and last but not least: free of charge industrial plot over 50 new jobs.



The Alsozsolca Industrial Park is located near to the Northeastern city of Miskolc, for 2 kms from the junction of M30 Motorway. The location provides 20% unemployment rate and strong engineering traditions, represented companies like Sanmina Enclosure Systems and the machinery engineering programs of University of Miskolc.


Gyöngyös Industrial Park
The Gyöngyös Industrial Park is located within 2 kms from the exit of M3 Motorway. Budapest is 70 kms only (on M3: 30 minutes), so commuting can be an option for international management. The leading company in the Park is Stanley Electric, and the location offers a good environment for electronics and automotive supplier companies.



View Larger Map 
Kecskemét Industrial Park - Mercedes-Benz Manufacturing Hungary
At the Southern part of Kecskemét, there is a brand new business park, hosting Daimler's manufacturing site and some top level suppliers. The 400+ hectares site is located between the M5 Motorway, the main routes nr.5 and nr.54 (see the map above). The business park has no website in English, so send your questions to the municipality: international @ kecskemet.hu



Kiskunfélegyházi Ipari Park
The Kiskunfelegyhazi Industrial Park has a real strength: it's located in 15 minutes from Daimler's site, beside the M5 motorway. Plus, it's owned by the local government (open for a price discount for jobs), so it's a strong alternative of Kecskemet. You won't believe, it has no English website, but try to contact them here: http://www.kilp.hu/kapcsolatfelvetel.html



SZILK, Szeged
The Szeged Industrial Park and Logistic Centre is located near to M5 and M43 Motorways. The South-Eastern Hungarian location has a strong connection to Romanian, Serbian and Bulgarian markets, it's on 4th Pan-European corridor linking Dresden to Istambul.

The European vision:
Finally, a 2-minute video about how the European Commission wants to connect the European (road) networks:



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September 19, 2013

Company profile: GE Hungary

With its 12 sites and 12,500 employees in Hungary, it's the largest American employer and investor in the country. This is the short story of GE Hungary.

History

The Tungsram Co. was established in 1896 in Budapest. The company produced lamp with tungsten heater, its name came from tungsten + the German name of tungsten (Wolfram) = Tungsram. Before the 2nd World War, Tungsram was the global leader in lamp manufacturing.

Tungsram poster from 1910. Source: Wikipedia

At the end of Communism, in 1989, as one of the first investors in Hungary and in Central- and Eastern Europe, General Electric Lighting bought the 51% of Tungsram. Later got the 100% of the company (plus bought Budapest Bank, a leading commercial bank in Hungary). Based on the positiv experiences, GE continuously was developing its presence in the country, and today all the 5 business units are present here. GE is not just the largest American company in Hungary, but one of the largest employers and exporters. GE has 2,000 key suppliers in Hungary, and the social responsibility of GE involves more scolarship programmes, talent management programmes, GE Volunteers' programmes and the charity programmes of GE Foundation.

Manufacturing

GE's largest sites are still in lighting industry. Ivan Hutter, member of top management talked in Amcham Hungary's Voice Magazine (June 2013) about one of these manufacturing sites: Hajduboszormeny.

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„GE has a large Lighting technology production facility in the city of Hajdúböszörmény. It is a global Center of Excellence for state-of-the art green lighting technologies and our measures of productivity, innovation and cost are all globally competitive. The municipal leadership is pro-business and we have an outstanding overall experience being part of the city and Hajdusag.” Ivan Hutter, Public Sector Market Development Director, GE Lighting EMEA

Future plans

GE is satisfiied with the Hungarian business environment, and signed a strategic agreement with the Hungarian government. The future of the company is impacted by the global economic situation, but there is no doubt: positive market trends will mean more investments in Hungary.

Finally, a 2-minutes video about the Opening of GE European Lighting Experience Centre:

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September 6, 2013

Budapest vs. Eastern Hungary: a brief comparison of manufacturing locations

Budapest, the capital city of Hungary, is one of the most relevant manufacturing locations of Europe. What key differences are there between Eastern Hungary and Budapest as manufacturing sites?


4 facts about Eastern Hungary. Graphics: Manufacturing Hungary Blog

#1: Labour pool
Budapest has a metropolitan area over 2.5 million inhabitants, the 3 Eastern Hungarian regions have 4 million inhabitants. Regarding the number of job seekers, Budapest and Central Hungarian Region had 130k job seekers at the beginning of 2013, while Eastern Hungary had 219k - the 46% of the total (476k) job seekers in Hungary. The number of vocationally trained Eastern Hungarian job seekers is 68k. A last data about the hugh labour reserves of Eastern Hungary: one little town and its 20 km vicinity, Hajduboszormeny has 25k job seekers, which can be compared to the 33k job seekers in an entire region: Western Transdanubia.

#2: Labour costs
The average gross monthly earnings of employees was 260,000 HUF (approx. 870€) in Budapest in 2011, while in Eastern Hungary it was between 170-181,000 HUF (570-600€). It means, Eastern Hungary provides 30% labour cost discount compared to Budapest.


#3: Real estate market
Eastern Hungary has 95 industrial parks (more, than Poland), however there is a significant lack in existing and relatively new manufacturing and logistics halls. The M0 motorway is not just a bypass around Budapest, but the location of several business parks. The 3 million sq.meter industrial and logistics space ranks Budapest real estate market to the top of Hungary and Central and Eastern Europe.


#4: Accessibility
Two motorways, the M3 (and M30, M35) and the M5 (and M43) ensures a stable and first-class road connection between Eastern Hungary and Europe (practicly: Budapest, because in Hungary, all roads lead to Budapest). The 600 km motorways network in Eastern Hungary is longer than the motorways system of entire Slovakia, and two times longer than Romania has. Regarding air accessibility, the Budapest Airport is one of the main hubs of Europe. The developments of Debrecen International Airport has started later, it has some international destinations.

Finally, a 2-minutes video about GE Lighting Hungary, which HQs are in Budapest - but one of the major manufacturing plant in Hajduboszormeny, Eastern Hungary:

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August 23, 2013

International award winning locations in Hungary

Beside the all-time-winner Budapest, Eastern Hungary won the most relevant international business awards.

The Financial Times' bi-monthly publication, the fDi Magazine and its online edition focus on international business and foreign direct investments. In every two year the fDi Magazine ranks the European cities and regions based on statistics about infrastucture, HR, economic potential, cost effectiveness, quality of life, business friendliness and fdi promotion strategies.
Hungarian cities and regions entered for this competition, and we edited a summary about more year results.
... and the winner is... Source: fDi Magazine
1. Budapest and Central Hungary
2012/13: top10 Eastern European cities (8. Budapest)
2012/13: top10 Eastern Regions, Overall (5. Central Hungary)
2010/11: top25 European Cities, Overall (25. Budapest)
2010/11: top10 Eastern European Cities (3. Budapest)
2010/11: top10 Eastern Regions, Overall (3. Central Hungary)
2008/09: top50 European Cities, Overall (47. Budapest)
2008/09: top25 Most Attractive for FDI (25. Budapest)
2008/09: top10 Most Cost Effective (6. Budapest)

2. Debrecen and Northern Great Plain Region
2010/11: top5 Eastern Regions, FDI strategy (1. Northern Great Plain)
2010/11: top5 FDI strategy: Eastern Europe (5. Debrecen)
2010/11: top25 Regions: FDI startegy (24. Northern Great Plain)
2010/11: top10 Small Regions: FDI strategy (10. Northern Great Plain)

3. Miskolc and Northern Hungary Region
2010/11: top5 FDI strategy: Eastern Europe (4. Miskolc)
2010/11: top5 FDI strategy: micro (4. Miskolc)
2008/09: top25 Most Attractive for FDI (16. Miskolc)

4. Central Transdanubia
2010/11: top10 Eastern Regions, Overall (10. Central Transdanubia)

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As you can see, beside Budapest, two Eastern Hungarian regions and their capital cities, Northern Hungary (and Miskolc) and the Northern Great Plain Region (and Debrecen) won the most awards. These are the most emerging regions in Hungary, with enormous work force reserves, relatively good infrastructure and large scale public investments to improve business environment.

On the map:
Graphics: Manufacturing Hungary Blog

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August 2, 2013

Tax competition for manufacturing investments

The Eastern part of the European Union is not just a low-cost but also a low-tax location, supporting manufacturing on this way.



Corporate tax rates in the EU. Sorurce: Wikipedia

Most of the Eastern European countries provides corporate tax rates under 20%, while tax rates over 30% is not rare in Western Europe. Tax competition may be a controversial trend: some opinions interpret it as the liberalizing force in the word economy, others - involving the European Comission - think: tax competition is harmful. The emerging Eastern European member states of EU accompany old-school tax racers like Ireland to block tax harmonisation efforts in Europe.

Hungary: towards 10% corporate tax rate?

There are some goships how does Hungary decrease corporate tax rate. One of them is about the leading automaker: Audi. When the company investigated Hungary in 2010 as a potential site for its new €900 million and 1,800 new jobs investment, the Hungarian government drafted a tax cut from 19% to 10%. Finally (in the economic crisis) the government couldn't manage the tax cut (10% corporate tax is for small companies only), but this kind of "normative incentive" is in the air (Audi decided for Hungary).

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Development tax allowance

Hungary provides a special development tax allowance for investors. If your investment in manufacturing industry reaches €10 million and you create 150 new jobs (€3.3 million/75 new jobs are enough in prefered regions like Eastern Hungary), you get an exemption for 80% of your corporate tax payable for 10 years following the fulfillment of the investment.

Background: a 2-minutes video about tax competition


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July 5, 2013

Get incentives in Eastern Europe payed by Western taxpayers

Between 2014 and 2020 in Hungary, robust incentives will be available for economic development.
Source: bbc.co.uk
The budget of the European Union cannot be compared to any similar-sized economies - it's much smaller than the federal budget of the U.S. or China. However, its impact on economic development is relevant. EU budget focuses on economic cohesion of member states and the improvement of European competiteveness (and agriculture + rural development, but it's another story).

Eastern Europe is not just a low-cost region inside the EU - probably this is the best funded low-cost region of the world. The large-scale EU transfers are combined with healthy economic structures, business-pro regulations and growing key industries.

Hungary: the 2nd largest money per capita

Between 2014-20, Hungary will pay 10 billion € into the EU budget and will receive 35 billion transfer from it - the net position of the country is 25 billion €. These are large numbers, but the top of that Hungary plans to fund mainly economic development projects - 60% of 35 billion € transfer (approx. 21 billion €) goes for economic development and innovation. Foreign direct investments in manufacturing, especially in automotive industry, electronics, pharma, food processing are highly welcommed (and subsidized). Details will be clarified later, but job creation and application of local suppliers will have priorities.

Eastern Hungary is a relatively underdeveloped area, and incentives will strongly focus to develop this part of the country (and Central Hungary - Budapest and its metropolitan area - will have a modest budget only).

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June 21, 2013

Will Eastern Europe be a car manufacturing super power?

In 2012, Eastern European automotive manufacturing reached the 59% of Germany's output, which is higher than France' and Italy's production all together.


The Eastern European automotive industry

has a long way behind. Many OEM and Tier 1-2 suppliers have established production facilities in the Eastern part of the EU, while the Western European car manufacturing was stagnating, the CEE production increased rapidly in the last decade. Eastern Europe provides Western style infrastructure, wide-spread supplier fundaments, low labour costssupportive governments and regulations, and last but not least: access to the world's #1 market: the European Union.

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The Hungarian automotive industry

is traditionally stronger on supplier level than on OEM level. However, in the recent years, companies like Daimler, Audi, Opel, Suzuki launched new production lines and facilities, and the (OEM) output is expected to increase dramatically in upcoming years.

Trends on corporate level

Schaeffler Hungary has 3 plants in Hungary, the largest one in Debrecen, Eastern Hungary. The FAG Hungary manufactures rolling bearings for automotive industry, employing 1,200 people in the city. The  company's recent 6 million EUR investment goals to develop new products and manufacturing processes in its Eastern Hungarian plant.

The boosting Central- and Eastern European automotive industry can be surprising when you look at the European picture:

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June 7, 2013

Will Eastern Europe provide lower labour costs than China?

We compared Central and Eastern European labor costs to a leading manufacturing location in China, Shenzen. The result is surprising.

In 2011, the Eastern part of European Union provided 116% (Bulgaria) to 487% (Prague) of Shenzen labor costs. We think, it's quite comparable. And the top of all that: labor costs in Shenzen doubled from 2010 to 2011 (wage inflation was 'only' 62% in Shanghai from 2010 to 2011). 
We have no statistics about 2012 or 2013 labor rates in China, we leave it to your imagination...

CEE regional average labor costs in the % of Shenzen labor costs, 2011
Bulgaria: 116%, Romania: 167-197%, Hungary (without Budapest): 210-244%, Poland: 242-285%, Slovakia (without Bratislava): 245-298%, Czech Republic (without Prague): 315-372%, Budapest: 320%, Bratislava: 414%, Prague: 487%
Graphics: Manufacturing Hungary Blog

In absolute terms, average monthly labor cost in Shenzen in 2011 was 513 USD or 369 EUR (and 257 USD in 2010). Average monthly labor cost in Bulgaria was 431 EUR in 2011, 775-900 EUR in Hungary (without Budapest), 905-1529 EUR in Slovakia and 1800 EUR in Prague, Czech Republic.

Average monthly labor costs (cost ranges) by locations. 
Bud= Budapest, Bts = Bratislava, Prg = Prague
Graphics: Manufacturing Hungary Blog

Sources: labor rates - China, Bulgaria, Romania, Hungary, Slovakia, Poland, Czech Republic
Yearly average exchange rates; taxes and social security rates

The word you are looking for: nearshoring!

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May 16, 2013

2nd Industrial Strategy Summit in Budapest

The 2nd Industrial Strategy and Innovation Summit on 3rd June in Budapest aims to provide an exclusive insight into electronics and automotive business in Hungary, and a networking opportunity to executive level governmental, academic and business leaders.

The organizers - AmCham Hungary and the Association of the Hungarian Automotive Industry - focus on future challanges and solutions of flagship industries, represented by companies like Audi, Suzuki, Siemens, Foxconn etc. The invited keynote speaker of the conference is Minister Mihály Varga.
AmCham Hungary, the main organizer

The first panel, the 'industrial strategy' comes round the electronic and automotive companies' growth opportunities and the governmental support to make Hungary the manufacturing workshop of Europe.
The second panel focuses on regulation, how to make it more stimulative, stable and simplier.
The third panel about education involves academic leaders and HR experts and tries to figure out some conclusions about the changing Hungarian educational system.
Finally, the fouth panel is about the supplying opportunities into the Hungarian flagship industries.

Some background
In this video, a chief economist of the Hungarian government, Mr. Zoltan Csefalvay talks about the Hungarian government's approach regarding economic development and growth in a European perspective.



Manufacturing Hungary Blog will be there at the Summit, and hope we can welcome you between the participants!

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May 9, 2013

The hardest working nations of OECD countries

You may think Germans and Americans are hard working people. What a mistake.

publication of OECD, the organization of most developed economies provides information about the average annual working time in hours per workers, in 2011.

Darker colour means more annual working hour per workers, in 2011.
Graphics: Manufacturing Hungary Blog

The hardest working OECD nations are 1. Mexico, 2. South Korea and 3. Chile, working +26%, +23% and +15% more than an average worker in the United States.

The surprise comes when we look at the European OECD nations. German is the 2nd least working nation in Europe (only the Dutch work less than Germans). Greeks, Hungarians and the Polish are the hardest working nations of Europe, working +44%, +40% and +37% more than an average German workers.

Finally, the former world recorder Japanese workers work less than an average US worker and much less than an average Eastern European worker.

The original spreadsheet:


If you have opinion about these numbers, do not hesitate to share it!


April 26, 2013

4 key benefits of new Hungarian labour code

The goal of new Hungarian Labour Code is to increase the level of flexibility in labor contracts, improve business environment and at the end of the day to increase employment in the country.

We can identify 4 key positive changes for businesses in the new act (valid from 1st January 2013):
source: http://ucslabordaily.com
#1: More simple termination of employement contract
The employment contract can either be terminated or terminated with immediate effect. Objective protection from termination are reduced, e.g: employees retiring within 5 years and employees having children under the age of 3 have less protection; incapacity for work no longer means protection from termination.
In contrast to the older rules, under certain circumstances definite-term employment relationships may be also terminated before their natural expiry, by giving notice.

#2: More flexible rules for compulsory minimum salaries
In contrast to the old minimum salary regime, the new Labor Code includes the government’s right to determine a varying level of minimum salary for different types of employees (e.g. employees working at different levels or in different geographical areas). Practicly it provides more moderate minimum salaries in regions with high unemployement, e.g: Eastern Hungary.

#3: More flexible working time
Multi-shift and uninterrupted work are no longer related to the work schedule of the employee but to the activity of the employer. The definition of multi-shift activity was modified: we can talk about multi-shift work schedule if the operation of the employer reaches 80 hours a week. It's easier to schedule working tasks to Sunday and to national holidays.

#4: More overtime
Although the average annual hours worked in Hungary was 1980 in 2011 (vs: 1787 hours in the US and 1413 hours in Germany), the annual overtime of 250 hours are allowed in the new Labor Code, up from 200 at older regulation.



See also: 
RSM DTM Hungary: Most important changes of the Labour Code
Law.com: New Labor Code in Hungary



April 11, 2013

Required reading: the future of manufacturing by McKinsey

In November 2012, McKinsey and Co. published a report about the future of manufacturing. If you have not read it yet, do it as soon as possible!

McKinsey has 3 key findings about the future of manufacturing, and we try to add some conclusions and tips about its impact to Hungarian manufacturing sector:

1. Manufacturing’s role is changing: 
'The way it contributes to the economy shifts as nations mature: in today’s advanced economies, manufacturing promotes innovation, productivity, and trade more than growth and employment. In these countries, manufacturing also has begun to consume more services and to rely more heavily on them to operate.'
Tip #1: The Hungarian manufacturing will step forward on value chain.
There are always cheaper locations. In the future, manufacturing companies will choose Hungary because its developed infrastructure, flexible labour market and advanced business service industry. Hungary belongs to the low-cost Eastern part of the European Union, however the future of Hungarian manufacturing is about the complex, innovative and service-rich business environment.

2. Manufacturing is not monolithic:
'It is a diverse sector with five distinct groups of industries, each with specific drivers of success'
Segments of manufacturing. Source: mckinsey.com

Tip #2: The Hungarian light industry is over. Long live the Hungarian automotive/electronics/pharma industry!
The Visegrad Countries (Poland, Slovakia, Czech Republic and Hungary) are not low-cost locations any more - they are between somewhere East and West. The Hungarian business environment, including labour market, regulations, infrastructure, governmental programs, supplier's background industries etc are, lets say, not supporting the old school Eastern European, labour intensive industries. The future is about automotive and vehicle industries, elecrtronics, pharma and medical devices.

3. Manufacturing is entering a dynamic new phase: 
'As a new global consuming class emerges in developing nations, and innovations spark additional demand, global manufacturers will have substantial new opportunities—but in a much more uncertain environment'
Tip #3: Start to think about emerging countries as emerging markets.
Classically, international companies manufacture in Eastern Europe and sell in the West. We guess it will dramatically change in the near future: they will manufacture and sell in Eastern Europe. The Eastern part of EU became the nr.1 manufacturing location of the Union, and it's generate robust demand for suppliers, but also on B2C markets.


What do you think about these conclusions? Share your opinion!

March 24, 2013

Company profile: Daimler's manufacturing in Hungary

A star of Hungarian manufacturing industry. source: origo.hu
Daimler's largest manufacturing plant in Eastern Europe was established in Kecskemet, Eastern Hungary. After the decision in 2007, the production started in 2012. With its €800 million investment, it was the largest foreign direct investment in the history of Hungary, creating 2,500 jobs in Daimler's plant, and further 10,000 jobs by suppliers.

A site selection story

Daimler (more exactly: Mercedes-Benz) was seeking an Eastern European location for the manufacturing site of its new B-class car. Originally the company was thinking about Romania and Poland. A senior manager of the Hungarian investment promotion agency read a news in Handelsblatt about Daimler's plans in Eastern Europe, and convinced the company to list Hungary in the site selection. In the final stage, Hungary provided stronger supplier industry than Romania and Poland (and much more moderated cost level than the Czech Republic). The guy who purchased step-by-step a 440 hectares agricultural land (more years before Daimler deal) in the periphery of Kecskemét, became a multimillionaire.

Labour pool and technical education

Daimler (Mercedes-Benz Manufacturing Hungary) has a high-end production facility in Kecskemét, located south-east from Budapest. Beside the M5 Motorway, Kecskemét is a little town with 110k inhabitants, however the labour pool is tremendous in Eastern Hungary: for less than 50% of the Hungarian population comes 80% of the Hungarian job seekers.
It's not an overstatement to say: in the core of the Hungarian vocational secondary education system's strong dual profile (with strong company presence) there is Daimler and the company's proven methods in Germany. Before Daimler, Kecskemét College, let say, was not a top-listed college in Hungary. After Daimler investment, it became a very strong mechanical and vehicle engineering center, almost the private college of Daimler.

Supplier pyramid

Hungary never was a world champion automotive industrial center than, let say, Slovakia (which is the world's nr.1 automaker per capita). There are a few OEM automotive companies in the country, beside Daimler: Audi, Opel, Suzuki. However, when we look at the background industry, the picture is different. There are a very strong, wide-spread automotive supplier industry in the country, represented by international companies like Knorr-Bremse or Delphi, and domestic companies like Hajdu Autotechnika or Csaba Metál. The strong supplier industry is the source of vehicle components - and the source of specialists, who are the key persons for every newcommer companies.

Finally, a short video about Daimler's Hungarian manufacturing plant:


What do you think? We were happy if you could share your opinion or any other information. Or, if you prefer a personal response, contact us now!