Manufacturing a Future for Mercedes, for Kecskemét and for Hungary

Automotive

With booming operations in the country – and getting very close to opening its second plant in here – Mercedes-Benz Manufacturing Hungary Kft. has seen a very successful period lately. Praising ties with the local and national governments, the company is eyeing further developments, the Budapest Business Journal learns from Josip Niksic, CFO at Mercedes-Benz Manufacturing Hungary Kft.

Josip Niksic

In mid-May, Mercedes-Benz Manufacturing Hungary Kft. managing director Christian Wolff announced that more than 190,000 vehicles had rolled out of its plant in Kecskemét during 2017, a rise of 4.1% from the previous year, while the revenue of the unit had also climbed more than EUR 3.5 billion. Talking to the BBJ, Niksic tags this as a “successful period”, and understandably so.

“Last year saw the initial stage of the preparations for the second Kecskemét plant where the first cars may roll off the assembly line at the end of the decade. The new body shop started to manufacture the new A Class compact cars just recently,” the CFO says.

The plant in Kecskemét appears to be well-located, both geographically, and economy-wise. “Kecskemét proves to be an ideal location for the Mercedes-Benz plant. Constructive work with the local government and the central government gives us long-term predictability, and our well-trained experts – i.e. our Hungarian employees – are professional and committed,” Niksic adds.

Indeed, the background environment could hardly be more supportive, it appears.  

‘Truly Good’ Cooperation

“Our cooperation with both the central government, and the local government is truly good,” Niksic underlines. “We make a joint effort to ensure that Kecskemét becomes a hub of European car manufacturing, innovation, and vehicle industry to attract even more young people to start their careers with us. The current challenge for both the city and our company is to improve local housing conditions to help make Kecskemét and the Mercedes-Benz factory even more attractive,” he adds, clearly seeing room for further improvement.

The factory has been performing quite outstandingly lately, boosting the economy of the country in total, the CFO says.  

“The Kecskemét factory has become a major actor of not only the local/regional economy, but also the overall Hungarian economy over the past years. The company offers jobs for a workforce of just below 4,000. As a business, and an employer Mercedes-Benz paid a total of EUR 23 million in taxes and contributions in 2017 to the Hungarian state and the local government of Kecskemét,” Niksic says.

During the press conference announcing last year’s figures this May, Niksic pointed out that the share of Hungarian suppliers to the Kecskemét had risen to more than 50% in 2017, a firm indicator of how local companies are benefiting from the presence of the automaker and rising up its value chain.

In addition to the ongoing developments at the original factory, where production of A-Class models had recently replaced the B-Class autos formerly produced here, the company has been ploughing back its profits into developments such as investing EUR 580 mln in a chassis unit and a EUR 1 bln plant expansion, for which the company laid the cornerstone in the beginning of June.

Fully Flexible

The new factory is expected to create an additional 2,500 jobs on the top of the 4,000 Mercedes-Benz already employs in Hungary. The area of the plant is approximately 382,000 sqm and will include a press shop, a so-called body-in-white shop (the stage at which a car body’s sheet metal components are welded together, prior to painting and moving parts being added), a paint shop and an assembly area. The company expects to launch production in 2020.

The new factory will be what is termed a “Full-Flex Plant” in which “several vehicle architectures from compact models to rear-wheel drive sedans and various drive forms, including electric vehicles, can be flexibly produced on one line,” Hungarian news agency MTI quoted Markus Schafer, a member of the Divisional Board of Mercedes-Benz Cars, Manufacturing and Supply Chain as saying in June.

Looking into the future, parent company Daimler AG appears to have some serious plans for Hungary.  

“Daimler AG made a strategic decision ten years ago to set up shop in Kecskemét. We have come to stay. We plan for the long-term, and would like to offer jobs to even more people, and thus ensure the livelihood of even more families,” Niksic tells the BBJ in answer to a question about the future of the company in here.  

“Our plant continues to play a major role in the city’s economic achievements, and results. A good example is the second Mercedes-Benz plant that greatly contributes not only to the growth of our staff, but also to the number, and the order books of suppliers in the region,” he adds.

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