German Firms Continue to see Good Business in Hungary


Economically speaking, Hungary has proved a happy hunting ground for German companies, with many indicating future plans to increase investments and headcount here.

Audi‘s  robotic “colleagues”.

Ties between Hungary and Germany have always been strong, be they historical, cultural or economic. Germany remains Hungary’s largest trading partner – the country continued to account for more than one-quarter of Hungary’s exports as well as imports last year in euro terms, according to data from the Hungarian Central Statistical Office.  

Positive vibes about the economy are prompting many companies operating here to expand. According to a recent report by the German-Hungarian Chamber of Industry and Commerce (DUIHK), in which more than 200 leaders and managers of German (and other foreign-based firms) were surveyed, the economy has improved compared to 2017. In fact, the assessment of the economic situation has never been so favorable since 2005 as it was last year.  

All respondents said they wish to expand further: both by increasing investments and recruiting more staff. The willingness to expand is the strongest since 2000-2001, the report says.

Similarly to previous years, it is mainly export-oriented companies in the manufacturing industry that show higher-than-average growth potential. The assessment of the business environment has slightly improved compared to last year. The evaluation of the national economy and policy framework and the business environment has improved as well. Even respondents’ dissatisfaction with labor market issues has decreased.

Overall, the assessment of the Hungarian economic situation has improved: in many questions, it has reached the regional average or has surpassed it. For example, due to tax cuts, taxation received a much more favorable rating than last year.  

Unresolved Issues

It is true that there are many issues that have remained unresolved: dissatisfaction about labor market potential, for one. More than two-thirds of the CEOs/managers of German firms here have been dissatisfied with labor market conditions and especially the availability of skilled workforce.

Fortunately, this has not thus far impacted significantly companies’ investment decisions. Siemens Group in Hungary has been expanding its activities consistently. Both the number of people employed and their overall level of responsibility have increased. Since 2010, when Dale A. Martin joined the Hungarian team as CEO of Siemens Zrt., the number of employees has practically doubled.

Siemens, which celebrated the 130th anniversary of its business activities in Hungary in 207, has also been expanding. Last year saw the foundation stone laying ceremony of a production hall at the power and gas unit of its Késmárk utca plant in Budapest. The approximately 10,000 sqm production hall, an investment of HUF 10 bln, is now operational, and ready to produce a new type of turbine blades, which will also entail an increase in staff.  

Thyssenkrupp, best known for its steering systems, has also expanded significantly. The company, which changed its name to thyssenkrupp Components Technology, boosted its staff in several locations: the number of employees has increased in Budapest, at the headquarters, and in Győr (in western Hungary) as well.  

The company has also increased the number of its manufacturing facilities. This March, a state-of-the-art HUF 30 billion plant was opened in Jászfényszaru (72 km east of Budapest), which will create 500 new workplaces. Another plant is under construction in Debrecen (231 km east of the capital): the HUF 11 bln factory will create 250 new jobs as of this summer.  

Another foundation stone was laid at the Hungarian site of the Mercedes-Benz plant in Kecskemét this June. The company is building the first full-flex plant of its global production. The EUR 1 bln investment project will also apply green production solutions, and will the conditions of flexible production regardless of the vehicle’s make, and drive. The company says it will create more than 2,500 new jobs through this investment.  

It was not only good figures (e.g. production rose by more than 4%) that made 2017 a milestone in the company’s history but also because the company launched investments serving the future generations of employees. (For more on the Mercedes-Benz investments in Hungary, see story opposite.)

Assembly Innovation

Innovation on the assembly lines is also in evidence at Audi Hungaria in Győr. The company has made further steps towards becoming a smart factory: following the pattern of the human-robot cooperation that exists at the production line of the four-cylinder Otto engines, further robot “colleagues” have been deployed. In the electric-engine production department, the company says it will implement a whole new production concept called modular production.

Audi Hungaria implemented investment projects with a total value of EUR 442 million in the 2017 business year, a 45% increase compared to 2016. The total cumulative volume of investment since the establishment of the company here comes to EUR 8,753 mln. Audi is one of Hungary’s most attractive employers: at the end of last year the company was employing 12,307 employees.

The general positive sentiment and the effects of improvements is reflected in companies’ commitment to stay here. According to the DUIHK survey, 84% of those asked said they would choose Hungary as an investment location again. This has been the highest value in the past two decades (during which time the figure has ranged between 71% and 84%).  

“Siemens has been present in the country for 130 years, showing significant commitment to Hungary,” Dale A. Martin, CEO of Siemens Zrt., tells the Budapest Business Journal.

“We intend to carry on this commitment into the future by contributing to the digitalization of the country and enhancing Hungary’s economic competitiveness. We invest in Hungary and create meaningful jobs. Our local R&D and production capacities qualify us for further expansion,” he adds.

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