After 30 years in Hungary, Suzuki still looking ahead with optimism
Magyar Suzuki has been one of the most influential investors in Hungary since it made the first significant (HUF 16.3 billion) greenfield investment in Esztergom 30 years ago. In this exclusive first interview since he took on the CEO’s role at Magyar Suzuki, Masato Atsumi talks with the Budapest Business Journal about how COVID has impacted production this year, workforce issues in a tight labor market, the future of automotive and his hopes for 2022.
BBJ: How has Magyar Suzuki performed in 2021?
Masato Atsumi: In the first 10 months of the year, Suzuki has had the leading share (14,83%) in the domestic passenger car market; we registered 15,376 autos. Of these 7,461 were Vitaras and 5,274 S-Crosses, and we are market leaders in both segments. We are optimistic about the end of the year as well. Dealerships had to be closed during the lockdown, which accounts for last year’s performance. As of this spring, though, car saloons have been open, which accounts for the rebound in sales.
We are still feeling the effects of the semiconductor shortage. The heightened customer demand stands in contrast with limited manufacturing capacities, which has led to our stocks plummeting. We expect sales figures to decline by the end of the year as a result. Due to the problems caused by the international chip shortage, we will produce 25% fewer vehicles than the 143,000 originally planned in Esztergom this year.
BBJ: When do you expect manufacturing and sales to return to pre-COVID levels?
MA: That primarily depends on the semiconductor supply. Once we have enough, we can resume manufacturing in almost no time. Together with our suppliers, we are closely watching the market, but we cannot see anything with certainty at this point.
BBJ: Will you increase prices to counter supply chain issues?
MA: The disruption in supply definitely impacts our costs. We are trying to introduce a number of cost-cutting measures; however, as a result of the global repercussions, our prices won’t remain unaffected.
BBJ: What consequence of the pandemic did the company feel the most?
MA: The fact that we had to halt production. With that, we put our workers’ health on top of everything and ensured that they were paid during the entire time.
BBJ: So there were no lay-offs during the pandemic.
MA: None of Magyar Suzuki’s own employees were laid-off. One of the most import lessons we learned during the pandemic is how resilient we have to be to respond to these changes. For example, when the Hungarian government allowed companies to set up their own vaccination points, we managed to launch a station in less than a week, thanks in large measure to our HR department. I was very satisfied to see how swiftly our team responded to such an unprecedented event. I am very proud of our company’s preparedness and the timely response we gave to, for example, delays in shipments and the shortage in semiconductor supply.
What we will undoubtedly keep from these extraordinary steps is mask-wearing and other health and hygiene measures. Regarding practices affecting our operations, we will stock larger supplies in the future should any shortage occur.
BBJ: How has Magyar Suzuki been able to maintain its market-leading position for many years, even during the pandemic?
MA: The underlying trend in the automotive industry is going green. Both in Hungary and Europe, we see a huge uptick in the volume of hybrid car sales. Customers in general are looking for products that are sustainable and affordable; I believe this is the reason they choose our cars.
BBJ: How has the domestic labor shortage affected Suzuki’s operations?
MA: When the restrictions imposed due to the coronavirus were eased, we were able to hire workforce in larger numbers. However, within a few months, we were faced with the same problems we had before the outbreak. The hiring process used to take place on-site, in person, but we have shifted to the digital space since. This is because those looking for a job also do so online, so we have to be there as well. We are also digitalizing our HR processes.
BBJ: Are you short of (skilled) workers?
MA: Looking at a longer term, the number we have hired in the past five years will not be sufficient. To attract more people, we offer a competitive salary and remuneration package. We have also been involved in training, as most of the tasks our future employees will deal with cannot be taught in school. We have created several training locations at Magyar Suzuki. This spring, we ran research and development and innovation training for our middle managers and engineers involved in the company’s R&D&I processes.
We plan to use more and more collaborative robots in our Esztergom plant, which allow machine and man to work together smoothly. The introduction of these robots in our processes has been ongoing. Unlike their predecessors, modern robots are capable of carrying out tasks with great precision while being very safe. For example, when they come in contact with a human, they will stop. We cannot robotize everything, though, so we have to make constant efforts to improve the number of people we hire and train.
BBJ: In what other innovations have you invested?
MA: Magyar Suzuki has been leading a five-year R&D project implemented in a consortium ending soon where we have introduced innovations in parts supply and other technology solutions. This program has received HUF 2,584 billion funding within GINOP 2.2.1-15-2016-00015.
Magyar Suzuki has been present in Hungary for 30 years. During this time, employees have given their development and optimization proposals as part of the practice of Kaisen (a Japanese business philosophy that aims to improve operations and processes continuously with the involvement of all employees). In the last 12 years, our employees have saved a total of HUF 3 bln for Magyar Suzuki Corporation. Our overall aim with all innovation is to meet customer demands and maintain our competitive edge.
Magyar Suzuki wishes to play a role in electrification. Shortly, we will receive the related guidelines from our parent company. We have also started a program to become carbon neutral. In late November, we presented the new hybrid S-Cross manufactured in the Esztergom plant. Furthermore, Magyar Suzuki is expanding its “strong hybrid” lineup. Our new strong hybrid system will be available next year, first in the Vitara, followed by the all-new S-Cross, and both models produced in Hungary.
BBJ: How do you see the future of urban mobility?
MA: Today, even if you can afford to buy a car, you will hardly use it. The time people actually spend driving is marginal; cars are parked for the majority of the time. Manufacturing cars that end up sitting idle is not sustainable; I believe car sharing could be an answer for that. Once autonomous driving is available, although it is a long time until we get there, our approach to mobility will shift: people will not necessarily want to own a vehicle; they would rather use it. In this scenario, the life span of cars will significantly decrease, and they will need to be replaced sooner. These are considerations we will take into account when planning the future.
BBJ: What plans does Magyar Suzuki have for 2022?
MA: Electrification is around the corner - we need to become a company that is capable of manufacturing electric cars. The decision that Suzuki will produce electric vehicles has already been made: Suzuki plans to significantly increase the share of electrically driven models in its product range globally from 2030 onwards. At the same time, the Suzuki Group would like to achieve carbon neutrality by 2050 in all its factory units and for all its self-manufactured products worldwide. The question is how big a role will Magyar Suzuki have in this process. We want to have a major share in planning, development and manufacturing. We’ll also continue to produce hybrid engines and install them in our new models.
BBJ: Does that mean that we will see a fully-electric car produced in Hungary next year?
MA: It is not ruled out. Back to our plans for 2022, we would like to reduce our CO2 emissions by, for example, building a photovoltaic power plant or trying to cut back on the gas consumption used at different phases of production. In the above fields, regarding the CO2 emissions, in particular, targets have already been set for 2030 and 2050.
In the car industry, it is crucial that players meet customers’ expectations, but they also have to adhere to international legislation and standards. Meeting both these goals involves massive costs. Therefore at Magyar Suzuki, we need to reform our sales concept. So far, car sales has been at the center, but there are other options such as leasing or subscription to which we will give more attention in the future. Of course, dealerships will feel the effects of the transition; this is why we wish to involve them in creating the concept.
We wish to keep our market-leading position in Hungary. To do that, we have to be aware of what our customers want. We also have to communicate it to our parent company, so it is also aware of the needs of the European markets. In this way we can offer our customers climate-friendly and fairly affordable cars and also contribute to the climate goals and competitiveness of the Hungarian economy.
BBJ: What are Suzuki’s core principles?
MA: The Suzuki Group has the motto “Develop products of superior value by focusing on the customer” in the first paragraph of its mission statement. To achieve that, we are assisted by our employees. This may be the most essential feature of the company, that this principle is always at the back of our minds. Yaruki, the Japanese word for motivation, is literally hung on the walls at several points of the plant/office. This has been a driver of the company in the past 100 years and this has been my motto: Always look ahead with optimism.
That is not to say that I am not concerned by the fact that production is currently reduced to one shift. But the above approach will continue to help us stay strong and move ahead. With that, I, too, take a break sometimes and relax with a glass of wine on a Saturday afternoon.
BBJ: You have been with Suzuki for more than 30 years. Did you have to take a different approach as a leader at any point to adjust to the changes that have taken place over that period?
MA: Many of my peers in Japan have been working for the same company they started at after graduation. So rather than adjusting to the changes, I have been shaped by the company at which I was raised. I may or may not have changed throughout this time; my communication with my colleagues may have been different, and I have definitely grown older, but I don’t feel I have changed, really.
BBJ: How does it feel to work and live in a European country?
MA: I never had a hard time getting used to living in Europe; the logical thinking and open communication we have in Japan is also a characteristic of European people. The food may be a different story, though. In Hungary, everyone is very friendly and fair, but their real personality may surface when they drive. But in a laid-back environment such as a restaurant or a café, they all seem nice and relaxed.
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