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BMW to build giant plant in Debrecen

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German car maker BMW is preparing to build a more than EUR 1 billion plant in Debrecen, eastern Hungary, Minister of Foreign Affairs and Trade Péter Szijjártó announced on Tuesday. The plant will have capacity to turn out 150,000 conventional and electric vehicles a year, employing more than 1,000 once production starts.

BMW will assume ownership of the 400-hectare plot on which the plant will be built in the second half of the year, with hiring to start in 2019, Szijjártó was cited as saying by state news agency MTI. BMW picked Debrecen over a number of other cities in Europe after talks that lasted 14 months, he added.

Hungary can boast low taxes, flexible labor regulations, a system of vocational training with an emphasis on apprenticeships, and high-quality instruction in engineering and IT, the minister noted.

In a press release, BMW described Debrecen as "the ideal place" for the group to expand its production network, citing good infrastructure, suitable logistics connections, proximity to an established supplier network, and a qualified local labor pool.

BMW said it enjoys "long-standing, positive relations" with suppliers in Hungary, noting that it purchased materials and services worth EUR 1.4 bln in the country last year.

"The plant in Debrecen will set new standards in digitalization, sustainability and flexibility. In addition, it will be a technology leader, with innovative solutions for automation, state-of-the-art assistance systems and flexible logistics applications," BMW said.

Szijjártó declared that economic cooperation between Hungary and Germany is now beyond question, given that some 6,000 German companies are active in the country, providing jobs for almost 300,000 Hungarians, according to online news portal index.hu.

Debrecen Mayor László Papp observed that BMWʼs decision to choose the city is a vindication of its economic development strategy. He added that the investment will nevertheless necessitate a rethink of the concept for Debrecenʼs future, with a particular focus on educational development tasks.

Index.hu observes that the new plant will further intensify Hungaryʼs reliance on automotive manufacturing, already the most important branch of industry in Hungary, adding that the sector is set to account for more than a 27% share of industrial output in 2018.

The report notes that last year a total of 472,000 cars were assembled at the Mercedes plant in Kecskemét, the Audi factory in Győr, Suzukiʼs plant in Esztergom and the Opel factory in Szentgotthárd– together representing some 2.8% of the 19 million cars manufactured in the EU in 2017.  

Index.hu notes that the details of the investment are not yet known, such as the conditions and benefits which BMW has been offered by the government to set up shop in Hungary. It speculates, however, that in light of similar investments so far, the German firm can expect to receive major tax breaks and subsidies.

Hungary spends generously on support for such major investments compared to the EU average, index.hu notes. German companies receive by far the greatest amount of such subsidies, it adds, estimating that some 27% of support granted to multinationals since 2010 has landed with German companies. 

BMW currently has 30 production units in 14 countries, 16 of them in Europe, including five in Germany and three in the U.K., notes index.hu. Outside of Europe, it has two plants in the U.S., two in Latin America, and three in Asia. 

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