BBJ: Historically, how important has the United States been as an FDI source for Hungary? What is its share of the FDI stock, how many jobs have been created, and what is the total value of investments?

Hipa: The economic relations between Hungary and the United States go back decades. In the 1990s, America was the second-largest investor after Germany. U.S. companies also played a decisive role in the transformation of Hungary’s economy after the change in the political system.

American companies make up the fourth largest investor community in Hungary; the foreign direct investments from the United States amounted to nearly USD 9.4 billion in 2022, based on the data of the National Bank of Hungary (MNB), representing 8.8% of the total FDI stock.

BBJ: And what is the trend with these figures today?

Hipa: More than 1,200 American companies are in the country, employing nearly 90,000 people. In the period between 2014 and 2023, with the support of Hipa, positive decisions were made in a total of 133 cases regarding projects involving companies from the United States (including the VNT subsidy to improve competitiveness and “Factory Rescue” programs), which represents a total volume of nearly HUF 700 bln. The government has provided more than HUF 76 bln in support.

In terms of projects, American investors have been among the top three nearly every year, and they have done exceptionally well in job creation from time to time.

An excellent example of the close economic relations between the two countries is that Coca-Cola was the first company with which the Hungarian government entered into a strategic partnership in 2012. As of today, 14 such U.S.-related agreements are in force. Moreover, Coca-Cola was the first company with which we renewed our strategic cooperation agreement.

BBJ: Where does the United States stand in the league table of FDI sources? Is the level of investment growing today?

Hipa: The United States forms the fourth-largest investor community in Hungary, accounting for 9% of the total FDI stock. During all this time, the United States has been one of our most reliable Western partners on the FDI front.

BBJ: What have been the traditional sectors favored by U.S. investors over the years and how has that changed?

Hipa: The main sectors of interest to U.S. companies are the business services sector (BSC), the automotive industry, and the ICT sector. These three fields cover almost 75% of all jobs created by U.S. investment in Hungary, managed by Hipa since 2014. Over the last few years, ICT/IT has gained in importance while the BSC share has decreased.

BBJ: Hipa has a close professional relationship with the American Chamber of Commerce in Hungary. How would you characterize this? How helpful are the contributions of AmCham?

Hipa: AmCham Hungary is one of the country’s most influential and reliable business organizations and has represented local and international business interests since 1989, celebrating its 35th anniversary this year. One of the most important American chambers in the region, it has more than 300 companies.

The work carried out jointly with the American Chamber of Commerce has dramatically increased the Hungarian economy’s efficiency and productivity in recent years.

In association with AmCham Hungary, Hipa organizes flagship events such as the Business Meets Government Summit and the Business Services Hungary Conference every year.

Since 2016, the background materials created by the professional working groups operating within the chamber and the proposal packages formulated by it every year and delivered to the government are regarded as a kind of compass.

Hipa welcomes the chamber’s latest strategic comments, and we will do our best to ensure that as many of these recommendations as possible are effectively implemented, particularly those aimed at improving the business environment.

This valuable work has enabled constructive dialogue between commerce and decision-makers in recent years, essential for improving the economy’s long-term performance at various levels.

BBJ: Does the balance of trade favor Hungary or America?

Hipa: Trade between the two countries has undergone significant development since the change of government in 2010. After 2022, a new record was set in the growth of bilateral trade turnover, with a 17% increase. That was promptly broken again in 2023, which saw another 9.3% increase. America is our 11th biggest trade partner.

BBJ: Are there any specific target areas where you would welcome U.S. investment but don’t currently have?

Hipa: Our new investment promotion strategy is taking shape as our objective is to bring less energy- and labor-intensive projects to Hungary and rather focus on investments that rely on highly skilled people. In the longer run, the idea is to primarily secure deals that help the economy move up the global value chain so that the local talent pool stays in the country and productivity surges.

Hungary has been highly successful in developing industries related to e-mobility. By now, the EV battery ecosystem is mostly complete, with large cell manufacturers and their leading suppliers already present in the country. The focus of investment promotion is shifting; we aim only to attract the missing pieces and other future-proof industries not yet established in Hungary, such as biotech and medtech.

BBJ: What are some of the most recent U.S. investments?

Hipa: Perhaps to mention some specific recent success stories. Most recently, in May, Flex, which has already been in the Hungarian market for more than three decades, announced investments at two sites in Zalaegerszeg. It will begin manufacturing high-tech electric and hybrid vehicle components for global OEMs such as BMW, Ford, and Volkswagen, as well as Tier 1 suppliers. The EUR 90 million investment will create 210 new jobs and further strengthen the company’s and Zalaegerszeg’s prominent position in the automotive industry on a national and European scale.

In December 2023, Coca-Cola celebrated yet another milestone on the way to turning its plant in Dunaharaszti into the largest manufacturing hub of the region. It inaugurated a state-of-the-art PET bottle production line and a new production hall worth a combined HUF 8.7 bln. Coca-Cola has invested more than HUF 135 bln since establishing its Hungarian subsidiary 27 years ago. The company is now in the middle of its plan to effect investments totaling HUF 30 bln through to 2025.

Also in December, Howmet-Köfém Kft. said it would invest EUR 44.9 mln to implement a substantial extension of its wheel plant in Székesfehérvár. The project to be completed by early 2025 will create 80 new jobs. Headquartered in Pittsburgh, Howmet Aerospace is a global leader in delivering state-of-the-art engineering solutions for aviation and transport. The company has been in Hungary since 1991 and has now broken ground on a wheel plant extension at its Székesfehérvár site. This latest development will significantly expand the company’s European capacity to produce forged aluminum wheels.

And finally, again from December, BorgWarner announced a EUR 59.6 mln investment that will take its Hungarian operation to the next level in Oroszlány. The U.S. automotive supplier will add new products to its portfolio to serve demand from the hybrid and electric drivetrain segment, creating 60 new jobs.

This article was first published in the Budapest Business Journal print issue of June 28, 2024.