German clothing company Mustang GmbH will shut down its plant in Hungary at the end of March because of increased production costs, business daily Napi Gazdaság reported on Tuesday.
All 400 of the plant's employees will be laid off, Birgid Rose, who heads the company's Hungarian unit, Mustang Marcali Zrt, told the paper. Mustang decided already in 2005 to shut down production in Western Europe, Russia and Poland, and to rely on production in Asia as well as on subcontractors. The company also decided to expand its sales network in Europe and the Middle East through franchises.
Mustang set up its plant in Hungary in 1992 and invested Ft 1 billion at the facility between 1995 and 1998. The unit had revenue of Ft 2.6 billion in 2006, up from Ft 2.45 billion in 2005 and Ft 2.3 billion in 2004. In spite of the increasing revenue, the unit's margin narrowed as costs increased.