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Automotive Industry Still Driving Hungary Forward

If you ever harbored any doubts about the importance of the automotive sector to Hungary’s economy, this issue of the Budapest Business Journal, with a special report dedicated to the subject, should put those to bed.

As Robert Ésik, the president of the Hungarian Investment Promotion Agency, says in our interview with him on page 12, automotive is the “flagship of the Hungarian economy”, with “most investments” in 2017 coming from that field.  

To put that into more precise figures, automotive was responsible for 36 HIPA-assisted projects last year, creating 6,727 new jobs and worth a combined EUR 1.548 million. Most of Hungary’s vehicle manufacturing is still dedicated to autos, but buses are increasingly important, as are component specialists such as the Asian electric vehicle battery manufacturers that have recently been building factories here.

There were concerns a few years back that Hungary was putting too many of its eggs in the automotive basket. The danger of being overly reliant on one sector is obvious, and neighboring Czech Republic, for one, clearly suffered when the people stopped buying cars for a while in response to the last financial crisis.

There are signs the successive Fidesz governments have been alert to the danger. They have talked of the need for Hungary’s economy to “stand on more than one leg”, to use that particularly Hungarian phrase. Even so, when the automakers cut back on production each August during the holiday month, or is response to a flatter market, or winds down production of an older model ahead of introducing a newer one, the damage is clear to all in poorer productivity and export numbers. And there is a possibility yet another German automaker may choose to set up a base here.  

BMW has openly admitted it is looking at options, and there is a mayor in the village of Hernádnémedi (192 km northeast of Budapest, and just 14 km east of Miskolc) who is saying nothing, despite the fact an investment in the area has been declared a national priority. That has been enough for some people, not least the good burghers of Hernádnémedi, to make a connection.  

But I would inject a note of caution: there have been rumors about BMW joining the likes of Audi and Mercedes here before that have come to naught. In any case, the country does already have a piece of the BMW pie. A previous CEO of BMW, Baudouin Denis, once told the BBJ CEO of the Year Gala that he boasted to Prime Minister Viktor Orbán there was an “invisible” factory here. He was referring to the Hungarian component suppliers of BMW that now number at least 50, according to specialist website  

Perhaps a more pertinent question would be where BMW might find its workforce. As reported elsewhere in this issue, engineers of almost all specializations are now a much sought after commodity. Still, others seem more sanguine: Csaba Kilián, general secretary of the Association of the Hungarian Automotive Industry (MAGE) said BMW would have no problem finding qualified workforce, as the reputation of the company would attract people from all over the country. Perhaps so, but Hungarians are not a famously mobile workforce, and when they do opt to move for work, it tends to be abroad.

Robin Marshall