Hungarian automotive industry: week 18

There has been a change in the top management of both Mercedes-Benz's and Suzuki's Hungarian plant, the Government's Convergence Programme was presented, Kecskemét Mercedes plant introduced the third shift, the 2,200th employee was welcomed at LuK Savaria, Fraikin came to Hungary, the monetary council decided on yet another rate hike, GTE elected a new presidency and VW head Martin Winterkorn gave a talk at the Budapest University of Technology and Economics. Let's look at what happened in week 18 this year.

Manufacturers

The third shift was launched at Mercedes-Benz Kecskemét on May 5, said Mercedes-Benz Manufacturing HR Director László Ács.

Thanks to an increased demand for their cars, starting in May 2014, the Mercedes-Benz Kecskemét plant will manufacture the B-Class and the CLA 24 hours a day, in three shifts. Effective from May 1, Thomas Geier replaced Frank Klein as Plant Director.

Ryoichi Oura will replace Hisashi Takeuchi as company CEO at Esztergom-based Magyar Suzuki. Takeuchi has been promoted to the position of director of product design at parent Suzuki Motor Corporation (SMC).

Audi Hungaria did not only celebrate ETO KC handball team's win in the Champions League final. The company announced that full capacity will be reached this year at the company's Győr-based plant.

Audi Hungaria spokesperson Mónika Czechmeister told Hungarian daily Kisalföld that it is certain that fully capacity will now be reached and 120,000 cars will be produced every year.

Service providers

Fleet manager Fraikin entered the Hungarian market. The French firm, with an annual income of EUR 700 million. is present in ten countries in Europe, managing 62,000 commercial vehicles to the value of EUR 2 billion.

At the 45th annual general assembly of Scientific Society of Mechanical Engineering (GTE) the participants discussed the practical use of research findings. István Szammer, founder and CEO of autopro.hu, was elected as member of the Society's presidency.

Suppliers

LuK Savaria hired their 2,100th employee at the end of January and the company plans to increase the number of the Szombathely-based plant's headcount to 2,500 by late-2015. Kata Szabó, the 2,200th employee at LuK Savaria, will start work in the field of heat treatment and is planning a long career at the company. She was welcomed by the company in a small celebration on April 28.

Szabolcs Szőke (right), director of pressing and heat treatment, welcomes Kata Szabó (left) at LuK Savaria

Videoton group finished 27th in American-based Manufacturing Market Insider's latest rankings based on turnover results of electronics manufacturing service providers, reported the company.

We paid a visit to electronics parts and connectors manufacturer and developer IMS Connector Systems Kft.'s Sopron-based location, where CEO Gábor Takács showed us the activity of the company, led by its employees' creativity.

Education

Martin Winterkorn, President of the Audi AG's board of directors, has given a presentation at Budapest University of Technology and Economics (BME) for the tenth time. Professor Winterkorn pointed out that future developments also require the know-how of Hungarian students.

Professor Martin Winterkorn at BME

His presentation was entitled "Connected on the Road – Connected Car, the Defining Direction of Development". Autopro.hu also took part in the event, interviewing students following Professor Winterkorn's talk.

It was announced last week that the first graduates of Hungary's dual education system will be offered positions at Mercedes-Benz in June. The programme's graduates will be offered positions in the assembly shop, the body shop and the paint shop – the very sites where they obtained practical know-how during their training.

A well-trained workforce is fundamental for a successful company. What is an aluminium foundry to do, however, if the professional training necessary in this field is unavailable in Hungary? It seems Győr-based Nemak have found the answer.

Students at Mercedes-Benz Manufacturing Hungary

HR and labour law

Our labour law expert summarised the most important changes regarding work schedule and working hours. In the latest part of our series Anikó Pethő interviewed Zoltán Kabács, who as a former employer and employee is familiar with the strengths and weaknesses of the labour market.

Rate hike

The Hungarian central bank has left its rate policy options open, including the possibility of further interest rate cuts, on the condition that external risks subside, Pleschinger Gyula, one of Hungary's rate setters, told The Wall Street Journal last week. Most economists had expected the central bank to end the easing cycle when the main rate hit 2.5 percent.

"One thing is clear: where the forint is now is no great tragedy for the economy," Pleschinger said. The central bank has no exchange rate target and the economy ministry has said that it doesn't have either, he added.

The National Bank of Hungary (NBH) cut its main rate by 0.10 percentage points to 2.5 percent last Tuesday, in line with expectations, for the 21st time in as many months. NBH began the rate hikes in August 2012, when the central bank's interest rate was at 7 percent.

Convergence Programme

According to Hungary’s Convergence Programme which is to be submitted to the European Union, the Government of Hungary is expecting economic growth of 3 percent and fiscal deficit of 1.9 percent by 2017. The document was presented on April 30 by Mihály Varga, the Minister for National Economy at a press conference in Budapest.

In light of the Converge Programme, the government debt-to-GDP ratio will drop to 75.2 percent by the end of 2017. The prognosis predicts that the unemployment rate will decline to 8.2 percent, consumption growth will average 2 percent per year and the inflation rate will be 2.9 percent next year and 3 percent in 2016 and 2017.

The Government is forecasting that the government sector fiscal deficit will fall to 1.9 percent of GDP by the end of 2017, after declining to 2.9 percent this year, 2.8 percent in 2015 and 2.5 percent in 2016. The Convergence Programme was calculated at a forint-euro exchange rate of 307.9.

Economic growth

According to GKI Economic Research Co., positive growth and inflation data at the beginning of the year are largely due to temporary factors. However, in 2014 the economy may be somewhat more dynamic, and inflation may be lower than previously expected by GKI.

The upswing of the European business cycle has a favourable impact on Hungarian exports. In the first two months of 2014 most sectors were able to increase their output, though in most cases compared to a very low base. Industrial production increased by 7 percent (exports by more than 10 percent). The automobile industry continued to soar (+27 percent).

In order to keep interest rates low, the Monetary Council is ready to tolerate the weakening of the forint. Within the scope of the National Bank of Hungary's Funding for Growth Scheme, credit banks have concluded loan contracts to the value of HUF 126 billion. 98 percent of these deals are new contracts.

Workplace injuries

Last year, the number of workplace injuries increased in Hungary: in total, 17,222 employees were injured, up 1.2 percent from the 17,025 cases registered the year before. According to the statistics, 53 occupational fatalities were registered in 2013 in Hungary, down from the 57 registered in the previous year.

Most cases (3,106) were registered in Budapest, and most fatalities (9) were recorded in Pest county. 6 fatalities were recorded in Budapest, Fejér county and Hajdú-Bihar county.

The statistics show that most workplace accidents were registered in the machine industry (3,317 cases) and the majority of victims were men. Next in line was the processing industry with 2,944 cases, followed by the sector of logistics, warehousing, post and telecommunications with 2,207 accidents. Men were also the primary victims in these sectors.

According to the statistics, most accidents were recorded at companies with 50 to 250 employees and 10 to 50 employees.