Hungarian automotive industry: week 29

Let's look at what happened during week 29 in 2014.

Manufacturers

Audi Hungaria will switch to three-shift operation. Three shift operation will be introduced at the company in mid-August, the reason for the change is growing demand on premium models. With the increasing production volumes of the TT and the TTS Coupé, the Győr-based plant will reach its full capacity. Currently over 3,000 people work in the field of vehicle production at the factory.

"After the introduction of the third-generation Audi TT, the new car plant will reach its full capacity, said Gerd Walker, board of directors member responsible for vehicle production. Audi is celebrating the TDI technology's 25th birthday with a true luxury sportscar.

The Audi A7 Sportback 3.0 TDI's engine, manufactured in Győr, Hungary, boasts a performance of 326 bhp.

Mass production of small petrol engines has started at Opel’s Szentgotthárd plant. This will be the main product of the new Flex engine factory, completing the product range of a plant that cost EUR 700 million to put in place and that started production in early-2013.

Last week it was announced that Rába had won the HUF 2.5 billion Volán competition. The public tendering project issued by DAKK Zrt. for 32 new buses was won by Rába Automotive Components Manufacturing and Trading Ltd. as the sole tenderer.

Suppliers

Automotive supplier BOS Automotive Products Hungary is expanding its Mosonszolnok-based site with a HUF 5 billion project, creating 200 new jobs by 2017 as a result of an investment supported with HUF 1.4 billion by the Hungarian government.

Eagle Ottawa has also expanded its production site. U.S.-based automotive leather producer Eagle Ottawa has increased its Szolnok plant with an investment of HUF 2 billion. The company will double its existing staff of 600 by the end of the year.

Daimler AG has chosen Hankook tyres made in Rácalmás, Hungary, as original equipment for the new Mercedes-Benz C-Class. From its market launch, the new C-Class will be fitted with 17" Ventus S1 evo² tyres. The tyre's puncture resisting variant, developed in Hungary, will be used for the first time on the German premium car maker's market-leading model.

On July 15, BMW and VW-supplier Fémalk Zrt.'s new production hall was handed over at Dunavarsány Industrial Park. The multi-billion HUF development will be funded from the company's own resources and will increase the company's existing headcount by 10 percent. We interviewed Zsolt Szentes, the company's CEO.

A Vác-based metal processing plant has expanded its production site by 1,600 square metres. Vác-based Zollner Elektronik Kft. has spent over HUF 300 million (EUR 1 million) to expand its production unit in Szügy. Almost 50 percent of the investment was financed from EU funds.

Education

Last week we presented László Palkovics, the newly appointed Secretary of State for Higher Education, and interviewed him about his strategy regarding the educational reforms to come in Hungary.

Hundreds of engineers graduate in Győr. 425 engineers graduated this year at Győr-based Széchenyi István University's Faculty of Engineering Sciences, the largest Hungarian engineering faculty. 21 MSc students graduated in Vehicle Engineering.

The University of West Hungary has launched a HUF 750 million EU-funded project entitled Mechatronic Engineering Network Research and Training Collaboration in cooperation with Budapest Business School, the University of Pécs, the Zalaegerszeg Higher Educaton Public Fund and the Pannon Development Fund.

László Palkovics, State Secretary for Higher Education

Service providers

It was reported last week that Magyar Közút Nonprofit Zrt. will purchase new John Deere tractors by the end of the year with a HUF 2.7 billion (EUR 9 million) investment.

Economy

In view of economic developments of the first six months, the course of budget revenues and expenditures Hungary’s 2.9 percent of GDP deficit target is attainable in 2014, said Árpád Kovács, President of the Fiscal Council, last Thursday.

Last year, average total labour costs per employee increased by 6.3 percent to HUF 329,000. In the competitive sector (at companies with at least five employees), average earnings increased by 9.3 percent, while social costs increased by 8.8 percent. In 2013, average earnings amounted to HUF 240,000 HUF according to the Central Statistical Office, 11.1 percent higher than the average for the whole budget.

Economic relations between Hungary and Romania are balanced and have been dynamically improving, companies are showing interest in investment opportunities, Economy Minister Mihaly Varga said on Tuesday after official talks with his Romanian counterpart Constantin Nita. Varga also said that Hungary may be interested in becoming an owner in the Port of Constanta on the Black Sea coast of Romania, after a decision is made on its privatisation.

EU tendering

New EU tendering projects could be announced earlier than expected, already in late-summer or early-autumn. Balázs Rákossy, State Secretary for EU funds, said in an interview last week, that the new economic development projects are expected to be announced well before October.

At first, this will probably concern the Economic Development and Innovation Operative Programme (GINOP) first. These projects aim the development of micro companies and SMEs and the increase of employment.

Industrial production

In May 2014, industrial gross output grew by 9.6 percent compared to the same month of 2013. According to KSH data, industrial export sales rose by 11.2 percent in the first five months of 2013 and by 10.3% in May compared to the same period of the previous year.

Domestic sales of manufacturing were 2.2 percent higher year-on-year in May. Industrial export increased by 11.2 percent in the first five months this year and 10.3 percent in May compared to the same period in 2013.

kormany.hu, portfolio.hu and politics.hu contributed to this article.