Hungarian automotive industry: week eight

Let's look at what the eighth week this year brought in the Hungarian economy and automotive industry.

Suppliers

Rába outdid themselves in 2013: two-digit growth, HUF 4.5 bln decline in their net loan portfolio – after a successful year the company is expecting further growth in 2014. According to the company's plans for 2013, Rába´s consolidated, group level sales reached HUF 47.5 bln last year, registering a 12.1 percent increase from HUF 42.3 bln in 2012.

The token of the company's success was the outstanding performance and result of the Axle Business. Compared to the base period Rába Group doubled their total comprehensive income in 2013, amounting to HUF 2.69 bln.

Axle manufacturing at Rába

Kiskunmajsa-based Agrikon KAM will deliver 3,000 cabin frames every year to Zetor. The Hungarian company will start production on a newly installed production line, purchased with an investment of EUR 3 million. Agrikon KAM, a supplier to several global manufacturers, has increased their headcount by 15 people as a result of a new business with agricultural manufacturer Zetor.

NNG's management has been expanded by three new directors. The company is expecting the new leaders to improve NNG's position on the global automotive market and in Japan. Zoltán Kégli was appointed director of connected services, ex-Chrysler director Jim Robnett was appointed director of automotive relations, while Ikeda Heisuke now fulfils the position of Japanese automotive relations.

German-owned Tata-based body parts manufacturer Gedia closed a successful year, increasing their revenue by 20 percent in 2013. CEO József Fenyvesi told autopro.hu that the company will build a new, 5,000-square-metre production hall.

Epcos Kft. will carry out a HUF 10.5 bln investment, increasing the company's headcount in Szombathely by 220 in the next three years, it was announced during a ceremony at the company's Szombathely location.

Automotive parts manufacturer ZF Lenksysteme is creating 150 new jobs as a result of a new investment, which is the token of the German industrial capital's confidence in Hungary, said Minister of State Péter Szijjártó at the company's press conference in Eger, Hungary.

Minister of State Péter Szijjártó (left) at the ZF Lenksysteme Kft.'s project-closing ceremony

Manufacturers

Audi presented the first designs of the third-generation TT, to be manufactured at the Győr plant. The new model will debut at the Geneva Motor Show in March. The car will be produced completely at Audi Hungaria's new vehicle plant, which was opened in 2013. The production process at the plant will include the pressing and painting of body parts and assembly.

The Rocks, the latest variant of the Opel Adam will make its debut at the Geneval Motor Show, featuring a 115bhp 3-cylinder turbo engine manufactured at the Szentgotthárd plant.

The Kecskemét plant of Mercedes-Benz has launched a recruiting campaign. The company is looking for new employees for the fields of production and production supply, but they are also interested in graduates and students looking for an internship. Applicants are also welcome for positions in the press shop, body shop and assembly shop as well.

The new Ford Transit will debut in Europe in early-2014. Ford is promising low running costs and exceptional transport abilities for the new Transit. We had a go in the long, short and platform variants as well.

We were among the firsts to drive the new Ford Transit

Service providers

Logistics company Waberer's-Szemerey Logisztikai Kft. has created a hundred new jobs with a HUF 3 bln investment, finished last Thursday in Miskolc, Hungary.

Veszprém-based Locargo Kft. has expanded their logistics centre with an investment of over HUF 470 million. The company had received a HUF 188 million support from New Széchenyi Plan funds.

Human Relations

HR and the professional management view the processes of selection and hiring in two different ways. HR is often featured in various articles and professional materials, the opinions of managers, however, is seldom in the spotlight. In a series of articles we interview the upper and middle management members of automotive companies, who talk about the challenges of recruiting. First we focused on the field of business development.

R&D

We made an interview with new president of the Hungarian National Innovation Office at the press event of Horizon 2020 an EU-financed R&D&I framework programme. President Endre Spaller said: Hungary can only become successful if creative and smart people do not leave the country but realize their ideas in Hungary.

The automotive career model in the Győr region will be made into a formal organisation. We will soon report on the developments.

Spring is coming, which means that the season of automotive student competitions is close. We interviewed the chief organizer of ALTrace, one of the most notable initiatives in the field.

Alternative vehicles are also gaining ground in practice: the country's first full-electric midibus entered traffic last week in Debrecen. The Coulombra, an electric midibus developed by Inter Tan-ker Zrt. in the last 12 years, boasts a range of 300 kilometres with one charge.

Interest rates

On Friday morning, the forint strengthened against the most important foreign currencies. At 7am, the forint was 312 against the euro, reaching 311.12 by 10am and 310.39 by midday. The Hungarian currency fluctuated all week, slumping to a two-year low of 315 on Thursday. Besides the uneasy Ukrainian and international situation, the forint's weakness is also a result of the strengthening fiscal role of the National Bank of Hungary (NBH).

The new Audi TT, to be manufactured at the Győr Audi plant

The Monetary Council of the National Bank of Hungary lowered the key policy rate by 15 basis points to an all-time low of 2.7 percent on Tuesday. Those optimistic were expecting a cut of 5bps, while the realistic projection was a rate cut of 10bps. Thus NBH's decision went against the analysts' expectations. The base rate has been lowered to 2.7 percent. The forint has started to ease immediately after the release of the MPC decision, dropping from 308 to 310 against the euro.

Economy Minister Mihály Varga said he is not happy with the forint’s weakness and trusts it can regain some strength for this year’s budget was planned with a forint firmer than 300 against the euro. The majority of analysts and strategists polled by Portfolio.hu believe that the NBH will keep cutting rates, which might be ended by a worsening mood in the foreign markets or the sudden and lasting weakening of the forint. Rate cuts could stop at a rate of 2.5 percent.

In his regular Friday morning radio interview, PM Viktor Orbán also shared his views on the weakening forint. He said the problem is not the easing of the currency as Hungary's export is higher than its import. This means that there is a surplus in our external and current account.

Economy experts are not so optimistic. They believe that the next stage is a level of 317 to 320 against the euro, but we also have to prepare for a new historical low, a course of 324 against the euro.

Real wages

Parallel to the steadily subdued inflation – currently at 1.7 percent – wages increased in real terms by 3.1 percent last year, excluding the effect of family tax allowances, said the Ministry for National Economy (NGM) on Friday after the publication of a flash report by the Hungarian Central Statistical Office (KSH). According to the flash report of the KSH, in January-December 2013 average gross and net wages increased by 3.4 percent and 4.9 percent, respectively, in comparison to data compiled one year ago.

In January-December 2013, the average gross wage of full-time employees was HUF 230 700. January–December, average gross earnings grew by 3.6 percent in the business sector. Private and public sector employees (excluding public work employees) earned on average HUF 242 200 and HUF 227 800, respectively. In January–December, average net earnings excluding family tax benefits were HUF 151,100 by national concept; they were equal to HUF 104,400 in case of manual and HUF 201,300 in case of non-manual workers.

Deficit

Hungary’s National Economy Ministry confirmed the HUF 75.4 bn preliminary deficit for the first month, which corresponds to 7.7 percent of the full-year target.

Export

Hungary's export amounts to 95 percent of the national GDP, which puts us to first position in Central Eastern Europe along with Slovakia. Hungarian enterprises received support from the EU to a value of HUF 1,200 bln in 2012 and HUF 1,500 bln in 2013, while this year the sum could amount to HUF 2,000 bln. Within the framework of its new loan scheme (EHP), in 2013 and 2014, HUF 500 bln will be available for Hungarian companies engaged in export and import, announced the Hungarian Export-Import Bank (Eximbank).

This year, Eximbank is planning to grant HUF 280 to 300 bln in credits, two third of which would be available for SMEs. Export is also encouraged by the emergence of trade houses and as a result, the product export of domestic SMEs could grow by HUF 100 bln in Eastern countries thanks to new businesses obtained by the Hungarian National Trade House Plc (MNKH). Based on MNKH's current negotiations, domestic companies engaged in engineering and IT activities could receive orders amounting to a similar value through investments planned in Asia.

Investments

The investor confidence index of domestic companies has further decreased. Currently 58 percent of company CEOs are planning to carry out investments of some kind. This shows a crack in investor confidence, growing steadily for over a year now. IT developments are still among the top objectives, reported K&H in their latest SME Confidence Index.

The majority of company CEOs are preparing for IT developments (30 percent), and the same ratio of companies is planning to invest in the development of machinery and production equipment as last year (23 percent). The worsening situation of companies was confirmed by a report by the Bisnode group, which said that in 2013, 13.9 percent fewer companies were established in Hungary than the year before.

While in 2008, almost 50,000 new companies were founded in Hungary, in 2013 their number stayed below 35,000. While the number of newly established companies grew from 2010 to 2011, a significant decrease was reported in the previous two years. The decline amounted to 20 percent in 2012 and 13.9 percent in 2013.

Portfolio.hu and the Central Statistical Office contributed to this article