40 years ago, Hungary was not even a spot on the map for the manufacturing community because of their lack of resources and small economy. However today, Hungary is a key trading partner for Germany, France, Italy, Austria, Romania, Slovakia, Poland and the Czech Republic. Each year more companies choose to expand to Hungary strategically. Multi-million dollars, multi-national enterprises like Knorr-Bremse, Thyssen-Krupp, Suzuki, Bosch, and Mercedes-Benz all have a strong presence. What is causing this manufacturing explosion? A centralized location, low production costs, skilled workers and most importantly, political incentives for large firms.
The primary contributor to this Hungarian manufacturing boom is the government incentive for foreign investment. Refundable and non-refundable incentives are available to investors with great potential to create jobs, level wealth inequality, and drive innovation through research. The Hungarian government provides support opportunities for investments greater than EUR 10 million. These incentives include cash subsidies, tax incentives, low-interest loans, and land for free and reduced prices. Such offerings are hard to refuse for multi-national companies looking for a centralized location in Europe.
The Hungarian workforce is known for being well-educated, highly skilled, and hardworking. They tend to work long hours and take fewer vacation days than other European workers. In addition, about two-thirds of the labor force has completed a secondary, vocational, or technical degree. In particular, Hungary produces great talent in IT, engineering, mathematics, economics, and physics—the fields that fuel technology and innovation. Lastly, nearly 90 percent of graduating students speak fluent English, which makes for easier acquisition and transition.
State of the Art Electronics
Electronics manufacturing and research is another key driver of innovation and economic growth. As the largest producer of electronics in Central and Eastern Europe, Hungary is a leader in information security, mobile technology, and related research. This sector employs around 112,000 people and produces 26% of the region’s electronics. It is home to six of the top ten electronic manufacturing services including Foxconn, Sanmina, Zollner, Flextronics, Jabil, and Videoton. Their power in electronic manufacturing is a partial contributor to the growing economy.
Automotive manufacturing is a core industry which generates nearly 21% of all Hungarian exports and employs more than 100,000 people. Stakeholders include Mercedes-Benz, Audi, Suzuki, Opel, and Daimler. Győr is even home to the second biggest engine factory in the world. The automotive sector is so fortified that a few smaller, local automotive companies have emerged and become stable among the giants. With a strong presence in auto-production, many educational institutions have partnered with the auto sector to establish research and development.
Having all the components to drive manufacturing—investment, location research, and ideal workers—Hungary’s efforts are both massive and intensive and thus far have shown great results in just a couple of decades. (Although still far behind the top global manufacturers like the United States, China, Japan, and Germany.) They’ve overcome their lop-sided economy and lack of resources, and will likely soon be competing in the big leagues as more and more corporations secure their plants in central Europe.
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