HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU
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BUSINESS JOURNAL BUDAPEST
VOL. 26. NUMBER 10
MAY 18 – MAY 31, 2018
SPECIAL REPORT
Automotive SPECIAL REPORT
Diversified Automotive Backbone Still Hungary’s Flagship
The automotive industry continues to be the backbone of the Hungarian economy, but has become more diversified through “thriving new industries” says Róbert Ésik, president of the Hungarian Investment Promotion Agency. 12
SPECIAL REPORT
Technology Driving Auto Recruitment Trends Advances in automotive technology are no longer just a matter of science; they are increasingly becoming one of labor. 16
SOCIALITE
Budapest: A River Runs Through It David Holzer finds himself musing on the endlessly moving Danube as it flows through Budapest, and what that means for the city and its inhabitants. 21
Start Your (Electric) Engine NEWS
Low Industrial Supply Limits Market Growth
A low industrial pipeline and lack of available space is limiting industrial growth: Estimates suggest 73% of demand in Q1 consisted of renewals, with 96% of the 2018 pipeline prelet. 4
BUSINESS
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LR EC I A
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Audi’s head of external communications Mónika Czechmeister says the automaker is looking to both electric engines and SUVs in securing its Hungarian market position.10
MTÜʼs ‘Spice of Europe’ Campaign The Hungarian Tourism Agency (MTÜ) has launched an HUF 1.3 bln international marketing campaign to promote Hungary’s capital city as a high-end tourist destination. 9
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THE EDITOR SAYS
EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Bridget Daley, Kester
Eddy, David Holzer, Christian Keszthelyi, Gary J. Morrell, Rob Smyth, Zsófia Végh, Ágnes Vinkovits. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:
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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 BBJ-PARTNERS
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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 autopro.hu. 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 Editor-in-chief
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Budapest Business Journal | May 18 – May 31, 2018
News
///macroscope
The Hungarian government has sent its updated Convergence Program to the European Commission. The document contains aspiring numbers regarding the economy’s growth potential for the coming years. First quarter GDP data seems to justify such ambitious plans, at least in the short-term. ZSÓFIA CZIFRA
The expansion of the Hungarian economy continued through the first quarter of 2018, giving ground for those projecting a 4% or even higher growth rate for the full year. As seasonally and calendar-adjusted Q1 GDP data – released by the Central Statistical Office (KSH) on May 14 – shows, GDP grew
by
4.7%
on a year-on-year basis, with unadjusted data showing a growth of 4.4%. Hungary’s economic growth is robust and stable, the government said in a statement reacting to the KSH release. The data confirms the strong growth potential of the Hungarian economy, the note cites incoming Minister of Finance (his old title of Minister for National
MTI Photo: Zsolt Szigetváry
Q1 Growth Justifies Goverment’s Ambitious Targets Nonetheless, the latest GDP figures do seem to be giving ground for the ambitious growth expectations of the government. The country’s fresh Convergence Program, sent to the European Commission at the beginning of May, states that Hungary’s GDP growth will stay at around 4% in the coming years.
New Projections
The program puts GDP growth at 4.1% in 2019, 4% in 2020, 4.2% in 2021, and 4.1% in 2022. The projections for 2019-2021 are between 0.3 and 0.6 of a percentage point above those featured in the previous year’s convergence program. The program also relies on strong – albeit slightly declining –household consumption, forecasting a massive
4.8% growth
Mihály Varga, Minister of Finance, at his appointment hearing in front of the Parliamentary Budget Committee on May 15. Economy having been retired) Mihály Varga as saying. The main contributors to the growth were market-based services. Compared to the previous quarter, the volume of gross domestic product grew by 1.2% – according to seasonally and calendar adjusted and reconciled data – in the 1st quarter of 2018. With both external and internal balance trends favorable, and as growth has not been generated by overborrowing, the current performance of the economy is sustainable, Varga said, adding that expansion has been broadbased because almost every sector has contributed to overall growth. Varga also said that the number one driver of growth had been the stimulating effect of the six-year wage agreement.
‘Indisputable Sign’
He also mentioned the nearly 8% increase in the volume of retail sales in the first quarter of the year, which he called an “indisputable sign” of the stimulating effect of the agreement. Housing construction has also boomed recently, and been another engine of the growth, Varga noted. Putting the figures into an international context, Hungary’s performance was still impressive in the first three months of the
In 2017, the combined gross domestic product (GDP) of the European Union amounted to some EUR 15.3 trillion at current prices. Over half of this was generated by three Member States: Germany, the United Kingdom, and France. At the other end of the scale, 11 member states had a GDP of less than 1% of the EU total. These were Malta, Cyprus, Estonia, Latvia, Lithuania, Slovenia, Croatia, Bulgaria, Luxembourg, Slovakia and Hungary, the latter’s 0.8% share being the highest among them.
year, he said. A recent Eurostat flash report shows that GDP grew on average by
just
2.4%
across the member states in the first quarter, and thus Hungary’s much faster
The country’s fresh Convergence Program, sent to the European Commission at the beginning of May, states that Hungary’s GDP growth will stay at around 4% in the coming years. growth is helping it close the economic gap with the more developed countries of the EU, the minister opined. TakarékBank analyst Gergely Suppan said the performance of the Hungarian economy in the coming quarters could be boosted by a wave of home and office building completions, EU-supported investments and strong consumption. Thus, TakarékBank is raising its forecast for full-year growth from 4.5% to 4.6%. According to ING Bank chief analyst Péter Virovácz, wage increases may well have contributed to the strong Q1 growth. He also expects that new industrial capacity will boost growth in the coming quarters. ING Bank has also raised its forecast for 2018; it now thinks GDP growth will reach 4%.
rate in 2019, 4.7% in 2020, 4.6% in 2021, and 4.5% in 2022. As for budget deficit, the government says that Hungary’s general government deficit, as a percentage of GDP, will be narrowing to 1.8% in 2019, 1.5% in 2020, 1.2% in 2021, and just 0.5% in 2022. Only a day before the Hungarian government submitted the program to the European Commission, the latter issued its regular economic forecast. For Hungary, the commission raised its projection for GDP growth this year to 4%, up from a projection of 3.7% released in February. The EC put 2019 GDP growth at 3.2%, also up by 0.1 of a percentage point from its previous forecast. The official Hungarian government forecast for GDP growth for 2018 is 4.3%. The EC is not as optimistic regarding consumption as the Hungarian government: according to the commission, household income and consumption growth are likely to remain strong in 2018, but are expected to slow down in 2019 as the impact of past administrative wage increases fades. Private consumption could rise by 4.9% in 2018 and 3.3% in 2019. Also, capacity constraints in the construction sector may limit the further expansion of residential investment, the report says.
Numbers to watch in the coming weeks Detailed information on the structure of GDP growth will be published by the KSH together with a second estimate of the quarterly growth figure on June 5. Investment volume will be released by the KSH on May 30, regarding the first three months of the year.
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Budapest Business Journal | May 18 – May 31, 2018
Low Industrial Supply Limits Market Growth A low industrial pipeline and lack of available space is limiting industrial market growth as 73% of demand in the first quarter consisted of renewals, according to Cushman & Wakefield. Companies are having to plan ahead as an estimated 96% of the 2018 pipeline is prelet and only 4,300 sqm of speculative space is expected to be delivered this year. GARY J. MORRELL
The Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary) has traced circa 2.07 million sqm of modern industrial space in the Budapest area. The current vacancy rate stands at 4.2% and there are only four industrial schemes with more than 5,000 sqm of available warehouse space. Prologis continues to be the largest industrial/logistics developer with four out
in market activity, and at first created a window of opportunity for existing Class ‘B’ products,” explains Gábor HalászCsatári, head of industrial at Cushman & Wakefield Hungary. “Now there is definitely much need for Class ‘A’, modern speculative stock (with existing stock practically being absorbed by the market) and we see that rental levels have started to improve to levels which makes speculative development feasible. This will most probably trigger the speculative development activity that we expect to actually break ground in the short-term,” Halász-Csatári adds. With regard to further development possibilities, Cushman & Wakefield says it has transacted East Gate Business Park of the ten largest industrial schemes in the Budapest area. Prime rents are estimated at EUR 4 per sqm per month for existing stock
and EUR
4.25
for built-to-suit (BTS) space according to Cushman & Wakefield. Demand trends and increasing construction costs are putting upward pressure on rents. This compares to Czech Republic where total modern industrial space has increased to more than seven million sqm according to the Czech Industrial Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield and JLL). There is an estimated 505,000 sqm of warehouse and industrial space under construction in the country, a minority (39%) of which is located in the greater Prague area, indicating that, unlike Hungary there is a commercial logistics market across Czech Republic. Significantly, 45% of space
under construction is being developed on a speculative basis. Cushman & Wakefield Poland has traced an estimated 1.9 million sqm of warehouse space under construction in 56 projects across Poland. Two logistics park developments were handed over in Hungary in the first quarter, representing 18,000 sqm. An 11,000 sqm warehouse was delivered at Wing’s East Gate Business Park and a 7,000 sqm logistics facility was completed at Budapest Dock Szabadkikötő by Westbay. CTP plans to extend its presence in Hungary while P3 Logistic Parks is looking to enter the market.
Limiting Factor
“The modest speculative development activity has recently been a limiting factor
more than
380,000 sqm
of quality industrial development land in the southern M0 area in Gyál and Dunaharaszti. The buyers in each case are international companies with plans to utilize the plots for industrial or logistics purposes. The total developable building potential on the sites sold is more than 150,000 sqm. Cushman & Wakefield sees a steady flow of demand from new market entrants from the manufacturing/production sector, predominantly looking for countryside locations. “This is driven by the better availability and pricing of land and workforce and potential state incentives. Large automotive hubs (Győr, Kecskemét) are already very popular. Investors have started looking at the very few institutional products currently available there, and developers also show an increasing interest in developing in wellestablished countryside cities,” HalászCsatári concludes.
Construction of Budapest One Business Park Starts Futureal Group has started work on its largest Budapest office project to date, the 65,000 sqm Budapest One Business Park. The first phase of the WELL “Platinum” pre-certified complex is scheduled to be delivered in the first half of 2019 and will offer 25,000 sqm of office space and 2,600 sqm of commercial and service space. Construction of a second speculative phase of the project will be undertaken once the first phase is completed.
GARY J. MORRELL
The business park is located at a multimodal transport intersection that includes the Metro 4 line, Kelenföld Railway Station and the M1 and M7 motorway links to western Hungary, Austria and Croatia. According to Futureal,
165,000 people
use the Kelenföld terminal of Metro 4, the railway station and bus station on a daily basis. “Besides the unique design, location is becoming more important for tenants, which makes areas close to the underground lines more valuable, especially those that also offer an employee-focused service environment,” says Tibor Tatár, CEO of Futureal. “Due to the labor shortage, companies are able to apply attractive offices as direct recruitment tools. Budapest One can be accessed within ten minutes from the city center by direct connections,” he added. The completion of Metro 4 was central to the timing of the development.
Business, Service and Leisure
Budapest One Business Park
Futureal says it aims to create a business, service and leisure hub on the 22-hectare
site. The 53,000 sqm Etele Plaza shopping center at the complex it is also developing is scheduled for delivery in mid-2020. This is the second brownfield development project by Futureal after the Corvin Promenade urban regeneration project. The complex, designed by PaulinyiReith & Partners Architectural Studio (formerly the Mérték Group), will include a 5,000 sqm open interior green area, meditation room, green roof garden, bicycle storage facilities with showers, a so-called nano-technology carwash, rooftop running track and electric car charging facilities. Reflecting the confidence of developers to go ahead with speculative projects in the Budapest office market, Futureal Group has also started the construction of
the
8,000 sqm
second phase of its Advance Tower project in the Váci office corridor. The project is expected to be handed over in the second half of 2019, bringing the EUR 68 million Advance Tower to around 20,000 sqm. The complex has been awarded BREEAM certification and will be operated according to WELL Building Standards.
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Budapest Business Journal | May 18 – May 31, 2018
Circular Economy: Start Small, Start Local, Start Today If Hungary is to build a sustainable circular economy, the concept needs champions and communities and business support and political involvement, but it all starts at the individual level, according to one of Europe’s leading experts. ROBIN MARSHALL
Professor Jacqueline Cramer, circular economy ambassador of the district of Amsterdam and former Dutch Environment Minister, spoke at the Business Council for Sustainable Development in Hungary’s (BCSDH) Business Breakfast and Action 2020 Forum recently, and this was the message she drove home, allied with the fact that Hungary must find its own path; there is no one-size-fits all approach that can or should be imposed. “The circular economy is the business model of the future,” Cramer insisted in her presentation. “The full implementation of the circular economy requires the appropriate scale. In this, regional or corporate communities are crucial. The inevitable first step is sharing knowledge and experiences and undertaking joint action which can accelerate the emergence of sustainable supply chains and thereby drive the expansion of the circular economy. By becoming part of such a community, we can take shared steps that we would never be able to manage on our own,” she explained.
Bio Box:
Professor Jacqueline Cramer She cited the example of the Netherlands-based FrieslandCampina, the world’s largest dairy cooperative, which is promoting the use of solar power among its member farms. The company website says the aim is to generate sufficient green electricity at the farm yards to fully cover the use of electricity
What is a circular economy? “Looking beyond the current ‘take, make and dispose’ extractive industrial model, the circular economy is restorative and regenerative by design. Relying on system-wide innovation, it aims to redefine products and services to design waste out, while minimizing negative impacts. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital.”
The Ellen MacArthur Foundation, launched in 2010 by the round-theworld British yachtswoman who became the fastest solo sailor to circumnavigate the globe in 2005.
within the chain and thus contribute to achieving climate neutral growth
in
2020.
FrieslandCampina is offering dairy farmers a EUR 10 bonus for each ton reduction of CO2 emission. Cramer spoke of her work in her home city, where there are 25 core members on the Amsterdam Economic Board, including some CEOs, and some 200 affiliate members who are also involved in projects. Since 2015, the state has also been very active, she said. “Together we have created a kind of momentum of positive examples.”
Competitive Advantage
Speaking afterwards exclusively to the Budapest Business Journal, Cramer said Hungary should not be judged against the Netherlands, because the countries had been on very different paths. “In the Netherlands we have an advantage; we have been dealing with it [the circular economy] longer! We faced the problem of a very dense population in a small area. Our landfills were filling up already in the ‘80s; that really pushed us to move ahead, and that is why we have a competitive advantage now.” She explained: “My message is that everybody can start at a very local level, the school level, the industrial park level, but
Jacqueline Cramer is a professor in sustainable innovation and strategic advisor to the Utrecht Sustainability Institute at Utrecht University. She is a member of the Amsterdam Economic Board and functions as the ambassador of the circular economy of the Metropole region Amsterdam. From February 2007-February 2010 she was Minister of Housing, Spatial Planning and the Environment. She has been actively involved in sustainability issues since the mid-1970s. She started her career as an associate professor at the University of Amsterdam (19761989), then worked as senior researcher at the independent Netherlands Organization for Applied Scientific Research, including stints as an internal consultant at Philips and Akzo Nobel. Since 1999 she has been a director of the consultancy firm Sustainable Entrepreneurship; Strategy and Innovation Consulting. She has worked closely together with more than 200 companies on the integration of sustainability in business strategy.
there also needs to be a willingness to join together. But do something now; don’t wait for all the challenges to be overcome first.” As she points out, there is an obvious advantage in groups and communities coming together: economies of scale. But first there has to be the individual desire to make a change. The BCSDH is trying to foster both in Hungary. The primary purpose of the Action2020 Forum, launched on April 25, is to support effective teamwork and joined-up thinking in the business sector while creating a real impact, promoting both sustainable lifestyles and circular economies. Its
81
member
companies produce 30% of Hungary’s GDP; 57 have already joined the Action2020 program, the council says.
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Budapest Business Journal | May 18 – May 31, 2018
Business
Having the Courage to be Resilient and Make a Difference opportunities and required skills. Our program team has put a lot of effort this year into adjusting our programs to fit the adolescents and their changing interests. For example, this summer, campers aged 16-18 will learn life skills, such as first aid or setting up a tent. Just imagine what it means for a kid who survived cancer: he has been hospitalized for years and was the one needing others’ help… now, he can become the one helping others.
Bátor Tábor (Camp of Courage: batortabor.hu/en) runs free-of-charge therapeutic, recreational camps for seriously ill children. The organization’s CEO, Erna Kindli, spoke to the Budapest Business Journal about her personal motivations and the indispensable role played by NGOs. BRIDGET DALEY
BBJ: From what I understand, you are relatively new to Bátor Tábor; how long have you held the post of CEO, and what initially attracted you to the job and the organization? Erna Kindli: I joined eight months ago. I’m coming from the for-profit sector: I spent ten exciting years in the software industry. I held various positions at Google for example. I had four major icons for the switch and I hope that these can motivate others to consider a similar career change. The first is impact. I like to contribute my knowledge and energy to something greater than me, something that makes the world a little better. In the non-profit sector, one’s positive contribution is clearer and more tangible than anywhere else. Bátor Tábor helps children with cancer and chronic diseases to regain self-confidence, optimism and hope. Number two is people. Everyone who interacts with Bátor Tábor has a
beautiful soul: my colleagues, the volunteers, the kids and their families, our donors, our corporate partners and more. They might have very different backgrounds, personal history, skills or living conditions but they all care about others and want to contribute to a better and happier world. I learn a lot about life from each of them. It is an honor to represent, help and lead them. Number three is intellectual challenges. I like to run my brain on interesting questions and Bátor Tábor is full of these. One day can include discussions about child psychology, medical conditions, CRM software, corporate partner strategy and volunteer loyalty. And all this for a great cause. Number four is getting real and solving real problems. I don’t want to degrade anyone’s job or problems, but after ten years in the for-profit sector and software industry, I was really craving some real problems. I hear this from our volunteers too. At camp, they get out of their “bubble” and realize their problems are actually small – they get perspective and become more resilient.
Erna Kindli BBJ: How has Bátor Tábor changed over the years? EK: Bátor Tábor was founded 17 years ago, and a lot has changed since then. Most are self-explanatory: like more campers, more revenue, a bigger budget, more diverse revenue channels. These are important processes and KPIs, but let me tell you about a change that business people wouldn’t necessarily think about. Childhood, and what it means to be a child, is changing. Children and teenagers are facing completely different problems and environments today, influencing their psychological conditions, fears,
BBJ: What kinds of changes would you personally like to bring? EK: What I want to bring to this already pretty innovative organization is to further develop its ability to change. It’s not because we are doing something wrong, but the environment is changing so fast today, whole industries could disappear from one year to another. I think resilience and the ability to change are the most important requirements for the survival or growth of any organization in such a world. BBJ: Is this year’s 1% tax contribution campaign any different from previous years? EK: One thing that I was involved with on a strategic level is putting more emphasis online. We recruited an online committee of digital experts that help us pro bono. We meet once a month and they help us both with strategy and tactics to run our campaigns efficiently online. We also have a new creative concept explaining how camp can “restart” childhood for kids who have temporarily lost theirs. BBJ: What does Bátor Tábor do to remedy the public distrust towards NGOs in Hungary? EK: We are transparent and positive. Transparence: We make annual reports and our finances public. Deloitte has been our auditing partner for many years now. More than 60% of our budget goes directly into the programs, which by international standards, is very good. The rest are required costs to maintain our programs, such as fundraising costs. You can experience how well our funds are spent if you volunteer at one of our camps. Our programs are free-of-charge for the children, their families and the volunteers. Positivity: Certain nonprofits try to fundraise by manipulating negative emotions, such as pity or shock. The kids we help have lost their childhood due to a serious illness and spent a lot of dark days in hospital. Yet, instead of focusing on the disease, we always communicate the positive impact of our work: feelings of hope, optimism and belonging. BBJ note: This year’s deadline to fix your 1% tax donation is May 22. Ask your accountant what you need to do to ensure the money goes to the charity of your choice, at no additional cost to yourself, rather than into the central state budget.
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Budapest Business Journal | May 18 – May 31, 2018
Like Armed Conflict, Ideological War Comes at a Cost
innovation
Photo by Alexandros Michailidis/Shutterstock.com
Back in 2001, George Soros, the Hungarianborn U.S. financier-philanthropist, was in town for the Central European University’s graduation ceremony. The CEU was then scattered in various buildings across the city, and the event was held in the Vígszínház – the Gaiety Theater. After congratulating every graduate in person when awarding their degrees, Soros announced he was donating USD 400 million to a newly created endowment fund to support the CEU – enabling the university to operate independent of himself. A speech or two later, and the media were invited to ask questions. In a somewhat mischievous mood, yours truly stuck up a hand, commenting that whenever a foreign investor brought so much as USD 10 mln into the country, a state-secretary would attend the event: it took USD 50 mln to attract a minister. Yet here Soros was handing over eight times the latter sum, with not a single government official on stage. “Mr. Soros, I don’t understand: how could this be?” I enquired innocently. Before the financier could utter a word, Yehuda Elkana, the CEU rector, jumped up to interject: “It’s not because we didn’t invite them!”
Acrimony Detectable
I was, of course, impishly drawing attention to the bizarre acrimony already detectable between the Viktor Orbán in his first premiership, and Soros. Why bizarre? Well, Soros had both supported Fidesz in its formative, cash-strapped years of the communist 1980s, and granted the youthful Orbán a scholarship to study at Oxford. But more importantly for Hungary in 2001, the economic contribution of the CEU had to be palpable: its many foreign professors paid taxes, rented homes and ate
in Budapest; its many conferences attracted visiting speakers who stayed in hotels, flew with local airlines, hired taxis to get around. Not least, the CEU employed a small army of local hires in services. I was reminded of this incident this week with news that the Open Society Foundations, a Soros-founded institution created to help civil society develop in Hungary and the region, was moving its international operations from Budapest to Berlin. Leaving aside the arguments (the OSF cited “an increasingly repressive political and legal environment in Hungary”; the government accuses the OSF of “wanting to create an immigrant continent and country”) the decision comes with a direct economic cost. It means the loss of 170 jobs (including support staff) in Budapest, Csaba Csontos, OSF spokesperson told the Budapest Business Journal. Of course, if any organization is illicitly working against a democratically elected government (which is, essentially, the charge against the OSF from Kossuth tér) that government is correct to enact counter measures. In the case of the OSF, most outside observers find the accusations an extreme interpretation at best. The next target on the anti-Soros government agenda could well be the Central European University, which says it has been left in limbo for nine months after complying with the latest government legal requirements. The CEU says that today it pays more than HUF 7 billion (USD 26 mln) annually into Hungarian state coffers (in taxes, social security contributions, plus payments to Hungarian suppliers) and currently employs some 520 Hungarians full-time. Regardless of the international controversy involved, hounding the CEU out of the country on ideological grounds will come at a cost: the government – which invariably shouts loud every time it signs a new investment contract – should think about that.
LIN E M O T T O B E TH
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Future driven
George Soros
KESTER EDDY
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Improving Innovation to Keep Auto Firms on the Radar Digitalization is undoubtedly a gamechanger, and as a result, the automotive industry is transforming rapidly. As such, innovation comes into the spotlight as an area to work on if a company wants to stay on the radar, Hungarianfounded navigation software developer NNG tells the Budapest Business Journal. CHRISTIAN KESZTHELYI
The core market for NNG, namely the automotive industry, is undergoing a swift and major change, therefore the company looks at innovation as a key factor to stay ahead of competition. “The average lifecycle of an S&P 500 company has been dropping over the last decade and that trend will continue,” Tamás Szabó, director of product management at NNG LLC, tells the BBJ. “Innovation and disruption seem to have become best friends, and successful companies need to out-innovate competitors to stay in the game.” Digitalization, a notion that pops up in every sector, makes no exception when vehicles roll into the picture. Electrification, which NNG tags as a hardcore technological change, is accordingly expected to have a huge impact on digital services in the automotive sector. “For example, take integrated charging station information; this navigation data and its management will be critical for the widespread adoption of electric vehicles,” Szabó notes. As radical as it may sound, Szabó cannot single out the possibility of individual ownership coming to an end, or at least evolving into something else entirely. “The cost per travelled mile is rapidly going down for transportation as a service, and it will come to a point where the gap-to-ownership cost could become too big. This would cause a disruption in the ownership model the industry currently relies on,” Szabo warns. He believes that digital infrastructure must keep up with such changes. Furthermore, he notes that as the level of vehicle automation increases, the focus might well shift from the hardware attributes of the vehicle to the customer experience, which will again be driven by associated services.
systems integrator. So, we must drive our innovation, but also follow closely what our partners are doing. This involves technical invention and closely monitoring the impact of existing technologies in adjacent markets, and of our customers and solutions,” Szabó says. The manager repeatedly emphasizes the importance of the customer experience, which the company expects to stay the clear driver of the future in the industry, with trends tilting towards customization and more personalization. In the next decade, he believes software and services are set to dominate the business landscape of the automotive industry.
“The average lifecycle of an S&P 500 company has been dropping over the last decade and that trend will continue. Innovation and disruption seem to have become best friends, and successful companies need to out-innovate competitors to stay in the game.”
“A similar transformation to that seen in the mobile phone industry will take place, at a slower speed maybe, but the trend seems to be apparent. I think our portfolio will be relevant and we’ll continue providing high customer value,” Szabo notes. Furthermore, in the field of navigation, autonomous cars are seen to bring changes. “All autonomous cars will have to have built-in navigation that will help the user to select his destination and guide the robotic driver from A to B. Cyber Security will become a key enabler in the whole ecosystem as vehicle integrity and personal privacy are becoming major Customer Benefit drivers for adoption. In-vehicle HMI Despite innovation having a very broad [human machine interface] will become meaning, as NNG sees customer value to the most important driver for customer be the common denominator, the company experience,” Szabó concludes. makes special efforts to generate new This regular column, run in association ideas, spot new opportunities and then with Audi, looks at how some of Hungary’s execute on them in order to provide a clear biggest companies involve innovation in benefit to the customer. their daily practice. For more on Hungary’s “We are continuously developing automotive industry, see our Special our core technology, but we are also a Report in this issue.
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Budapest Business Journal | May 18 – May 31, 2018
WHO’S NEWS
INSIDE VIEW
It’s always dawn raid season – but now also for transactions András Nagy
Anna Turi
Competition Law Specialist
Head of Competition Law
SCHOENHERR HETÉNYI ATTORNEYS AT LAW
SCHOENHERR HETÉNYI ATTORNEYS AT LAW
The Hungarian Competition Authority (HCA) has never shied away from using its most effective investigative tool: the dawn raid. Since 2017, the possibility to search the premises and all devices, documents and data of an undertaking are available not only in those cases where the HCA suspects that an anticompetitive agreement or abuse of dominance has taken place, but also when a merger is under scrutiny by the competition enforcer.
NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
Dawn raids in a nutshell
A dawn raid involves the case handlers of the HCA showing up at the doors of the company and conducting a systematic search for evidence regarding an alleged infringement. A significant number of the HCA’s investigations are initiated with such a raid. The HCA needs to obtain a court warrant to conduct such an intrusive action; courts have proved to be rather permissive in this respect. The case handlers have exceptionally wide-ranging rights on site and may request access to any workstation or document storage, irrespective of the level of confidentiality. The company gets no time to prepare (the dawn raid is never announced) and the case handlers have no obligation to wait for the lawyers of the company to arrive. There is a constraint, however, to their wide-ranging investigative rights: case handlers may not read and use communication between the company and its external legal counsel (a law firm) and the documents the company trusted the external counsel with. This is due to the company’s basic right of defense.
The DIGI-Invitel case
The HCA decided to initiate a merger control dawn raid in the DIGI-Invitel case for the first time. DIGI Távközlési és Szolgáltató Kft. (DIGI) and Invitel Távközlési Zrt. (Invitel) are two major telecommunication companies. DIGI announced in 2017 that it intends to acquire Invitel and filed a notification to the HCA in August 2017. The HCA initiated an in-depth investigation, where it also requested DIGI to disclose documents regarding the preparatory phases of the transaction. DIGI failed to disclose such internal documents, while the case handlers took the view that it is likely that such information exists. The case handlers subsequently decided that a dawn raid was necessary. The raid was concluded at DIGI’s seat on
November 15, 2017. The HCA has subsequently approved the concentration but imposed significant obligations on the parties.
Comments
There are two important notes to the above: • The HCA has seemed to take merger control investigations to a new level in the last few years. With the incorporation of an additional, investigative merger control threshold, the HCA may initiate an investigation to look into practically any transaction which meets the HUF 5 billion overall turnover threshold and the HCA deems it potentially anticompetitive (provided they are not notified voluntarily to the HCA). The competition enforcer has recently shown that it is willing to initiate such ex officio investigations. Also, after the introduction of the new short(er) filing form, the HCA is not shying away from imposing a procedural fine and even withdrawing merger control clearance from a company it considers not to have disclosed all the requested data. • Dawn raids are a major tool in the HCA’s investigative toolbox and several investigations are initiated with dawn raids. Considering the developments above, it is likely that we will see ex-officio merger control Investigations initiated with unexpected raids. This may not only constitute a sizeable surprise for undertakings but may also halt a transaction significantly and lead to unexpected damages. We may only hope that the HCA will continue to use this tool responsibly. Companies can, of course, prepare for the above. Transactions which may be of interest for the HCA due to their effect on competition may be notified voluntarily. Companies should also ensure that all information which is necessary for the assessment of the merger is disclosed to the HCA. Compliance training and mock dawn raids are also proven preventive measures for companies in order to ensure that the proper functioning of the company is not unnecessarily interrupted by such an investigation.
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Public Management Expert Joins PwC Hungary
Professional services firm PwC Hungary has brought Szabolcs Mezei on board as new director in its advisory services practice. Mezei will be tasked with improving public sector consultancy, according to a press release sent to the Budapest Business Journal. Before joining PwC, Mezei worked for nearly 12 years at IFUA Horváth & Partners Kft. as a management consultant, and later as principal responsible for the public sector. Prior to that, he served at Hungary’s Ministry of Interior as an accounting manager, where he was in charge of accounting support and supervision of institutions under the ministry’s authority. More recently Mezei has led successful consulting projects at several public institutions (in central administration, healthcare, higher and public education, and local
governments), providing customized professional and technological assistance to improve their performance. Mezei has been actively involved with the Association of Management Consultants in Hungary (VTMSZ) for several years, and he currently serves as vice chairman. He regularly gives guest lectures in higher educational institutions to promote management consulting in the public sector. He is a Certified Management Consultant (CMC), and also holds a Public Administration Certificate. He spends most of his free time with his family, and enjoys playing sports (soccer and squash) and taking online courses.
His return continues the strengthening of Nagy és Trócsányi’s corporate practice group, the law firm said.
Fresh Appointments at Invitech
As of May, a well-known professional in the Hungarian ICT market, Csaba Bőthe, will take over the marketing and business support department at Invitech. Several other positions at Invitech will be filled by internal promotions. Albert Kis will become deputy CEO at Invitech, responsible for corporate sales and network development. Operative deputy CEO Áron Javorniczky has decided to leave the company after 14 years. Two new chief directors will be appointed: László Marton as head of the department of corporate and government partners; and Zsolt Kemendi, responsible for the development of IT services and the whole IT and technical department.
Accenture Names Country Managing Director
Accenture has named Tomáš Volek as country managing director for Slovakia and Hungary, effective May 1. In this
Lawyer Returns to Nagy és Trócsányi
Nagy és Trócsányi announced that as of May 1, Dr. Zsolt Zamostny has re-joined the firm as an associated lawyer. During his more than 25 years of legal
practice, Zamostny has gained extensive knowledge in the field of corporate M&A transactions and real estate developments.
role, he leads Accenture’s business and operations in the two countries, with a specific focus on growth by innovation and digital transformation. Volek succeeds Peter Škodný, who left Accenture at the end of April. Prior to assuming his new role, Volek led Accenture’s Advanced Technology Centers in Slovakia, Hungary and Romania, which employ more than 1,500 people to provide technology services and digital capabilities to Accenture clients worldwide. Since joining Accenture in 1995, Volek has served as an SAP expert and worked on several large systems integration projects across a wide variety of industries in Western and Eastern Europe, Russia, Turkey and India. In 2003, he set up the Bratislava Delivery Center for Technology, taking on the role of delivery center lead in 2012.
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Budapest Business Journal | May 18 – May 31, 2018
Tourism Agencyʼs ‘Spice of Europe’ Campaign Trains Eyes on Budapest The Hungarian Tourism Agency (MTÜ) has launched an international marketing campaign to promote Hungary’s capital city as a high-end tourist destination.
900 placements.
The 60-second film is the fruit of exclusively local talent. Directed by René Mednyánszky and with originally composed music from Dániel Karányi, the film’s Hungarian actors (Rebeka Szabó Sipos and Ádám Lábodi) don clothing and accessories from more than
budget is allocated for online spending, targeting several other countries besides the United States, including Canada, France, Germany, Israel, Italy, Spain and the United Kingdom. Several airlines will also run the campaign in the coming months, while low-cost carrier Wizz Air expects up to five million passengers to view an eightpage supplement on Budapest in its JuneJuly online/in-flight magazine.
Energetic City
“Guest nights in Hungary between 2010 and 2017 grew from 20 million to 30 million, and there’s no reason why we shouldn’t be able to achieve our goal of 50 million guest nights by 2030.”
What the broader campaign is expected to do, according to MTÜ press material, is “to convey the image of Budapest as an energetic, creative and diverse city where visitors can find anything that any classic European capital has to offer, presenting both its authentic, historical side and innovative, vibrant aspects. The campaign is being launched with a youthful, creative image, with a new tourism logo, website, TV promo spot, and other creative content.” The current promotional material will appear on international television, online and print media from May 15 to June 30, according to the MTÜ press release. In parallel with the Budapestcentered campaign, MTÜ plans to launch a domestic campaign aimed at stimulating spring and summer tourism for Hungary’s lesser-known locations and attractions. The wider “Spice of Europe” campaign, as detailed at the press event by Dávid Drozsnyik, director of Graphasel Design Studio, is working with five emotive themes (mirrored in five pastel shades) to target three main groups (young people aged 25-40, families seeking adventure, and global tourists in the 30-35 age group). Comparatively, Hungary has some catching up to do with its regional rivals on a nationwide scale. Figures from 2016, according to statista.com, place Austria up front with
overtake the Austrian and Czech capital cities and emerge as the region’s premier holiday hot-spot, Guller added. “Guest nights in Hungary between 2010 and 2017 grew from 20 million to 30 million,” Guller continued, “and there’s no reason why we shouldn’t be able to achieve our goal of 50 million guest nights by 2030.” While television spending for the campaign is high, 65% of the present
overnight stays, with the Czech Republic at 49.7 million, and Hungary trailing by a fair margin at 29.3 million. In terms of growth, percentage-wise, from 2010, however, Hungary does lead the pack, and decisively: up from 19 million (35%), compared to the Czech Republic’s 36.9 million (26% growth) and Austria’s 103.9 million (14%).
Actors Rebeka Szabó Sipos and Ádám Lábodi in a scene from the “Spice of Europe” film.
NATHAN JOHNSON
With the clearly stated objective of overtaking rivals Prague and Vienna as the region’s best place to visit — or just where to stay longer and spend more — the new Budapest-centered push, titled “Spice of Europe”, carries an initial price tag of HUF 1.3 billion (USD 4.864 million). A campaign kick-off event for local media took place on Monday morning, May 14, in the elegant environs of the Uránia National Film Theater, with actor and TV presenter Pál Rókusfalvy hosting the proceedings. In coming weeks and months, international news network CNN will broadcast the “Spice of Europe” campaign’s one-minute “movie” to an estimated 250 million homes in the United States over the course of some
Business | 9
a dozen well-known or up-and-coming Hungarian fashion designers. The campaign spot features a young couple visiting Budapest to kindle their romance. The man and woman dance, shop, gaze, bathe and dine their way through several Budapest locations, at the end of which a spoonful of piquant local cuisine brings newfound ecstasy to the young woman, while sparking new impressions of Hungary for the young man.
Joy of Sharing
“The closing scene presents the joy of sharing that the boy experienced in his youth and is now re-living with his sweetheart,” the press material explains. We can’t know how things will turn out in the long run for this attractive young pair, but if they get along just fine for now in Budapest and have high spending power, it’s all good. Tourism and gastronomy account for roughly 10.5% of Hungary’s GDP, and the sector employs close to
400,000 people
nationwide, explained MTÜ CEO Zoltán Guller in his opening remarks
at the campaign press event. Given its geographical position and wealth of attractions, Budapest is poised to one day
121.1 million
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Special Report Automotive
Car Industry Remains Vital to Hungary: Is Hungary Vital to Car Makers?
The importance of the automotive industry for Hungary’s economic wellbeing and political stability is plain for all to see. Car manufacturing accounts for just over 30% of the country’s total industrial output, and 20% of exports. NATHAN JOHNSON
In a country of fewer than 10 million people, the car industry provides jobs for more than
(the rates for regional competitors Poland and Slovakia are 19% and 22%, respectively). Magyar Suzuki, manufacturer of the Vitara, one of Hungary’s top-selling cars,
1.5% of the
population (154,000 employees at the end of 2016), making its workers a vital source of tax revenue — and, one could argue, support— for the sitting Hungarian government. And while several foreign-owned car making giants have enjoyed long, and sometimes unprecedented, runs of success in Hungary, does the country continue to hold sufficient levels of promise for industry players as they plan for the future? Some of the keys to maintaining a good business relationship between Hungary and its car industry, according to people who spoke recently with the Budapest Business Journal, are: an ability to meet market expectations, a well-trained workforce, automatization potential, and the adaptability to manufacture and develop new technologies. Government-
Grzegorz Buchal attributes its current success in part to successfully matching new brands with customer expectations. “We also have the strongest extended dealer network in Hungary,” Róbert Krisztián, executive general manager at Magyar Suzuki, told the BBJ. “[Furthermore], our well-trained workforce can produce cars in Hungary at a competitive price level, and due to Hungary’s geographical position, we can easily and effectively reach our main markets, which are located in Western Europe.” According to Krisztián, the main challenge nowadays is workforce availability. “Up to now we have managed to secure the necessary manpower, but we are also looking into further automatization possibilities,” he said.
Supportive Government Róbert Krisztián led incentives are another attraction, and Hungary’s corporate tax rate of 9%, introduced in 2016, is the lowest in the EU
Regarding the efforts of Hungarian governments, both past and present, to support the automotive industry, Opel Szentgotthárd’s plant manager, Grzegorz Buchal, gives high marks. “In our 27 years in Hungary, we’ve received continuous support from
Hungarian governments,” Buchal told the BBJ. “This is the case as well after the ownership change. Minister [of Foreign Affairs and Trade Péter] Szijjártó visited our plant just a few weeks after the Opel/ PSA deal was announced in
March
2017
and met top Opel executives. He was very clear that Opel can count on the strong support of the Hungarian government.” Buchal referred to the importance of open dialogue between his company, the Hungarian government and the Hungarian Investment Promotion Agency, adding that Opel is keen to explore R&D opportunities and bring value-added activities to the Szentgotthárd plant. “From my experience in working at several Opel manufacturing locations around Europe, I can confidently say that the Hungarian business environment is supportive for automotive operations — both OEMs and suppliers,” Buchal added. “Hungary has done a lot to create a legislative and human infrastructural framework to enhance competitiveness. This extends to such crucial measures as improving workforce flexibility and labor mobility, as well as to efforts to establish a dual educational system.” Audi Hungaria Zrt. head of external communications Mónika Czechmeister, noting that “transformation” is ever a watchword in the automotive industry, told the BBJ that the parent company is nonetheless “satisfied with the conditions of doing business in Hungary”. “Hungary provides favorable
with its innovative projects. The company will produce the first e-engine of the Audi Group, while the other main project of Audi Hungaria is the start of production of the Audi Q3. The SUV segment is booming, and this model ensures the long-term competitiveness of the company.”
View From Outside
So, a major car manufacturer plans to invest in developing electric-engine technology while at the same time heeding the call to manufacture more SUVs for the European market. What gives?
Dávid Szultanov “It’s always difficult to predict the future in this industry,” Dávid Szultanov, managing director of FleetConcept Hungary Zrt., a Budapest-based car leasing and rental company, told the BBJ. “Nobody knows what the effect of PSA’s purchase of Opel will be. Nobody knows exactly what types of cars will be built anywhere. Petrol engines, plugins, hybrids, diesel, all-electric, fuelcell technology — the big companies are developing in every direction.” As for Hungary holding its position as a regional manufacturing powerhouse, Szultanov is cautiously optimistic. “The big brands have been here for
25 years
Mónika Czechmeister circumstances, an investor-friendly environment and a skilled workforce. These factors are very important for successful, long-term development,” Czechmeister said. “Audi Hungaria is ready for the future and well prepared for the new era
now, and the reputation of Hungarian manufacturers is good, as we can see with Audi, Bentley and Volkswagen engines made in Hungary ending up in high-end models, and the quality level is quite high,” Szultanov explained. “The question right now is not whether any of these big companies are going to pick up and leave, but rather where they will be looking to expand investment.” Finally, Szultanov pointed to the relationship between manufacturers and dealers, which, he believes, hinges on prevailing engine technologies. “There’s a lack of investment in dealerships, but not from negligence or incompetence,” said Szultanov. “It’s from uncertainty about the future of engine technology. Western European and American auto shows are saying that everything will be electric, but no one is really sure.”
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Budapest Business Journal | May 18 – May 31, 2018
News///in brief
BMW may Choose Hungary to Build Plant
After Sandra Schillmöller, spokesperson for BMW, said that the company is looking for places to establish production capacities in various countries, people in Hernádnémedi (192 km northeast of Budapest, and just 14 km east of Miskolc) are hoping that the plant will be built in their village, autopro.hu reported. The mayor cannot disclose any information as he has signed a confidentiality agreement. It is known that an investment in Hernádnémedi has been declared a national priority investment, Csaba Kilián, general secretary of the Association of the Hungarian Automotive Industry (MAGE) said. BMW would not have a problem finding qualified workforce, he added, as the reputation of the company would attract people from all over the country. Already at least 50 Hungarian companies supply car parts to BMW and there is a reliable supply chain in the country.
Self-driving car Test Track has new Competitor
The test track that is being built in Zalaegerszeg (227 km southwest of Budapest) to test self-driving vehicles is getting a regional competitor, autopro.hu reported.
The Czech government is supporting the construction of a test track to be built by BMW next to Solokov (145 km from Prague, close to the border with Germany) with a grant of EUR 18.7 million. BMW earlier said that it will spend some hundred million euros on the investment, creating a few hundred jobs. According to the plans, the test track will start operations in 2022.
Mercedes-Benz’ Hungarian output up 4.1%
German carmaker Daimler produced more than 190,000 vehicles at its base in Hungary last year, up by 4.1% from 2016, Mercedes-Benz Manufacturing Hungary managing director Christian Wolff said on May 14, profitline.hu reported. Financial director Josip Niksic said the share of Hungarian suppliers to the unit had risen over 50% last year. The unit is ploughing back its profits into developments, including a EUR 580 million chassis plant and a EUR 1 billion plant expansion, he added. Revenue of the unit, in Kecskemét (93 km southeast of Budapest), increased by more than 4% to EUR 3.6 bln, Wolff said. MercedesBenz Manufacturing Hungary will lay the cornerstone of the expansion in just a few weeks, he noted. Additionally, it
Special Report | 11
Apollo Tyres Sponsors DVTK Sports Club Deepening its connection further with Hungary, Indian tire manufacturer Apollo Tyres has partnered with sports club DVTK, including its top flight soccer team, and signed a three-year shirt sponsorship deal, according to a press release sent to the Budapest Business Journal . The company will leverage DVTK’s passionate and massive fan base to raise awareness of its brand among potential customers, business partners and consumer audiences in Hungary. Apollo’s Gyöngyöshalász factory
is undertaking developments at the existing plant, where production of A-Class models has already started, replacing production of B-Class models. At least 2,500 people will be hired at the base in the coming period, with current headcount at 4,000. Revenue of Mercedes-Benz Hungária, which sells the Mercedes-Benz brand locally, rose 26% to HUF 101 bln last year, said its managing director Jörg Schmidt. In Q1 2018, the brand remained market leader in the premium segment with sales of 836 cars, up 33% year-on-year, he added.
New car Registrations up 39% in April New car registrations in Hungary climbed 38.9% from a year earlier to
(79 km northeast of Budapest) was inaugurated in April last year. When it reaches full capacity, the plant will produce 5.5 million passenger car and light truck (PCLT) tires and 675,000 heavy commercial vehicle (HCV) tires per year, predominantly for the European market. In addition to this, the Truck and Bus Radial (TBR) tire unit is almost ready, with commercial production set to start soon. Its capacity “will be outstanding in the Hungarian tire industry”, Apollo says with 675,000 TBR tires per annum.
12,056 in April, mainly on increased demand from non-corporate buyers, the Hungarian Vehicle Importers Association (MGE) said, autószektor.hu reported. Demand is also affected by low interest rates and the gradual repayment of foreign exchange-based loans. Sales of light commercial vehicles edged down 1% to 1,775. Heavy commercial vehicle registrations climbed 56.4% to 677. The number of motorcycle registrations came to 409, up 42%. In January-April, the number of new car registrations rose 32.2% from the same period last year. MGE projects that 2,000-2,500 new electric cars could be registered this year. In April, Suzuki was the most popular brand of car, followed by Ford, Skoda, Opel, Toyota and Volkswagen.
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Diversified Automotive Backbone Still Hungary’s Flagship The automotive industry continues to be the backbone of the Hungarian economy, but has become more diversified through “thriving new industries”. Company feedback matters, Róbert Ésik, president of the Hungarian Investment Promotion Agency tells the Budapest Business Journal.
Róbert Ésik, president of HIPA.
ROBIN MARSHALL
BBJ: What share of Hungary’s FDI is made up by the automotive industry? How has this changed over the years? Róbert Ésik: The automotive industry continues to be the flagship of the Hungarian economy. If we look at the numbers, among the investments managed by the Hungarian Investment Promotion Agency (HIPA) in 2017, the most investment projects are related to the automotive industry. Beyond numbers, the position of Hungary has further developed in the past few years: we have a lot of projects creating higher added value, and it is an important fact for the evolution of the industry that three leading EV [electric vehicle] battery companies – Samsung SDI, GS Yuasa and SK Innovation – have selected Hungary as their manufacturing hub in Europe. Another milestone for e-mobility is that
Audi, having the largest engine factory in the world in Győr, is expanding its Hungarian unit with electric powertrain manufacturing for its first e-model. The strong presence of the four OEMs and many of their Tier 1 suppliers also generates the continuous growth of the international supplier base. One of the world’s leading automotive suppliers, Valeo, is further expanding its manufacturing and R&D complex in Veszprém through a greenfield investment; Thyssenkrupp has built a new production unit in Jászfényszaru and is implementing a new site in Debrecen; Germany’s ZF is expanding its unit in Eger; and globally dominant German giant Continental is also extending its manufacturing footprint in Hungary with a new facility in Debrecen. These projects will create a high level of automated production environment, which provides an opportunity for generating higher added value. Besides promoting FDI in Hungary, HIPA boosts cooperation between Hungarian suppliers and multinational companies by organizing training and
supplier days jointly with OEMs or integrators. We also created a “virtual marketplace”, an online, Englishlanguage Certified Supplier Database for our clients. On one hand, it gives an opportunity for Hungarian SMEs to get in the race by registering, on the other hand, it provides a platform for the purchasers of OEMs and intergrators looking for reliable partners in the field of automotive industry, electronics, machinery, packaging, production-related services and implementation, ICT, innovation, R&D, environmental protection, logistics or engineering services. HIPA’s aim is not only to promote cooperation but to support the digitalisation of domestic SMEs during the period of global technological change. Continuous innovation is essential for companies to secure their place or to step up in the supplier pyramid. The most recent trends require next generation suppliers, automotive corporations increasingly expect suppliers to assume a greater share of the development processes, such as product development and R&D.
In cooperation with VW Regional Office Eastern Europe, we organized Audi Innovation Days in 2017, where innovative startups introduced their services or products to the purchasers of VW Group. The buzzing Hungarian startup ecosystem offers a wide range of agile and innovative companies and we are glad to cooperate with other OEMs too on integrating as many innovative Hungarian SMEs as possible into their supply chain. As for another activity to spread innovation, we launched our E-mobility Booklet to encourage Hungarian SMEs shifting the level of their operation to a digital dimension. The publication presents international best practices and helps companies in better understanding the new market demands and the huge potential in e-mobility. BBJ: What are the shares for cars, light commercial vehicles, lorries and buses? RÉ: The major part of the Hungarian vehicle manufacturing remains cars, with approximately 470,000 manufactured in Hungary in 2017. But the increasing
Summary of automotive investment projects in Hungary based on HIPA database Projects: 13
Projects: 17
Projects: 25
Projects: 36
Jobs: 3,500
Jobs: 4,280
Jobs: 7,759
Jobs: 6,727
2014 Value: EUR 868 mln
2015 Value: EUR 761 mln
Source: HIPA
2016
2017
Value: EUR 1.948 mln
Value: EUR 1.548 mln
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Budapest Business Journal | May 18 – May 31, 2018
significance of the production of buses is indicated by the fact that the Chinese BYD, manufacturing pure electric buses, has built its first European factory in Komárom with 400 buses rolling off the production line yearly. This is double the 2016 production. Hungarian bus manufacturers like the Kravtex-Kühne Group or ITK Holding are remarkable players of the industry too. Kravtex-Kühne has announced capacity expansion in its Győr and Mosonmagyaróvár factories, and ITK just signed a memorandum for understanding with the University of Debrecen and the Municipality of Debrecen on having a strong cooperation on education and social responsibility. The spectrum of Hungarian vehicle manufacturing has been also becoming more and more diversified in the past
“The major part of the Hungarian vehicle manufacturing remains cars, with approximately 470,000 manufactured in Hungary in 2017. “ period, thanks to the development projects and the thriving new industries, such as the aerospace industry. In this field, investments were made by companies such as Lufthansa Technik, Magnus Aircraft, RUAG, and Diehl Aviation.
BBJ: As you mentioned, there have been a number of battery factories launched recently. Is this a growing trend, and does it indicate a firm move away from combustion engines? RÉ: That is true, e-mobility is clearly a global trend, and the investments related to it are significantly growing also in Hungary, which, with its strong automotive background, is a perfect location for non-EU battery manufacturers to enter the EU market. So, the appearance of Asian battery manufacturers in our region is not surprising, as the European car manufacturers announce one after another that they are going to launch a lot of partially or pure electric vehicles in the coming years, but do not possess the battery capacities necessary for the production. However, the demand for combustion engines is not falling; for example, Opel’s modern Flex plant in Szentgotthárd is going to start the production of Groupe PSA’s three-cylinder petrol turbo engines of 1.2 litres at the beginning of 2020. BBJ: What are the trends when it comes to R&D related investments? RÉ: There are two global trends in the automotive industry: the already mentioned e-mobility, the developments on alternative or combined power trains and autonomous driving. Thanks to the major changes in Hungary’s taxation and incentive system last year, we have been able to offer an attractive investment environment in the new digital era. I am sure, that the building of the vehicle testing track in Zalaegerszeg will
also strengthen the country’s position in becoming a key player in the automotiverelated R&D and ICT developments. The proving ground will provide a complex testing environment for both electric and
“E-mobility is clearly a global trend, and the investments related to it are significantly growing also in Hungary, which, with its strong automotive background, is a perfect location for non-EU battery manufacturers to enter the EU market.” self-driving cars, thus, a special strategic R&D infrastructure is being created. The demand for the project was given by industry players and the technical details also came from business. The development - involving different faculties of Hungarian and international universities such as mechanical or electrical engineering, IT - will create a knowledge hub for the technologies of the future. The proving ground will offer a complete validation environment and testing opportunities, laboratory and simulation facilities and public road testing in Hungary, Austria and Slovenia. Looking back to the last few years, a number of advanced manufacturing
Special Report | 13 and development projects have been implemented in the past period. The second factory of Mercedes-Benz in Kecskemét will be suitable for the production of, among other things, alternative powered models, while the factory of Audi Hungária in Győr has a huge number of robots working hand-in-hand with the plant employees thanks to the developments. Bosch’s largest automotive research and development center outside Germany is located in Hungary; therefore, its developments for the European market are mainly carried out in Hungary. The Budapest development center of Thyssenkrupp presented a self-driving vehicle developed by Hungarian engineers and electro-mechanic “smart” steering systems in 2016. ADAS, Continental’s business branch for advanced driver assistance systems, will establish its latest deep machine learning competence center in Budapest. BBJ: According to your strategy, what is the main focus of your industry-related services in 2018? RÉ: We are looking ahead: in the next coming years HIPA would like to focus more on R&D and advanced manufacturing. As for our services, apart from looking for newcomers, we pay special attention to the needs of our clients having a long-term presence in Hungary. In the framework of our policy advisory activities we mediate between business and government. I truly believe that collecting company’s feedback is crucial to prepare policy proposals, which can further improve the business environment that allows companies to grow.
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Budapest Business Journal | May 18 – May 31, 2018
Electric and Autonomous Vehicles Demand Constant Innovation Today, electric and autonomous vehicles are the main focus of car makers and suppliers. Innovation, though not spectacular, is part of the design, testing and production on a daily basis; it is a must rather than something that provides a competitive edge. ZSÓFIA VÉGH
The expansion of electric vehicles has brought about a number of issues engineers need to solve, László Naszádos, department leader at ThyssenKrupp Presta Hungary told the Budapest Business Journal. Because of the highpower wires in the cars that “fuel” the electric motor, all electronics need to be less sensitive to electromagnetic disturbances to avoid interference with other electric devices. The noise emitted by the steering system also needs to be reduced, just to name two problems ThyssenKrupp engineers need to deal with. Another focus of innovation is selfdriving vehicles. With time, vehicles have had ever more autonomous features added. What began with parking radars, lane keeping assistance and adaptive cruise control is gradually being widened
Nissan says it is working on how to harness unused EV baterry energy to help power national grids.
to features that allow drivers to let go of the steering wheel, for example, when inching in a traffic jam. Steering systems need to adjust to these changes; the ultimate aim is to eliminate the need for a driver’s interference. “The system can no longer count on the driver taking over as they do now. To achieve that, we need to build more redundancies/backups into the system. Should anything happen, the steering assist must operate. Carmakers also prepare for that by incorporating multiple batteries or double generators,” Naszádos says. These functions may require more work from developers, but the driver likely won’t notice anything as the functionality of the car won’t change. Unless there is no steering column at all, of course, as is in some self-driving models.
Innovation at the assembly line
Operation in the company’s new, stateof-the-art factory at Jászfényszaru starts in the fall. Currently ThyssenKrupp is fine-tuning the production lines. These are crucial to improve the so-called “takt-time”, the pace at which a product rolls off the line. Automation here is key. To improve efficiency, the use of robots is becoming more widespread. “A robot won’t get tired, won’t lose concentration. As a result, their work is more
predictable,” Naszádos says. Robots can take over more simple tasks – but experts are still needed to control machines. Cost is another key consideration. These cars are expensive, they cost thousands of euros, and millions are produced of a model during its lifecycle, the expert says. “So if a part costs just
20
euro cents
more than necessary, we have wasted a million euros. What is needed to ensure safety cannot be spared, that’s out of the question. Independent auditors make sure that safety is not compromised at the expense of price. But there are many ways to optimize the design. It may require a few months’ more thinking, but it is worth it if we can save a million.” Competition between companies is tough: in this field, no one shares knowledge with their peers. “If a car maker sees a new or better solution on the market, they demand us to apply that as well. We can deliver that, though we may not get there the same way the others did,” Naszádos says. The need to come up with something better at a better price places constant pressure on companies but that’s not a problem, according to Naszádos, as such competitive pressure keeps them “fit”. Legislation has a huge impact on the pace at which innovation appears in vehicles. Car makers often say that the technology for driverless driving is already available; it is regulations that are missing. As a result, autonomous features are introduced gradually. “Today, Leaf drivers cannot take their eyes off the road and the steering wheel,” Levente Reizer, electric vehicle product manager at Nissan Sales Central Eastern Europe told the BBJ. “With time, this will change as our car will start using one lane on a highway, then two lanes and will be able to change lanes and also keep a
distance.” Then come urban driverless models, and the final step is to reach full autonomy, for which a 5G network is needed to allow communication between cars. This it is unlikely to take place before 2025.
Road Blocks Ahead?
Even then, there can be situations when the car cannot decide what to do. For example, when there is a temporary road block or a police check ahead. Together with NASA, Nissan has developed a system to solve such problems. “When the car encounters an unfamiliar situation, it sends data to a control center where, after a quick assessment, the staff sends the new route plan to the car and notifies other cars as well,” Reizer says. There are other reasons why fully autonomous cars are not yet on the roads. Being a pioneer may not be the best strategy here. “If we are the first to launch a self-driving vehicle, we may risk pricing ourselves out of the market,” Reizer notes. Components and technology such as lidars (distance measuring devices) are quite expensive right now, so it may not be profitable until economy of scales is achieved. Automotive innovation is not reduced to driving – the “fuel” cars run on may be changing; saving on consumption remains just as important as is in the case of internal combustion engines. Nissan’s energy services department in Europe focuses on how to integrate the growing number of EVs in today’s changing energy environment. Carbon-dioxide emissions are a main culprit for global warming, which can be reduced via smart energy solutions, Reizer says. The integration
“A robot won’t get tired, won’t lose concentration. As a result, their work is more predictable.” of renewables in the grid can help achieve climate goals. However, due to their intermittent nature they need to be stored, otherwise we get stuck at roughly 20% penetration, he adds. EV batteries may be part of the solution. Although battery capacity and range continues to grow – the current Leaf is capable of
covering
500 km
on one charge – most owners won’t drive more than 25-30 km per day. The remaining capacity can be used to store and transmit energy, for example, charging the battery with electricity from nuclear energy at night, and send it back to the grid during daytime. “If drivers can tell ahead how much energy/range they are willing to use, they can sell the rest to transmission system operators. This way we don’t need to switch on expensive spare power plants during peak consumption times – they can use the energy stored in the car’s battery,” Reizer says. With such vehicle-to-grid solutions, drivers can earn as much as EUR 1,000 per year, according to Nissan’s data based on some research in Denmark.
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Budapest Business Journal | May 18 – May 31, 2018
Special Report | 15
Capacity to Develop Engine Technology Drives Continued Confidence, Investment in Hungarian Production Units Ever since car manufacturers Opel and Suzuki each took a decisive step to set up shop in Hungary in 1991 (in Szentgotthárd and Esztergom, respectively), the automotive industry in Hungary has grown by leaps and bounds to become a staple component of the Hungarian economy. Registering record-high production worth EUR 25.5 billion in 2017, Hungary’s automotive industry now accounts for more than 30% of the country’s total industrial manufacturing output, and roughly one-fifth of its total exports. NATHAN JOHNSON
The added presence in Hungary of two other leading OEM firms — Audi Hungaria Zrt., established in 1993 in Győr; and Mercedes-Benz Manufacturing Hungary Ltd., established in 2012 in Kecskemét — has helped to grow and burnish Hungary’s reputation over the years as a regional, if not European, leader in automotive manufacturing. Even after the pivotal 1990s, the Hungary-based auto industry grew by 15% between 2000 and 2016, while the wider industry has kept pace locally through a steadily maturing network of suppliers, as well as investments from companies such as Bosch, Continental, NNG and Thyssenkrupp into an expanding constellation of automotive R&D centers throughout the country. While major players remain optimistic about Hungary’s strong regional position and good reputation, they are also well aware of the automotive industry’s potential for volatility. The biggest recent shakeup with potentially far-reaching consequences for a Hungary-based manufacturer, for example, was PSA Group’s
2017 purchase
of Opel and Vauxhall from General Motors. As the new owner followed with a pledge to become a “CO2 leader” in the production of all-electric vehicles (EVs) and plug-in hybrids (PHEVs) by 2024, many immediately wondered if Opel’s Szentgotthárd facility will be able to respond effectively to such radical changes in engine design requirements. “Definitely!” Grzegorz Buchal, plant manager at Opel Szentgotthárd, told the Budapest Business Journal. “[We] have proven expertise in building high-quality internal combustion engines [ICEs] and components. Efficient ICEs are here to stay and are also the backbone of the hybrid propulsion system, a system that is an integral part of the Opel strategy to meet the strict emission norms of the European Union in the very short-term.”
Proven Competitiveness
Buchal added that Opel Szentgotthárd will be manufacturing the “highly
efficient 3-cylinder turbo gasoline PSA engine from the beginning
of
2020.
We have won this project because of our proven competitiveness and knowledge, and we are and will continue doing our best to win further projects in the future.” Also looking to accelerate the development of environment-friendly technology, Japanese car maker Suzuki continues to invest in its Hungarian arm, Magyar Suzuki Corp. With the parent company in the midst of a campaign to introduce 20 new models worldwide between 2015 and 2020, Magyar Suzuki announced in March of this year the launch of a HUF 5.3 bln R&D project to produce vehicle prototypes and more efficient engine technologies. As part of a four-year project that started in 2016, the European Union and Hungarian state will contribute funding worth up to HUF 2.6 bln, the BBJ reported following the announcement. “Our Hungarian workforce is producing cars of the same quality that Suzuki is producing in Japan,” Magyar Suzuki Corp. executive general manager Róbert Krisztián told the BBJ. “Our Hungarian plant is concentrating currently on
production of mid-size SUV and C-segment models, namely the Vitara and S-Cross. The parent company considers Magyar Suzuki as one of its main global manufacturing sites for these models and a key factory for supplying cars for the European market. Besides that, the parent company is securing more opportunities for Magyar Suzuki to export cars produced in Hungary out of Europe. At present, we export cars produced in Hungary to 128 countries across five continents.” As for investment and confidence in its Hungarian operations, Audi Hungaria Zrt. has a standout résumé. Győr-based Audi Hungaria, which began producing engines for the Audi and Volkswagen group in 1994, has since grown to be one of the world’s largest engine plants. In 2017 alone, the company produced nearly two million engines. Already the largest investor in Hungary from the automotive sector (EUR 8.753 bln since its establishment), the company plans to expand engine production even further later this year to include a series of electric motors: “Preparations for the start of series production are in full swing,” according to the company’s press information. “Audi Hungary has an important role in the Audi Group, and holds a central
position in the Group’s production network,” Mónika Czechmeister, head of external communications at Audi Hungaria Zrt., told the BBJ. “With the production of e-engines, the company will be central to that process for the Audi Group, as well.”
Beyond Capacity and Innovation Audi’s positive outlook regarding its Hungarian operations extends, however, beyond manufacturing capacity and innovation. “The development of the Hungarian automotive sector is remarkable,” Czechmeister noted. “Not only are the big production sites broadening their capacities, but the Hungarian supplier industry is also developing very fast. Audi Hungaria has more than 100 production suppliers, and the number increases year by year.” With Daimler pledging to spend up
to EUR
1 bln
through 2020 to expand its MercedesBenz Manufacturing Company Kft. site at Kecskemét, the “big four” foreign-owned OEM companies with a firmly established presence in Hungary continue to express confidence in their Hungarian units, both rhetorically and investment-wise. Still, no one is resting on their laurels. “The fact that Opel Szentgotthárd has won a new project with the wider PSA manufacturing world shows that we are being recognized by the new management as a highly efficient facility with a knowledgeable and dedicated workforce, where it makes sense to further invest,” Opel’s Buchal explained. “At the same time, we must be aware that there is no such thing as a lifelong guarantee for success. We need to fight our daily fights in each and every detail to make our processes and daily routines more efficient and more streamlined. The automotive business is part of an everevolving mobility economy on the brink of historical changes.”
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Budapest Business Journal | May 18 – May 31, 2018
Technology Driving Automotive Recruitment Trends Budapest “owns” the entire group’s knowhow, so offering attractive projects to work on is fairly easy, Tagai, says. “We won’t assign an unexperienced, young engineer to the development of self-driving vehicles, but they can watch, learn and can get involved in the process from the beginning,” she says. The possibility to innovate can also be a draw for the more experienced, who might have been in the same position for a long time.
Advances in automotive technology are no longer just a matter of science; they are increasingly becoming one of labor.
More Than Assembly
Sándor Bodnár
There are several more companies, suppliers such as Bosch or Continental, with R&D centers in Hungary. But even manufacturers where the focus is on assembly need engineers. “I strongly disagree with those claiming Hungary is no more than a vehicle parts assembly hub,” says Sándor Bodnár who is responsible for the expert permanent recruitment business line at Hays Hungary. The company is strongly involved in the Hungarian automotive labor market: more than
professional from test to quality engineers.” There are fewer on the market and they tend to change more slowly, she adds. Thyssenkrupp is trying to solve this problem by attracting candidates with inspiring jobs. The competence center in
the firm’s recruitment projects last year were in this sector, says Bodnár. “Several assembly hubs, for example Dana at Győr, design a part from scratch, rather than assembling it from imported
ZSÓFIA VÉGH
When you are looking at a shiny new (electric) car, admiring the amount of technology the streamlined chassis houses, the last thing that comes to your mind is probably the labor market. But it should, as cars and innovation are strongly linked to the pool of experts available. Labor has not kept up with the expansion of the automotive industry in Hungary (a story that is repeated in virtually all economic fields): the number of employable professionals has remained the same. This is a global problem. The job market is saturated with technologyrelated opportunities and the number of candidates is limited. Regardless of the
field, recruiting specialists with several years of experience is challenging, Dóra Tagai, head of HR at Thyssenkrupp tells the Budapest Business Journal. “It is not only software or hardware developers; it is any expert-level
70% of
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“In order to keep the hotel fresh, a comprehensive reimagining and renovation has been underway, following the reconstruction of the event area on floor one, the former ballroom and the associated halls last April,” general manager Stephan Interthal explained. He said the idea was to combine “a mix of luxury and residential styling with a considered understanding of the guests’ requirements. Pieces from the hotel’s own art collection grace the newly redesigned rooms and suites.” The Premium Grand Deluxe Rooms and Premium Junior Suites have been entirely rebuilt on plans by British designer Alex Kravetz. The new units boast a comfortable seating area, abundant sunshine, and a light-enhanced separation of functions within the room. Featuring a soft color palette, the redesigned spaces reflect contemporary aesthetics and the designsavvy sensibility of the modern traveler.
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Budapest Business Journal | May 18 – May 31, 2018
Tight Supply
Despite tight supply, companies are reluctant to widen the circle of potential candidates. This is a rather tight market and won’t get wider as long as companies expect applicants to have experience in this industry, Bodnár says. If they need a molding specialist, why not hire someone with experience in molding from another industry, he suggests. Companies may require industry experience, but they do lower the bar when it comes to soft skills, the expert says. Language command is a must but interpersonal or management skill may not be – even if an engineer today leads teams and supervises projects. The shortage of IT professionals is so acute that some companies would hire professionals with no university or college degree. “There are a number of non-accredited IT academies that train
junior programmers in one-to-two years. We have taken on people coming from such institutions; we try and use every source,” Thyssenkrupp’s Tagai says. Bence Bank, recruitment team leader at automotive navigation solution provider NNG tells the BBJ: “We are partnered
INSIDE VIEW
“We won’t assign an unexperienced, young engineer to the development of selfdriving vehicles, but they can watch, learn and can get involved in the process from the beginning.” with Codecool Academy where we have a dedicated training program for Java and C++. In addition, we have ad-hoc relationships with selected universities who cooperate with us during job-fairs and specific events.” In order to secure labor supply, companies offer attractive remuneration packages. The Suzuki plant in Hungary, due to its proximity to the Slovakian border needs to pay special attention to that. “We try and offer an attractive package to attract and retain workforce,” Viktória Ruska, head of communication at Magyar Suzuki tells the BBJ. This is not confined to salary; fringe benefits and other services play a role too, Ruska says. The company has been reviewing its remuneration package to better accommodate the needs of its workers. It had better do so; Slovakian car makers also try and recruit from Hungary. Though salaries are definitely a factor for one to change, especially for blue collar workers, some companies would rather not enter a wage competition. “We keep up with market trends, but we don’t see the point of offering more. It is not these colleagues [who receive a higher salary] who stay with the company longer in the long run” Tagai says.
Magyar Suzuki’s Esztergom Facility to Become a Smart Factory A new, multi-phase innovation development project has begun at Magyar Suzuki’s factory. The HUF 5.3 billion R&D project supported by EU funding is led by Suzuki as part of a consortium. During the fouryear project, Magyar Suzuki Corporation and its partners will introduce smart manufacturing processes and build an innovative supplier network. As a result of this modernization, new, competitive, safe and thoroughly tested Suzuki prototypes will be created at Suzuki factory by 2020.
Factory of the Future
The Esztergom factory has been playing a leading role in innovation and applying manufacturing technologies since 1992. Magyar Suzuki Corp. concluded its threeyear factory modernization project in 2016, implementing significant developments in automation and robotization. Following the modernization, manufacturing processes became safer, more efficient and more environmentally friendly. With respect to the level of robotization, Magyar Suzuki leads the way in Hungary with 770 robots working currently throughout the production line, where installation is aided by smart systems.
Cooperation with Hungarian suppliers
An engineer working at the Audi factory in Győr.
Magyar Suzuki Corporation pays special attention to cooperating with its supplier partners. The company regularly implements development programs for its Hungarian suppliers. Since 2015, several quality assurance and innovation training courses have been organized with the Hungarian Investment Promotion Agency’s (HIPA) HUF 20 million subsidy, with the participation of a total of 39 domestic suppliers, and the program continues this year. As part of the current R&D project, the company, as the leader of the consortium, is working in close cooperation with its professional and technology partners: PEMÜ Plc., Bay Zoltán Nonprofit Ltd. for Applied Research and Pázmány Péter Catholic University. The project’s overall budget of HUF 5.308 bln has two sources: a self-funded portion of HUF 2.712 bln and another HUF 2.596 bln granted by the state’s Széchenyi 2020 program.
As a result of this investment, by 2020 an innovative close cooperation network will be built up including consortium partners and the suppliers.
Areas of Development
The ambitious factory innovation project will have been implemented in several areas by 2020: • Major development goals in vehicle prototype development are weight reduction, low fuel consumption, low environmental impact, safety, and the use of recyclable materials. • A major, decisive step on the way towards the factory of the future is the preparation for laser welding technologies. • Having a connected network of welding robots is an important element of smart manufacturing. • Magyar Suzuki’s supply chain involves around 240 suppliers delivering more than 4,500 types of parts to the Esztergom factory. The aim of the development of the logistics system is the implementation of the complete electronic tracking of products, a significant step towards the implementation of digital production control. • The aim of the material development process is the production of a lighter polymer to be used as a raw material. With this development, Magyar Suzuki will further increase safety, contribute to the preservation of the environment, and reduce the fuel consumption of Suzuki models. • Magyar Suzuki Corp. wishes to transform its current supplier agreements into an innovative supplier network. The members of this network will work together when it comes to research and product and technology development. By delivering cars combining high-quality and advanced technology solutions, Magyar Suzuki Corp. offers state-of-the-art features to its customers, further strengthening its leading role in the Hungarian car market, as well as its position on the international automotive scene.
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pieces”, he says. In many research centers in Hungary, engineers design products (for example lidars – distance measuring devices – for self-driving cars) that usually are not designed elsewhere, except for the company’s home headquarters. As a result, the demand for white-collar workforce, both in manufacturing and in R&D, is high. Just as in any sector where technology is involved, in the automotive industry it is IT professionals who are most in demand. Today everything is softwarecontrolled, which puts software developers on top of recruiters’ lists. They earn the most: a developer with two-to-three years’ experience can get HUF 600,000-700,000 gross, while a fresh graduate’s starting salary is about HUF 450,000. There is also a shortage of electrical engineers: hardware developers, test engineers, automation engineers and robot programmers. Quality Assurance engineers are becoming more and more challenging to find. The demand for the latter has jumped recently; every company is searching for them, Bodnár notes. It is the precise focus of the company, for example R&D or new project implementation, that defines what skills are needed more.
Special Report | 17
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Special Report
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Budapest Business Journal | May 18 – May 31, 2018
HIPA Named Region’s Best Investment Promotion Agency The Hungarian Investment Promotion Agency has been voted the “Top Investment Promotion Agency, Eastern Europe & Central Asia”, while the country itself has been named among the ten best investment locations in the world and topped two categories in the region, according to the Site Selection “Global Best to Invest 2018” report.
Most Projects by Country – 2017 Number
Country
Projects
1.
China
777
2.
Germany
455
3.
India
269
4.
United Kingdom
227
5.
Poland
140
6.
Netherlands
137
7.
Mexico
125
8.
Hungary
74
9.
Australia
73
10.
Romania
70
The survey is published annually by Site Selection, the professional magazine of the U.S.-based Conway, Inc. consultancy firm. It is based on Conway’s database of capital investments into private-sector facilities, which includes projects representing an
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Combating skill shortages Team Leader
HAYS HUNGARY Due to the scale of investments, which has been the highest since 1995, the biggest headcount increase in the engineering and manufacturing area has come from the automotive industry. Nearly 40% of investments are automotive, and in 2017 the automotive industry’s production value exceeded HUF 8 trillion. Industry 4.0 projects are in high focus, while a key requirement for the lead plants is to integrate and educate suppliers from the SME segment. In the future the most important goal is no longer to increase the number of job opportunities but to increase the added value and the technological standards. Lead plant function requires the build-up and retention of competence for specialists with a high level of professional knowledge in the areas of plastic injection molding, metal working, soldering and SMT technology. The growing demand for project managers is also visible, both in manufacturing and in the R&D sector. Professionals in the field of quality management are expected to become more prominent as market participants are putting
6 2
5 8
more emphasis on improving quality assurance systems and processes, given the ever-expanding investments and the competition between companies. In the field of electrical engineering, there is a growing demand both for careerstarting and experienced candidates. This is also relevant to the research and development area, since companies are seeking for hardware developers and test engineers in Budapest. In addition, commissioning positions were expanded to the greatest extent in the field of automation. It is difficult to find and keep engineers with electrical background/experience, who typically run their career in automation – there is a fundamental labor shortage in this area. The production of high technology for hybrid and electric cars is also challenging for fresh graduates and senior executives; automotive skills are highly paid by most relevant manufacturing and R&D companies. Over the past five years, salaries have increased by 19% in non-managerial positions and by 3% in executive positions. In addition to raising salaries, career prospects and many other non-financial benefits – workplace atmosphere, employer’s image and training opportunities – keep colleagues loyal in the long-term and have a very important role in recruiting new staff.
1
3
9
Source: HIPA
20 jobs
or requiring 1,900 square meters of newly developed space. The report also takes into consideration various international competitiveness rankings. “The ‘Top Investment Promotion Agency, Eastern Europe & Central Asia’ award is both an honor and important feedback, showing that HIPA implemented the appropriate strategy and that the quality of our one-stop shop management consultancy services are exceptional even on an international level,” commented Róbert Ésik, the president of the agency.
Generating Value
“HIPA has supported nearly 300 successful investment projects between 2014 and 2017. These projects will create more than 58,000 new jobs with an investment volume of more than EUR 10 billion. I am sure that, through our company-specific services, we will continue to generate value for our partners and for Hungary, and our customer base will continue to grow,” Ésik added. The latest “Global Best To Invest” survey is based on data from 2017 and was published at the beginning of this month. Hungary was ranked among the top ten in three categories, and named as the best country for investment in the Eastern Europe and Central Asia region. It also achieved number one ranking for investment volume per capita. The country was placed eighth in the global ranking based on the number of investment projects. That list was topped
Top 10 Countries by Investment Value per Capita – Eastern Europe & Central Asia Source: HIPA
www.hays.hu
10
7
investment of at least USD 1 million, creating at least
BBJ
INSIDE VIEW
Virág Morvai
4
by China, followed by Germany, India, the United Kingdom, Poland, the Netherlands, and Mexico. After Hungary, and rounding out the top ten, came Australia and Romania. According to a HIPA press statement put out marking the award, Site Selection is one of the most popular magazines on investment, site selection and economic development in the United States. It has been in circulation for 60 years, and its readers on average contribute to a total of
130
investment
projects worth USD 12 billion per month. As well as measuring investment destinations, the survey also looked at national and regional investment promotion agencies. With feedback from more than 1,000 international consultants, a jury of FDI professionals and Site Selection experts named HIPA the top investment promotion agency in Eastern Europe and Central Asia. Managed by the Ministry of Foreign Affairs and Trade, HIPA, as its name suggests, has a main focus on investment promotion. It received the award based on its results in promoting FDI, the quality and complexity of services offered to customers, the expertise, language skills and customer-friendly attitude of its employees and the feedback of investors already established in the country. The official awards ceremony will take place at “The World Forum for FDI” event in Liverpool next month. See also Diversified Automotive Backbone Still Hungary’s Flagship, page 12-13.
1. Hungary 2. Slovakia 3. Lithuania 4. Serbia 5. Czech Republic 6. Slovenia 7. Macedonia 8. Romania 9. Latvia 10. Estonia 0
5
10
15
20
25
30
35
Special Report | 19
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Car importers Ranked by total net revenue (HUF mln) in 2016 CaR bRands
leasing
assistanCe
seCond-Hand CaR tRade
Fleet management
HybRid
178,624
✓
–
–
–
–
–
–
1991
–
276,160
35,589
✓
–
✓
–
–
✓
–
1990
Volkswagen, Audi
Volkswagen, Audi, SEAT, Skoda
oWneRsHip (%) HungaRian non-HungaRian eleCtRiC
RepaiR
710,252
diesel, gas
no. oF veHiCles sold in 2017
yeaR establisHed
total net Revenue in 2016 (HuF mln)
FinanCing
Company Website
spaRe paRts supply
Rank
seRviCes
top loCal exeCutive CFo maRketing diReCtoR
addRess pHone Fax email
Suzuki
–
(0.01) Suzuki Motor Corporation (97.53), Itochu (2.46)
yoshinobu abe – –
2500 Esztergom, Schweidel J. utca 52. (33) 541-100 (33) 510-570 –
Volkswagen,
– (100)
János eppel, peter gstattner – –
1139 Budapest, Fáy utca 27. (1) 451-5100 (1) 451-5100 prsajto@porsche.hu
Opel
– Groupe PSA (100)
enrico de lorenzi Péter Oriskó –
2040 Budaörs, Szabadság út 117. (23) 446-100 (23) 446-339 info@opel.com
–
– Toyota Motor Europe (100)
Jacek pawlak – –
2040 Budaörs, Budapark Keleti 4. (23) 885-101 (23) 885-006 infohu@toyota-ce.com
viktor molnár – –
1138 Budapest, Népfürdő utca 22. (1) 777-7555 – inform@ford.com
magyaR suzuki zRt. 1
www.suzuki.hu
2
poRsCHe HungaRia keReskedelmi kFt.
3
opel soutHeast euRope kFt.
4
toyota CentRal euRope kFt.
5
www.porschehungaria.hu
www.opel.hu
www.toyota.hu, www.lexus.hu
FoRd kÖzép- és kelet-euRópai ÉRTÉKESÍTŐ KFT.
210,050
119,041
11,486
Ÿ
✓
✓
–
–
✓
–
–
–
✓
–
–
–
–
–
1990
–
Opel
1990
Toyota, Lexus
Toyota, Lexus
93,224
16,033
✓
✓
✓
✓
✓
–
✓
2000
Ford
Ford
–
– Ford Motor Company (100)
90,287
Ÿ
✓
–
–
–
–
–
–
1992
–
Alfa Romeo, Fiat, Jeep, Fiat Professional
–
– FCA Italy S.P.A. (100)
alberto de aza – –
1138 Budapest, Madarász Viktor utca 47. (1) 458-3100 (1) 458-3101 customercare.hu@fiat.com
www.ford.com
6
FCa CentRal and easteRn euRope kFt.
www.fiat.hu, www.alfaromeo.hu, www.jeep.hu, www.fiatprofessional.hu
7
meRCedes-benz HungáRia kFt.
79,791
Ÿ
✓
–
–
–
✓
–
–
2004
MercedesBenz
MercedesBenz, smart
smart
– Daimler AG (100)
Jörg dieter schmidt – –
1133 Budapest, Váci út 96–98. (1) 887-7000 (1) 451-2209 internet-hu@daimler.com
8
poRsCHe inteR auto HungaRia kFt.
65,756
Ÿ
✓
✓
✓
✓
✓
✓
✓
1993
Porsche
Porsche, Bentley
–
– Porsche Holding GmbH (100)
szabolcs nagy – Péter Árvay
1139 Budapest, Fáy utca 27. (1) 451-5500 (1) 451-5502 info@porschepest.hu
Renault
– (100)
tamás Wachtler – Zsolt Précsényi
1138 Budapest, Váci út 140. (1) 358-6000 – ugyfel.kapcsolat@ renault.hu
Nissan
– Nissan Europe S.A.S. (Ÿ), Nissan Motor Manufacturing (UK) Ltd. (Ÿ)
pierre gerfaux Joel Palette Laurent Lamotte
1117 Budapest, Inforpark sétány 3/B (1) 371-5300 (1) 371-5303 hungary@ nissan-services.eu
–
– KIA Austria GmbH (100)
kim dowan, kim youngrae – –
1117 Budapest, Budafoki út 56. (1) 371-2000 (1) 371-2001 info@kiamotors.hu
9
10
www.mercedes-benz.hu
www.porscheinterauto.hu
Renault HungáRia kFt. www.renault.hu, www.dacia.hu
nissan sales CentRal & easteRn euRope keReskedelmi kFt.
47,828
25,623
15,654
4,887
✓
✓
–
✓
–
✓
–
✓
–
✓
–
✓
–
✓
1991
2005
–
–
Renault, Dacia
Nissan
www.nissan.hu
11
kia motoRs HungaRy kFt.
www.kiamotors.hu
18,993
Ÿ
✓
–
–
–
–
–
–
1995
–
KIA
Special Report
www.bbj.hu
Budapest Business Journal | May 18 – May 31, 2018
CaR bRands
15
www.hyundai.hu
volvo autó HungáRia keReskedelmi és szolgáltató kFt.
2,272
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
–
–
1993
1994
–
–
Peugeot
Citroen, DS
oWneRsHip (%) HungaRian non-HungaRian
top loCal exeCutive CFo maRketing diReCtoR
addRess pHone Fax email
Peugeot
Frey Automobil Holding Kft. (100) –
györgy balkányi, Zsófia Bálint kovácsné – Zsófia Bálint Kovácsné
1194 Budapest, André Citroen utca 1. (1) 279-5555 (1) 279-5556 kapcsolat@ p-automobil-import.hu
Citroen
Frey Automobil Holding Kft. (100) –
györgy balkányi, andrás albrecht – Nóra Hajdú
1194 Budapest, André Citroën utca 1. (1) 348-4848 (1) 348-4896 kapcsolat@ c-automobil-import.hu
pál kovács – Gergely Fónay
1186 Budapest, Cziffra György utca 15. (1) 887-5700 (1) 887-5722 info@hyundai.hu
eleCtRiC
HybRid
yeaR establisHed
Fleet management
seCond-Hand CaR tRade
assistanCe
14
Hyundai Holding HungaRy kFt.
16,130
www.citroen.hu
3,324
leasing
13
C automobil impoRt kFt.
16,191
www.peugeot.hu
RepaiR
12
p automobil impoRt kFt.
no. oF veHiCles sold in 2017
FinanCing
Rank
total net Revenue in 2016 (HuF mln)
Company Website
spaRe paRts supply
seRviCes
diesel, gas
20 | 3
15,304
Ÿ
✓
–
–
–
✓
–
–
2007
Hyundai
Hyundai
Hyundai
– AutoBinck Car Distribution and Retail B.V. (100)
14,764
1,437
✓
✓
✓
✓
✓
✓
✓
1927
Volvo
Volvo
–
– Volvo Car Corporation (100)
gábor bodrogai, Ágnes Tárkányi Andrea Sztárcsevity
1044 Budapest, Váci út 50–58. (1) 238-8100 (1) 238-8190 huinfo@volvocars.com
–
– Mazda Motors Logistics Europe (100)
tibor együd Erika Káldi Eszter Burovinc
1117 Budapest, Infopark sétány 1. Building I (1) 464-5000 (1) 464-5001 mazda@mazda.hu
gábor mátrai, Heinz schneiter – –
1149 Budapest, Mogyoródi út 34–40. (1) 422-3910 – gabor.matrai@ mitsubishimotors.hu
www.volvocars.hu
16
mazda motoR HungaRy kFt.
11,504
www.mazda.hu
2,367
✓
–
–
–
✓
–
–
1992
–
Mazda
17
mm impoRt kFt.
9,993
Ÿ
✓
–
–
–
–
–
–
2004
Ÿ
Mitsubishi
Ÿ
Frey Automobil Holding Kft. (100) –
18
Wae autóFoRgalmazási és szolgáltató kFt.
7,782
2,336
✓
–
–
–
–
–
–
1991
–
Jaguar, Land Rover, Isuzu, Ssangyong
–
WALLIS Asset Management Zrt. (90.02) Andrew Prest (9.98)
andrew prest Roland Czeilinger –
2051 Biatorbágy, Budai út 16. (1) 451-4851 (1) 550-0185 info@wae.hu
19
bRitisH automotive HungaRy kFt.
7,781
Ÿ
✓
–
–
–
–
–
–
2011
Range Rover
Jaguar, Land Rover, Range Rover
–
– AutoBinck Car Distribution and Retail B.V. (100)
pál kovács, nicolaas Hertsenberg – –
1186 Budapest, Cziffra György utca 15. (1) 882-8930 (1) 882-8951 info@jlr.hu
20
gablini pRemium kFt.
1,995
159
✓
✓
✓
✓
✓
✓
✓
2007
Inifiniti
Inifiniti
–
Gábor Gablini (80), GABLINI Vagyonkezelő Zrt. (20) –
péter gablini Regina Spenger Péter Váradi
1134 Budapest, Váci út 45. (1) 799-2250 (1) 799-2250 iroda@gablini.hu
21
emil FRey impoRt kFt.
Ÿ
Frey Automobil Holding Kft. (100) –
gábor mátrai, Heinz schneiter – –
1149 Budapest, Mogyoródi út 34–40. (1) 422-3910 – penzugy@emilfrey.hu
massimiliano di silvestre – Zsuzsanna Pócs
2220 Vecsés, Lőrinci út 59. (29) 555-100 (29) 555-101 ugyfelszolgalat@bmw.hu
Roland berger Jarmila Pavova Dagmar Zinner
2040 Budaörs, Puskás Tivadar út 1. (23) 506-406 – info@honda.hu
www.mitsubishi.hu
www.wae.hu
www.jaguar.hu, www.landrover.hu
www.infiniti.hu
www.subaru.hu
bmW veRtRiebs gmbH magyaRoRszági NR Fióktelepe
1,256
Ÿ
✓
–
–
–
–
–
–
1993
Ÿ
BMW, MINI
BMW i
– BMW Vertriebs GmbH (100)
Honda
–
– Honda Motor Europe Ltd. (100)
Ÿ
Ÿ
✓
✓
✓
✓
✓
✓
–
2011
BMW i Performance, MINI
Ÿ
1,738
✓
–
–
–
–
–
–
1993
–
www.bmw.hu
NR
Honda motoR euRope limited magyaRoRszági Fióktelepe www.honda.hu
Ÿ= would not disclose, NR = not ranked, NA = not applicable
Subaru
This list was compiled from responses to questionnaires received by May 15, 2018 and publicly available data. Data is based on companies’ own data revelations. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14. or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu
www.bbj.hu
Budapest Business Journal | May 18 – May 31, 2018
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Budapest: A River Runs Through It David Holzer finds himself musing on the endlessly moving Danube as it flows through Budapest, and what that means for the city and its inhabitants. DAVID HOLZER
The first time I took my Hungarian partner to London, we went on the London Eye. As we climbed slowly into the sky, I realized that the couple next to us were Hungarian. When we were back on terra firma, I asked her what they had been saying. “The woman said the view of the Thames was beautiful and the man said it wasn’t as good as the Danube,” my partner said. Every time I see the Danube, I have to agree with that Hungarian man. The idea for this article first bubbled up to the surface when I was high above Budapest, sitting in the splendid St. Andrea Wine and Skybar. As my partner sipped a glass of what she assured me
I can’t tell you what it means for Budapest to have the river flow through it. The best I can say right now is that, for me, it creates a profound sense of transience. was a delicious Chateau Beaubois Cuvée Elegance Blanc, I gazed over the rooftops towards the sky above the Danube, trying to decide what I thought about the river. Let’s start with the facts, I thought. But, after trawling around, I understood that these don’t begin to explain the mystery of the river. Apart from the revelation that you can pan for gold along its length. Now that’s worth knowing. I also can’t tell you what it means for Budapest to have the river flow through it. The best I can say right now is that, for me, it creates a profound sense of transience. The Danube is so clearly a working river, a route from somewhere to somewhere else. Watching an enormous barge chugging upriver towards Vienna or a pleasure cruiser heading down to the Black Sea
makes it feel that Budapest is only a temporary port of call for me also. The fact that the river has flooded throughout Budapest’s history to such disastrous effect adds to this strange feeling of impermanence.
High Water Mark
I recently discovered that there are high water markers all over Budapest that indicate flood levels over the years. The easiest of these to find is on one side of a ticket-sales center for ferryboats and dinner-cruise ships on the Pest side of the river near Vigadó tér. The highest marker nearly reaches the roof and shows the level the river reached in 2013. Just below it is a marker for 1876. I find it impossible to imagine the river rising so high. But a marker for the most terrifying flood to hit Budapest is missing. When the river broke its banks in March 1838, this building would have been a long way underwater. If you walk into the city’s fifth district and look for the corner of Király Pál utca and Egyetem tér, you’ll also find a strange little monument that shows the extent of the devastation
water levels could ever rise as high again as they did in 1838. If anything, river levels may be falling.
Rock of Misery
Apparently, when the Danube is at its lowest, the Rock of Misery at the foot of Mount Gellért appears out of the water. This happened in 2003, 2011
and
2015.
Should you want to pray for rain this summer, you can always pop into the Cave Church, inside Mount Gellért. The church, called Saint Ivan’s Cave (Szent Iván-barlang) after a hermit and healer who holed up there, is inside a cave system formed by thermal springs. It was founded in 1926 by a group of Pauline monks after they returned from a pilgrimage to Lourdes. In 1951, the
church was closed by the socialists. It was restored and reopened in 1991 and is one of the most intriguing places in the city. While you’re in the area, you might want do something rather more daring than simply visiting the Gellért Baths, beautiful as they are. The remarkable S’39 hybrid design manufacture collective has built a free spa for the people of Budapest literally on the bank of the Danube, fed by overflow hot water from the Gellért. For most of us, sitting in the free spa may well the closest we get to swimming in the Danube. As a keen swimmer, I often wonder what it would be like to brave the waters of the river. It seems I’m not the only one. In September 2017, swimming across the Danube from the Pest side of the Szabadság híd (Freedom or Liberty Bridge) to the Buda side was an event in the Budapest Urban Games. The organizers provided a rescue crew of 40 people on ten boats. Everyone taking part had to be over 18 and needed medical proof that they were, in theory, able to take part in the 100meter swim. Which, when you consider that there are whirlpools in that part of the river, not just strong currents, and the water is 20 degrees centigrade, is not surprising. An impressive 200 people swam the river, but 63 swimmers had to be rescued. The organizers are keen to make the event annual so, if you’re tempted, perhaps you ought to get in training. You can take a number 47 or 49 tram directly from Deák Ferenc tér to the Cave Church. St. Andrea Wine and Skybar is at 5 Deák Ferenc utca. If you’d like to take a deeper dive, as they say, into the subject of the Danube, I recommend regional BBC correspondent Nick Thorpe’s “The Danube” and “Danube” by Claudio Magris. They approach it from different ends: Thorpe begins at the Black Sea and Magris at the river’s source.
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in
1838.
Half of the Pest side of the river was flooded. Should you prefer something more dramatic, head for Ferenciek tere and look for the huge metal relief sculpture on the side of Belvárosi Ferences templom, or Inner City Franciscan Church. The man offering his oar to a family stranded on a rooftop is the hero of the 1838 flood, Baron Miklós Wesselényi. In these times of global warming and wild fluctuations in rainfall, it’s impossible to say whether the Danube’s
MŰVÉSZ KÁVÉHÁZ One of Budapest’s oldest cafes, established in 1898. A beautiful Caffehouse with great atmosphere, delicious coffee and amazing cakes.
120 years old
H - 1061 BUDAPEST, Andrássy Str. 29. Phone: +36 70 333 2116 www.muveszkavehaz.hu • info@muveszkavehaz.hu
22 | 4
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www.bbj.hu
Budapest Business Journal | May 18 – May 31, 2018
Raising the Wine Bar With more new wineries shooting up like mushrooms in Hungary, knowing where to start when visiting wine country can be daunting. Here are a couple of wine bars cum shops to whet the appetite. ROB SMYTH
While the town of Sárospatak may not be the epicenter of the Tokaj wine region, it is nevertheless becoming a significant town in its own right, with wines from this northern part of the most famous Hungarian wine region typically having a cooler edge than those from around the better-known area slightly to the south. The cool and easy-going A Boros wine bar (Rákóczi utca 21, Sárospatak) is the ideal place to get to grips with the local wines, many of which hail from vineyards around the town, such as those made by Pajzos, Tomi Vincze, Harsányi and Portius, or from around the nearby towns. These include: Olaszliszka, represented by the highly promising Kvaszinger; Tolcscva by Spanish-owned Oremus and Czemicki; and Erdőbénye by Karádi-Berger and Béres. The wines also come from the other
parts of Tokaj, such as Mád with names like the legendary István Szepsy, Royal Tokaji, Höldvölgy and St. Tamás. The dry wines are available in 1.5 deciliter measures, as well as by the bottle, but they will also serve half measures if you ask, which enables you to sample a broader range. A Boros also serves food. Over in Somló, the Somlói borok boltja is a treasure trove of local gems, which can be sampled inside, or out on the terrace with a view. It is run by Éva Cartwright (call ahead on +36 30 338 8993 to set up a tasting appointment), a tireless promoter of Somló and other volcanic wines. You can still also find one of the last wines made and bottled by the much-loved Béla Fekete, who though now in his 90s is still actively involved in helping out the new owners of his former winery. His dry Hárslevelű 2008 is wonderful, with pronounced notes of apricot, ginger, honey and melon to complement its impressive texture and structure.
Somlói borok boltja
Exciting Young Winemakers At the other end of the age spectrum, it was here that I got a sneak preview of a community wine from three exciting young winemakers, Péter Tóth, Bálint Barcza and Tomi Kis, which will be available for tasting at the shop in a month’s time. The wine is a blend of three different barrels of Juhfark, one from each winemaker, with the barrels coming from the Trust Hungary cooperage and each barrel possessing different characteristics. The alliance of the three young winemakers is called the Basalt kör. Kis’ own Juhfark 2016 is quite deep yellow, with rhubarb, pineapple and
banana, intense aromas and full-bodied, just like the very well-built former Judo champion himself. For something a little gentler check out his Olaszrizling 2017, which nevertheless possesses impressive body and weight for the grape. Kis works organically, albeit uncertified. Kis was also spotted by the internationallyrenowned Austrian winemaker Roland Velich, who, after falling in love with Somló, teamed up with the young gun to make wine under the label of NR 2 as part of Velich’s Hidden Treasures series. You can feel the savvy touch of Velich in the bold 2016 NR2: buttery and white Burgundylike with the kind of pronounced acidity associated with the Chardonnay of Chablis, from the northern part of Burgundy. The 2016 is sold out but the 2017 is on the way. Just bottled, it is currently a little young and wild, but should be in great shape with a little more time. It is a blend of Furmint and Hárslevelű. Deciding not to release its premium red wine from the challenging 2014 vintage under its usual moniker of Nagy-Eged-hegy, St. Andrea’s father-and-son winemaking team of György Lőrincz Sr. and György Lőrincz Jr. are releasing this wine as Igazán Egri Bikavér Grand Superior 2014. It has the high acidity that characterizes this cool and damp vintage but is nevertheless a very exciting, superbly structured and very complex wine with ripe black and red fruit, cassis and pencil shaving notes, after giving it a chance to breathe. It will cost around HUF 14,000 on the shelf, as opposed to the usual HUF 26,000 for a bottle of NagyEged-hegy and is a chance to savor the hill’s limestone action at a lower price.
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Elegant Greek Eatery by the Opera When passing the Opera House in Budapest, one will bump into a very elegant, authentic Greek restaurant. Don’t be afraid to enter despite the classy look; it is paired with very kind waiters’ eager to explain which specialty your choice could be this afternoon or evening.
The name Ellinon Jefseis, or “Greek Tastes” in English, adorns the pretty sign above the door. The terrace tables are already outside, too. Sitting out there and having dinner in the evening, watching people go by and enjoying the summer milieu should absolutely be on everyone’s Budapest night wish list. The stylish interior might be somewhat misleading for those who mean to enjoy a good old hearty moussaka or a fresh original souvlaki, but do not worry, these two favorites are also available here. The more curious types are also welcome, of course, with lamb, shrimps, octopus and squid among the range of choices. Authenticity is guaranteed not only by the Greek recipes, but also by the ingredients wherever possible. The two chefs, Christos Gremos and Antonis Panousiades, insist on ordering some of their favorites from Greece, such as real feta cheese, olives, olive oil and herbs. Fresh ingredients such as meat and vegetables come from Hungary, from sources tried, tested and trusted. As to what to try here, one of the most exciting dishes is rizogalo with mastiha, a rice pudding seasoned with a true delicacy. Mastic (mastiha) is the resin of a special tree that only grows on one side of Chios island, and is sometimes referred to as the “tears of Chios”. The flavor is refreshing,
reminds one of pine or cedar, and comes in tiny droplets from Greece. During the day, the venue offers a business lunch with two-or threecourse options (soup or cold starters, a main meal and a dessert) for HUF 2,490 or HUF 2,990, changing weekly. Meals offer a peek into the full menu but at a discount.
www.bbj.hu
Budapest Business Journal | May 18 – May 31, 2018
PRESENTED CONTENT
4
Socialite | 23
Summer-long Festival VeszpremFest to Please Most Demanding Brings Back the Opera VeszprémFest (July 11-15), which started Cultural Consumers
with a group of friends thinking it would be a wonderful idea to get the world’s most famous singers to perform against the back drop of the castle, celebrates its 15th anniversary this year. We spoke with founder and organizer Zoltán Mészáros about how preparations are going.
It is worth adjusting your holiday calendar to take account of the Budapest Summer Festival: the cream of the crop series of programs between June 9 and August 26 offers a wide range of cultural events from classical music concerts, opera and ballet shows to pop concerts and exhibitions. No matter the genre, the requirement is always outstanding quality. Teodóra Bán, the head of the festival, tells the Budapest Business Journal her vision about the ideal evening in Budapest. Photo: Szilvia Csibi
ÁGNES VINKOVITS
BBJ: The Margaret Island Open-air Stage, one of the regular venues of the festival, opened 80 years ago. How do you celebrate? Teodóra Bán: A gift for Budapest – this is our motto this year to mark the anniversary. The season will kick off with a free and grandiose open-air concert on Margaret Island’s Nagyrét on June 9, where Norwegian violinist, Alexander Rybak and the Hungarian State Opera Orchestra will make sure that the audience feels the rhythm. We really would like to see people dancing. This is why we named the opening concert “Barefoot in the Park” and decided to have it outside of our traditional venues. The stage program starts the next day with the concert of alternative rock band Quimby and the Óbuda Danubia Orchestra. BBJ: On Margaret Island you have events at the Water Tower and at the Dominican convent ruins, too, while you also have another venue on the Buda side in Városmajor. Classical music concerts and ballet will also be on stage, as well as electronic and pop music, not to mention that there will be plays for kids too. Can you pick personal favorites from such a big assortment? TB: All the events are dear to my heart, but I would highlight two big operas, the “Salome” and the “Rigoletto”, which might attract huge international interest. But it is hard to stop as I am also looking forward to “The Great Gatsby” ballet show and the Béjart Ballet’s “The Magic Flute”. And, indeed, we would like to take advantage of the unique architectural environment that our big stage is located next to the country’s oldest and biggest water tower. It has been renovated recently and got back its original look and during the festival it will serve as a look-out tower as well as an exhibition place. The Water Tower with its secessionist stairs and its view on the city is a touristic sight in itself; no
ROBIN MARSHALL
Teodóra Bán wonder it attracts 8,000-10,000 visitors per year anyway. We are also happy to have a boat service coming to the theater’s own port. It is really the cherry on the cake if, after watching a beautiful play, people finish their evening by taking a look at the lights of Budapest from the River Danube. BBJ: The Festival has an impressive line-up. Is it easy to attract international stars to play here? TB: The old historic venue demands respect and has always had its appeal. Already in the beginning we could present legends like the Italian conductor Giuseppe Patané or the Russian opera singer Jevgenyij Nyeszterenko. They helped to establish our name and we keep having great artists who keep spreading the good reputation of the Margaret Island Open-air Stage, and also of Hungary’s unique beauty and intellectual quality. So, luckily, I can say that all the big names are happy to play here and thanks to them it is also easy to attract international audiences. At this year’s festival we expect an audience of about 110,000.
BBJ: What is new at VeszprémFest this year? Zoltán Mészáros: We had been hesitating about how to celebrate our 15th anniversary; many ideas popped up, but producing a great night with opera stars returning to Veszprém turned out to be the winner. All of the four stars of our opera night are coming back after many years; the festival has not done an opera since 2012, though previously we had seven opera productions from Verdi’s “Rigoletto” to Mozart’s “Magic Flute” to Donizetti’s “Don Pasquale”. José Cura, the great Argentinean tenor opened the Festival in 2004, Andrea Rost was in Verdi’s “Rigoletto” in 2005, Erika Miklósa was the Queen of the Night in the Mozart piece in 2006, and we also had Ramón Vargas from Mexico. These four great singers have never been on stage together before, so I personally really look forward to it on July 13, outdoors at our fascinating new venue at the Bishop’s Garden. BBJ: Who are the stars you are most looking forward to seeing on stage? ZM: Well, as a general manager obviously I look forward to all of our productions, and from reggae to soul and from opera to pop, it’s so different night by night. But if you ask about my personal musical appetite, I might point to Joss Stone; she is really my cup of tea in terms of the musical genre she is performing. BBJ: How are ticket sales going thus far? ZM: Well, I was a little concerned about the opera, but tickets sales are good, although we still have another seven or eight weeks, and then I may be more relaxed about this! Joss is selling pretty well too. For the younger generations, we offer a double bill with Amy McDonald and Aloe Blacc, and this is not a typical VeszprémFest audience, but I still consider it to be important to offer artists and concerts for the youngers as well, so our marketing activity supporting the ticket sales will probably back up these two days of Ziggy and Amy/Aloe. BBJ: Could you give us an overview of how successful last year was? ZM: Financially it was about on plan; Tom Jones was unquestionably the greatest success, sold out weeks before the show and he delivered a surprisingly young and freshly arranged sound with
Zoltán Mészáros the young British musicians around him. Sometimes it sounded far more like a blues night than a pop concert; it was really one of the most spectacular gigs of the festival. Our new outdoor venue, the Bishop’s Garden has successfully passed the exam: audience and supporters and guests all had really good feedback about it, so we return there again this year. BBJ: Do you already have half an eye on the 2019 festival? If so, can you tell us any of your hopes and aspirations? ZM: Surely, I do! We have just started to book artists for the 2019 festival. We have some uncertainties around the renovation and renewal of the Veszprem Arena (it will be enlarged from 5,300 to 8,300 seats), so we really need to see clearly as soon as possible whether the renovation starts next summer or not. We use the arena as alternative rain venue, but in the case of the “heavy hitter” stars we might be able to book, we use it as the sole venue as it has a way bigger capacity than our outdoor one. Anyhow, we are really looking for an attractive line-up for 2019 as well, and considering the unexpectedly good ticket sales for the opera, we might do something again in that genre next year too. BBJ: Is there anything else we should consider? ZM: Maybe our fascinating Rosé, Riesling and Jazz Days mini-festival (July 6-15), now into its eighth year. Ten days, 30 winemakers, 30 concerts, wines only from the Lake Balaton region, young Hungarian bands; it’s a free admission event, and a really a great one…
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