March 24, 2013

Company profile: Daimler's manufacturing in Hungary

A star of Hungarian manufacturing industry. source:
Daimler's largest manufacturing plant in Eastern Europe was established in Kecskemet, Eastern Hungary. After the decision in 2007, the production started in 2012. With its €800 million investment, it was the largest foreign direct investment in the history of Hungary, creating 2,500 jobs in Daimler's plant, and further 10,000 jobs by suppliers.

A site selection story

Daimler (more exactly: Mercedes-Benz) was seeking an Eastern European location for the manufacturing site of its new B-class car. Originally the company was thinking about Romania and Poland. A senior manager of the Hungarian investment promotion agency read a news in Handelsblatt about Daimler's plans in Eastern Europe, and convinced the company to list Hungary in the site selection. In the final stage, Hungary provided stronger supplier industry than Romania and Poland (and much more moderated cost level than the Czech Republic). The guy who purchased step-by-step a 440 hectares agricultural land (more years before Daimler deal) in the periphery of Kecskemét, became a multimillionaire.

Labour pool and technical education

Daimler (Mercedes-Benz Manufacturing Hungary) has a high-end production facility in Kecskemét, located south-east from Budapest. Beside the M5 Motorway, Kecskemét is a little town with 110k inhabitants, however the labour pool is tremendous in Eastern Hungary: for less than 50% of the Hungarian population comes 80% of the Hungarian job seekers.
It's not an overstatement to say: in the core of the Hungarian vocational secondary education system's strong dual profile (with strong company presence) there is Daimler and the company's proven methods in Germany. Before Daimler, Kecskemét College, let say, was not a top-listed college in Hungary. After Daimler investment, it became a very strong mechanical and vehicle engineering center, almost the private college of Daimler.

Supplier pyramid

Hungary never was a world champion automotive industrial center than, let say, Slovakia (which is the world's nr.1 automaker per capita). There are a few OEM automotive companies in the country, beside Daimler: Audi, Opel, Suzuki. However, when we look at the background industry, the picture is different. There are a very strong, wide-spread automotive supplier industry in the country, represented by international companies like Knorr-Bremse or Delphi, and domestic companies like Hajdu Autotechnika or Csaba Metál. The strong supplier industry is the source of vehicle components - and the source of specialists, who are the key persons for every newcommer companies.

Finally, a short video about Daimler's Hungarian manufacturing plant:

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