Automotive Industry. Securing Automotive Investments in the New Member States. Kalman Meszaros, dr. Commercial Counsellor. Brussels, 4th November 2008

Transcription

1 Automotive Industry Securing Automotive Investments in the New Member States Kalman Meszaros, dr. Commercial Counsellor Brussels, 4th November 2008

2 I. New Challenges Long term: EU stricter environmental regulations (to reinvent the vehicle from birth to funeral from materials used and recycled to intelligent solutions, new fuel for low C02) EU companies in the forefront of Innovation/R&D best poised to succeed, to meet market expectations for less expensive, clean, safe and well performing vehicles extra incentives needed to shift to clean vehicles Short term: financial crisis spiralling inte real economy temporary slump, later catch-up probable, overbridging financial facilities New Member States: for EU to remain competitive essential to exploit potentials of NMS (HR;Know- How;Logistics;Innovation/R&D;New Markets)

3 II. Automotive Industry in Hungary Investment Aspects EU: one third of world production; abt. 550 Bn Euro annually 5 % of GDP vs. Hungary abt. 15 Bn Euro - 15 % of GDP Overview

4 Passenger Car OEMs in CEE (2007) Volkswagen in Poznan Production of 75,100 cars Employees: 4,800 FSO/Chevrolet in Warsaw Production of 153,300 cars Employees: 3,000 Opel (General Motors) in Gliwice Production of 186,200 cars Employees: 3,600 Fiat in Tychy Production of 346,100 cars Employees: 4,500 Hyundai in Nosovice Capacity: 300,000 cars (by 2011) 3,500 employees 100 km Skoda (VW) in Mladá Boleslav Production of 623,529 cars 23,559 employees Kia in Zilina Production of 142,335 cars Employees: 1,200 PSA and Toyota Kolin 308,478 cars 3,500 employees PSA (Peugeot/Citroen) Trnava Production of 180,000 cars Employees: 3,300 Volkswagen (VW) in Bratislava Production of 248,738 cars Employees: 8,500 Audi (VW) Győr Production of m engines and 56,982 cars Employees: 5,845 Daimler (Mercedes) Kecskemét Production from 2011, 100,000 cars Employees: 2, km REVOZ (Renault) in Novo Mesto Production of 200,187 cars Employees: 2,632 Dacia (Renault) in Pitesti Production of 222,854 cars Employees: 8,237 GM Powertrain Szentgotthárd Production of 434,617 engines, Employees: 677 Suzuki Esztergom Production of 233,253 cars Employees: 6,200 Fiat in Bielsko-Biala Powertrain production FIAT Kragujevac Production of 200 th cars Ford in Craiova Production from mid 2009 Capacity: 200,000 cars Sources: companies

5 Facts and Figures of the Hungarian Auto Industry Production value in 2007: EUR 15.9 bn Total number of companies: 630 (of which 290 with quality certificates) Total number of employees: 110,000 FDI: 15 Bn Euro from abt. 70 Bn Euro total (50 % of No. of companies JV, 75 % of equity in foreign ownership) Production figures in 2007: 290,235 passenger cars 5,045 commercial vehicles and buses ~50,000 motorcycles Source: Hungarian Central Statistical Office, AHAI

6 Car Manufacturing, Assembly Suzuki: 233,253 cars assembled in 2007, 300,000 pcs planned for 2008 Audi: 56,982 cars assembled in 2007 (TT coupe, A3 cabriolet) Daimler: 100,000 Mercedes A and B Class from 2011 Engine Manufacturing Audi: million engines produced in 2007 (379 variants of 24 different types of powertrain) GM Powertrain: 434,617 engines produced in 2007 World s 3rd largest powertrain plant operated in Hungary by Audi

7 AUDI Facts and Plans In million engines produced, 15 new, innovative engine models introduced 56,982 cars assembled (41.5 % increase on 2006) New TT model introduced in 2006, new A3 cabriolet introduced in 2007 Turnover in 2007: EUR 5.87 billion (16.7% increase on 2006) Hungary s largest exporter Employs 5,845 people 24 different engines in 379 variants of four-, six- and eight-cylinder engines for the VW concern in a 375 th. sq meter area Since 1993 Audi has invested a total of EUR 3.3 billion in Hungary, and is planning to invest mn EUR per year is planned until 2011 Audi Hungária is going to manufacture the 10-cylinder, 560 HP engine for the luxurious sports car Lamborghini Gallardo Source: AUDI

8 Suzuki in Hungary 1991 Foundation of Suzuki Hungary in Esztergom on a 35,000 m 2 plot 1992 Serial production Swift models 1999 The 250,000 th Hungarian-made Suzuki 2000 Wagon R+ launched 2003 Introduction of Ignis Awarded for the biggest reinvestment (EUR 100 million) by the Prime Minister 2005 new Swift; 146,870 cars were manufactured, record turnover of EUR 1,262.3 million was reached production of new SUV the SX4 launched Number of employees: 6,200 Production in 2007: 233,253 cars; (Swift, SX4, Ignis, Wagon R+) By having invested EUR mn in 2007 total volume of investments reached EUR 1.27 bn Production of the Splash started in February 2008 (planned production: 60,000 per annum) Production planned for 2008: 300,000 units

9 The Largest Foreign Investment in Hungary: Daimler AG, 2008 The company will invest EUR 800 million to manufacture 100 thousand Class A and B compact Mercedes cars yearly in Kecskemét, Hungary Production will start in 2011 employing 2500 people A large number of suppliers are expected to follow the company, generating a new wave of investments in the sector Why did Mercedes choose Hungary? Good location and developed infrastructure Good quality of labour A large network of automotive suppliers already present Professional services

10 Central Transdanubia AFL Karsai Plast Ajkai Elektronika Kirchhoff Albert Weber Lé Belier Alcoa Lear Asahi Glass Magyarmet Bakony Michels Benteler Musashi Borg Warner Plasticor Bourns Plastimat Bridgestone Rába Continental Teves SCI Sanmina Denso SEWS Diamond Electric Suoftec Euro Excedy Toyo Seat Gedia U-Shin Gestamp Valeo Hammerstein Videoton Hankook Visteon ITW Siewer Wescast II.1. Supplier Network Central Hungary Arvin Meritor FESTO Schwarzmüller AVL GE Lighting Siemens VDO Cascade Hokushin Tauril Clarion Ibiden ThyssenKrupp Continental Catalyst Lear Toyo Seat Continental Temic MGM Vogel Sitze ContiTech Michelin Webasto Draexlmaier Mono-Ipolyfabric Zollner EMT NABI Excel Csepel PEMÜ Northern Hungary Ada-Cast Akzo-Nobel Coating ARRK Bosch Delphi-Calsonic Delta-Tech Exir Firth Rixson Ganz Foundry Gibbs Hi-Lex Knaus Tabbert Kovács Lear Leoni Mitsuba Modine Prec-Cast Remy Saia-Burgess Salgglas Shinwa Stanley Electric Starter Battery Technoplast ZF Northern Great Plain Western Transdanubia Arcelor GM Powertrain Autoliv Győri Plast B.O.S. Hirschler BPW Rába Kravtex Dana Magna Steyr Dekorsy Nemak Delphi Packard Rába Edag Rekard Produkt EMT Rudolph Logistik Erbslöh Schaeffler AG Euro Exedy Semperform Euro Elzett Veritas Eybl Visiocorp Federal Mogul Vogel und Noot Southern Transdanubia BHG CabTec Ratipur Interplus Southern Great Plain Continental Phoenix Kaloplastic Csaba Metál Knorr-Bremse Eckerle Kunplast Emika Linamar Hirschmann ThyssenKrupp Caroflex Carrier Transicold Eagle Ottawa Eismann EMCON Technologies/ Arvin Meritor Euroszol F.Segura Hajdu Autó Hübner Isringhausen Lé Belier Michelin Nief Phoenix Schaeffler AG

11 II.2. Human Resources Most important element rich heritage in inventors, innovators (Janos Csonka, carburettor, 1890;Jozsef Galamb, mass production Ford-T ;Ferenc Pavlics, moon craft, Mars vehicles ; Ferenc Anisits, BMW diesel engine development ), manufacturers (Ikarus, Csepel Auto, Raba) EIT in Hungary High productivity, efficiency Ambitious, dedicated workforce with competitive wages Availability (unemployment rate abt. 7,5 %, over 10 % in N-E Hungary)

12 Hungary Ahead in Labour Productivity GDP in Purchasing Power Standards per person employed relative to EU-27 (EU-27 = 100) Slovakia Hungary Czech Rep. Poland Romania Bulgaria (f) 2008(f) Source: Eurostat

13 Competitive Wages for High Productivity Monthly average gross earnings in the Automotive Sector Avg. Gross Earnings in HUF Avg. Gross Earnings in EUR No of employees Vehicle Component Manufacturers 196, ,852 Vehicle Manufacturer Companies 219, ,771 Monthly gross wages by occupation in the Automotive Sector 1 EUR = HUF Job Gross wages in EUR Job Gross wages in EUR Head of Technical Dept. 1,505 High voltage electr. technician 704 Head of R&D Department 1,823 Programmer 1,039 Chemical Engineer 1,139 Turner 515 Mechanical Engineer 1,182 Tool manufacturer 555 High voltage Electr. Engineer 1,124 Welder 447 IT specialist 1,276 Forger 423 Mechanical Technician 805 Storeman 459 Source: Hungarian Central Statistical Office, Public Employment Service in Hungary, 2007

14 Unemployment Rates by Micro Regions (in percentage) Source: Public Employment Service, as of September 2007

15 II.3. Logistics, infrastructure Besides HR and dense suppliers network a major factor at investment decisions Hungary is among Top logistic centers in Europe (subregional hub) Fast expanding highway network Industrial/ Logistics Parks, Clusters (Pannon Automotive Cluster), Automotive Competence Centers (4 ACC S)

16 Hungary Scores Third in Logistics Cushman & Wakefield evaluated the European logistics sector: Hungary ranks third in the key cots-benefit factors C&W: CEE is a much soughtafter logistics and distribution location Hungary offers plenty of land and a healthy supply of available properties Source: Cushman&Wakefield: European Distribution Report, 2008

17 Expanding Highway Network

18 Industrial Parks in Hungary With indication of the year when the title of Industrial Park was granted Kazincbarcika Salgótarján Eger Miskolc Nyíregyháza Győr Debrecen Szombathely Veszprém Tatabánya Szolnok Zalaegerszeg Székesfehérvár Kaposvár Szekszárd Pécs Kecskemét Szeged Békéscsaba Year of granting the title (number of titles won) 1997 (28) 1998 (45) 1999 (37) 2000 (21) 2001 (13) 2002 (13) 2003 (5) 2004 (1) 2005 (15) 2006 (11) 2007 (9) Ministry of Economy and Transport, 2008

19 Modern warehouse facilities and logistic parks Intermodal Logistics Centres and Logistics Development Areas in Hungary

20 II.4. Automotive R&D Priority area in Hungary, especially in hi-tech manufacturing and knowledge intensive services - among top-scorers in EU re total employment EIT in Hungary In automotive business scores of companies have relocated some of their R&D businesses to Hungary still much unexploited potential

21 Hungary Ahead in R&D Employment in high-tech manufacturing and knowledge intensive services (KIS) sectors as a percentage of total employment Hungary EU-15 EU-25 Source: Eurostat, High-tech Statistics 2007

22 Automotive R&D Arvin Meritor Budapest Audi -Győr AVL Autokut Budapest Bosch Miskolc Bosch Budapest Continental - Veszprém Denso - Székesfehérvár Draxlmaier - Érd EDAG Győr GE Lightings Budapest Knorr Bremse Budapest Magna-Steyr Győr Temic Telefunken - Budapest ThyssenKrupp Budapest Visteon Székesfehérvár WET - Pilisszentiván - exhaust system development - engine development - engine and powertrain dev. - electronic hand-tools designing - electronic developments - electronic instrum. dev. for cars - fuel supplying system dev. - vehicle compartment designing - vehicle subunits development - car lightings - electronic brake-system dev. - engineering centre - car electronic development - electronic steering gear dev. - vehicle parts and subunits - electronic subunits development

23 II.5. Incentives Business environment, tax regime, intensity ratio deemed favourable by investors Attractive soft factors (educational, cultural, shopping, leisure, sport opportunities) and supportive government/authorities approach (licenses, permissions, one-stop service) Besides good fundamentals incentives are also a matter of consideration at major investment decisions Complementary incentive schemes and special incentive package

24 Attractive Tax Regime Major business organizations across Europe assessed the attractiveness of their domestic tax regimes: Hungary ahead of major competitors Ranking Country 11. Hungary 15. Slovenia 16. Latvia 19. Lithuania 20. Poland 22. Czech Republic 23. Romania Source: Attractiveness of European Tax Regimes, 2007, KPMG International

25 Competitive Incentive System Maximum intensity ratios: Borsod-Abaúj- Zemplén Győr-Moson- Sopron Komárom- Esztergom Nógrád Budapest Heves Hajdú-Bihar Szabolcs- Szatmár-Bereg Vas Veszprém Fejér Pest Jász-Nagykun- Szolnok Zala Somogy Tolna Bács-Kiskun Csongrád Békés less developed regions + 10 % for medium enterprises + 20 % for small enterprises Baranya 25%* 30% 40% 50% *after 2011: 10%

26 Types of Incentives Development tax-allowance allowance for investment projects from 4 million EUR Tailor-made incentive package of the Hungarian Government Investment volume: - in case of manufacturing, R&D and SSC projects at least EUR 10 million - projects between EUR million if not eligible for EU co-financing Job creation potential - in case of manufacturing industry: from EUR 10 million and 25 new jobs created - in case of an R&D project: from EUR 10 million and 10 new jobs created Employment-related incentives Subsidy for job creation: non-refundable subsidy up to EUR 1,04 million Training subsidy: non-refundable subsidy up to 50% of eligible costs R&D related incentives Direct costs deductible from corporate tax-base; tax-free employment of PhD, MSc or MBA students; up to EUR 2 million tax-free development reserve for 5 years

27 Special Incentive Package The Hungarian Government is ready to provide a tailor-made incentive package for large investments (investment value at least EUR 10 million*) Elements of the package: 1) Cash subsidy based on Individual Governmental Decision 2) Development tax allowance 3) Training subsidy *For investments between EUR million the project will be subsidised from tender application if possible

28 Major Automotive Companies in Hungary HanKooK HanKooK

29 Thank you For your kind attention Kalman Meszaros, dr. Embassy of Hungary/ ITDH 1180 Brussels Av. Du Vert Chasseur 44 Belgium Phone: Fax: Internet: