What do these companies have in common: Suzuki, Bosch, Knorr-Bremse, and Thyssen-Krupp? Aside from being multi-national companies, they all have manufacturing production facilities in Hungary. Although often overlooked as a manufacturing power, Hungary is ideal for manufacturing with its geographical location in the center of Europe, highly skilled workers, excellent infrastructure, low-costs, and most importantly government incentives. With a perfect recipe for investment and trade, Hungary is a key trading partner for Germany, France, Italy, Austria, Romania, Slovakia, Poland and the Czech Republic.
As we all know, electronics manufacturing and research are some of the key drivers of innovation and economic growth in any country. In recent years, Hungary has become a hub for information security, mobile technology, and related research. Although they are not brands we typically use in the United States, Hungary is the largest producer of electronics in Central and Eastern Europe, employing around 112,000 people. In fact, they manufacture 26% of the region’s electronics and provide 6 out of the top 10 electronic manufacturing services including Flextronics, Jabil, Foxconn, Sanmina, Zollner, and Videoton. Their strong presence in electronic manufacturing is a partial contributor to Hungary’s strong economy, which has continued to grow since the fall of communism.
Strong Automotive Presence
The automotive sector generates almost 21% of all exports and is another one of Hungary’s core industries employing a total of 100,000 people. Suzuki, Mercedes-Benz, Audi, Opel, And Daimler all have factories in Hungary. In fact, Győr is home to the second biggest engine plant in the world. With their strong foothold in auto production, many educational institutions and multi-national IT companies have partnered with Hungarian automotive to establish research and development efforts in the centers of Hungary. Such research has made it possible for smaller, local automotive companies to emerge and become stabilized among the giants.
The Pharmaceutical industry also thrives from research and development efforts. With the most developed pharmaceutical and biotechnology sectors in Central and Eastern Europe, it is one of the most efficient and successful industries in Hungary. The industry employs approximately 15,000 people mostly in and around Budapest, Debrecen, Szeged, and Pécs and accounts for more than USD 4 billion in exports.
Perhaps the biggest reason Hungary is booming in manufacturing is the government incentive for foreign investment. Refundable and non-refundable incentives are available to investors looking to expand in Hungary. Such incentives come in the form of cash subsidies, low-interest loans, tax incentives, and land available at free and reduced prices. The monetary incentives focus on creating jobs, leveling wealth inequality, and driving innovation through research.
The Hungarian Government alone provides support opportunities for investments greater than EUR 10 million. If investment is more than EUR 10, authorities investigate the possibility of subsidizing investment through EU Funds. Such offerings are hard to refuse for multi-national companies looking for a centralized location in Europe.
Educated and Skilled Workforce
The Hungarian workforce also attracts foreign capital, as their employees are known for being highly skilled, well-educated, and hardworking. Hungarian workers tend to work longer hours, and more days in the year than their other European counterparts. In addition, nearly ⅔ of the labor force in Hungary has completed a secondary, vocational, or technical degree and about 90% of all students speak English. With particularly high marks in engineering, IT, economics, mathematics, and Physics, Hungarian workers are in high demand.
Despite having the perfect ingredients of investment, research, labor force, and location, Hungary is still far behind the top manufacturing leaders like the United States, China, Japan, and Germany. Regardless, Hungarian manufacturing has certainly come a long way and is making great strides to become globally competitive in manufacturing.
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