Among the few well known companies, the bus manufacturer Ikarus (one of Eastern European market leaders) is the most commonly known. Nevertheless, since the early 1990s, some Western manufacturers have installed production or assembly plants there, namely General Motors, Suzuki and Audi. (Audi Hungary Kft is actually the second biggest company in the Hugarian economy).
These foreign investments were partly induced by tax exemptions and other incentives like tax-free import of parts, etc. Last year, 136,130 cars were produced in Hungary, and new car registrations almost reached 200,000 units. This is when Hungary becomes of interest to Western tyre manufacturers.
Recent announcements by Bridgestone from Japan and Hankook from Korea saying they would heavily invest in new Hungarian production facilities have been particularly sensational. In May 2005, Bridgestone announced that it was going to build a new tyre factory in the city of TatabÁnya for about £130 million. From 2009 it plans to produce 8,000 high performance passenger car as well as light truck tyres there – an annual production of about 3 million units. The first tyres will be built in 2008. The Japanese tyremaker laid the foundation stone for the new factory in June.
According to Bridgestone Europe NV/SA, the facility in TatabÁnya will be the first European factory to produce tyres using Bridgestone’s highly automated BIRD system. The other two plants are in Hikone (Japan) and in Monterrey (Mexico, under construction). The BIRD production system (Bridgestone Innovative & Rational Development) is a completely automated tyre production system – from the mixing department to final inspection. Tyres which will be built in Hungary from 2007 onwards will be mainly sold on the European markets. When production starts in TatabÁnya it will be the 51st Bridgestone factory worldwide.
“This factory will be the first in Europe in which we will able to produce top quality tyres at increasingly low costs thanks to our new technology,” Takashi Urano, new chairman, CEO and president at Bridgestone Europe, said during the laying of the foundation stone in June. According to media reports only around 200 new jobs will be created at Bridgestone’s Hungary factory which is obviously a result of the high level of automation. The BIRD system in Japan has proved to be highly efficient. Bridgestone says BIRD is “the most automated production system in the [tyre] world”. The construction of Bridgestone’s new Hungarian factory is coordinated through Bridgestone Hungary Manufacturing Ltd.; this newly founded company is a 100 per cent subsidiary of Bridgestone Europe NV/SA.
The extent to which Bridgestone will receive government support on this project has not been made public. However, it is highly probable that the state of Hungary has given or agreed to give certain incentives as was communicated when Hankook Tire was looking for a location in Hungary.
For several months, the Korean tyre manufacturer has been a special subject in Eastern European business newspapers because Hankook announced it was going to invest about 500 million euros there (£340 million) – a considerable investment for Hungary or any European country. Other states like Slovakia, Czech Republic or also Poland had been named candidates for Hankook’s first factory in Europe and were obviously keen on attracting such a muti-million pound investment as well. After Tyres & Accessories reported “Hankook Chooses Slovakia” in May there was much confusion in October when all of a sudden Hungary was Hankook’s favourite site.
The Korean tyre manufacturer was clearly convinced by the offers the Hungarian economy minister made – this and the fact that, according to some reports, the Slovakian government slashed its support package offer by as much as 70%. The Hungarian minister for the economy, JÁnos KÓka, said that the government would cover more than 20% of Hankook’s investment. Details on Hungary’s direct and indirect incentives have been declared a state secret although the European Commission has given its consent.
Hankook’s new factory will start operating in June 2007 in the city of DunaÚjvÁros. In December 2010, it will have an annual output of 10 million passenger car and light truck tyres; during the first year the output will be about 1.3 million units. The newly founded company (Hankook Tire Hungary) is a 100% subsidiary of Hankook Tire Co. This new factory will be Hankook’s first factory in Europe.
Michelin: On the Ground For Years
The only company that produces tyres in Hungary at the moment is Michelin. At the beginning of the 1990s, the Hungarian government wanted to privatise the huge Taurus industrial conglomerate. Then in 1996 the French tyre manufacturer was able to buy the two Taurus tyre factories as well as three production sites for technical rubber from the privatisation agency. The latter factories were sold to Germany-based Phoenix, leaving Michelin with its tyre plants in Hungary. In the Eastern parts of Hungary in the city of NyÍregyhÁza Michelin today produces passenger car as well as Taurus brand agricultural tyres; truck tyres are produced in the Hungarian capital, Budapest.
In NyÍregyhÁza Michelin only started the production of passenger car tyres because the new owner of the agricultural tyre factory was willing to install a new production base from which to supply Eastern European markets. The French tyre giant invested £39.5 million. Between then and 2005 about 300 new jobs were created in Michelin’s new passenger car tyre production facility in Hungary. Today, the facility has an annual passenger car tyre output of about 800,000 units. The factory was first built in 1979 as the Taurus Rubber Co. Ltd.
