Victor Orbán
The Hungarian Prime Minister also has political interests in BMW setting up in poor eastern Hungary.
(Photo: ddp / abaca press)
Vienna Where the best farmland once stretched near the east Hungarian city of Debrecen, it now looks like on the moon. Construction machinery has leveled an area of 500 hectares so that the automaker BMW and some suppliers can build factories. The company’s own area is so huge that the construction containers at the other end of the site look like Lego building blocks.
There were delays in the construction of the factory due to the sales crisis in the automotive market. By 2025 at the latest, the factory is expected to produce 150,000 primarily electric vehicles for the European market every year.
Countless cities in Central Europe vied for the Munich company’s favor. After all, BMW plans to invest one billion euros in the new plant. At the beginning of the search process, the consulting firm KPMG allegedly screened around 170 locations for BMW. In addition to Debrecen, the nearby Miskolc and the Slovak town of Kosice made it into the final selection. Debrecen won because it was just a little tiger, says Zoltan Poser, head of local promotion.
But other feelings mingle with the joy of the city. There are already many other western companies in Debrecen. And there is resentment among them. “There is a great shortage of skilled workers in the city,” says Michael Wagner, Chief Operating Officer (COO) of Hoffmann Neopac. Pal Veres, mayor of the city of Miskolc, which lost out to BMW, confirms the problem.
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Many well-educated Hungarians have left the country – and, according to Veres, they are not coming back in large numbers despite rising wages. “Our job is to attract more employers so that the former residents can come back and to bring workers from the region to Miskolc.” There are not many cheap workers left in the north-east of the country.
BMW could need up to 5,000 workers
So it is the struggle for cheap workers that makes production in Hungary more difficult – and that should now get into the BMW. Hoffmann Neopac, for example, employs around 200 people in Debrecen, but ten percent of the positions are vacant. According to Wagner, you can find semi-skilled, but hardly trained, skilled workers in Debrecen. “I miss the dual training system that exists in Germany and Switzerland,” he says.
Nevertheless, many companies are still crowding into Debrecen, Hungary’s second largest city with 200,000 inhabitants. Countless international companies are already present, such as Teva (generics), Krones (filling systems), Thyssen-Krupp (steel), Schaeffler (automotive), Bürkle (mechanical engineering) and the Swiss family company Neopac (tubes).
In the near future, plants of the Zurich company Sensirion (sensors) and the Chinese battery manufacturer Semcorp will also go into operation. According to the location promoter Poser, 100 to 200 Chinese will then come to the city.
BMW announced that they would employ 1,000 people in Debrecen. Car experts, on the other hand, say that a factory like the one BMW is planning requires at least 2500 employees – if not more. In Debrecen there is even talk of the car manufacturer employing 4,000 to 5,000 people.
Business promoter Poser – entirely the seller – dismisses concerns about a fight for workers as unfounded. The more companies settle in Debrecen, the more sustainable the city’s upswing is. “The new companies also bring business to those already in town,” he says.
Companies train themselves
Obviously, western companies are not deterred by the labor shortage anyway, although in the case of BMW it should not be easy to find a large, free area somewhere else within a radius of 1000 kilometers from Munich. In terms of area, Debrecen is even a little larger than the metropolis of Vienna.
Many companies have started to train their employees themselves. Neopac offers internships, and a spokesman for BMW says they want to cooperate with local schools. With this concern, the western companies run open doors at the training centers. Universities and secondary schools in Hungary are increasingly adapting the courses to the needs of the economy and companies. “Education is a key factor in winning the competition with other cities,” says Laszlo Papp, Mayor of Debrecen.
Hungary and Debrecen also attract companies with generous subsidies and tax subsidies. In the EU, the extent to which a country can financially support company settlements depends in part on the economic strength of a region. Because Eastern Hungary is one of the poorest regions in the EU, a company willing to settle receives up to 50 percent of the project costs from the central government as financial aid. In the comparatively affluent Kosice, Debrecen’s Slovak competitor in advertising for BMW, this figure is 25 percent.
E-car from BMW
The German automaker is planning a plant in Hungary. Other companies in the region are dissatisfied with this.
(Photo: AP)
In addition, Hungary and Debrecen are generously expanding the infrastructure around the BMW factory and other industrial areas. There are new motorway connections, bypass roads as well as bus and train stations. It is also these generous subsidies that motivated western companies to come to Hungary despite the well-known shortage of skilled workers, says Sandor Richter, economist at the Vienna Institute for International Economic Studies.
Thanks to foreign investments, Hungary is to become a conservative, middle-class society, similar to what existed in the West in the 1950s. That is the goal of Victor Orbán, the country’s prime minister.
Political interests involved
In the case of Debrecen in particular, the government is likely to pursue not only economic but also political intentions with its financial aid. When opposition alliances won local elections a year and a half ago, including in Budapest and Miskolc, it came as a nasty surprise for Orbán and his Fidesz party. Since then, the prime minister and his followers have been fighting almost constantly, especially with Budapest’s green mayor.
Debrecen, on the other hand, has been a reliable stronghold of Fidesz for over 20 years, and the ruling party is said to do its best to promote the city as a counterweight to the insubordinate capital. Even Mayor Papp thinks that as a Fidesz member, he is more easily heard by the central government in Budapest than his colleagues in the opposition. He wants to develop Debrecen into a strong economic metropolis by 2030; the population is expected to increase by around 30,000 people.
Debrecen does not yet give the impression of a colorful metropolis, even if there are impressive new buildings such as the elegant football stadium with its VIP lounges. Highly qualified workers who have the opportunity to work in Munich, London or Zurich will hardly end up in Debrecen in the near future.
In comparison with the generously dimensioned industrial areas, the transport infrastructure of the spacious city in particular still seems very underdeveloped.
In Debrecen, for example, whose core city has the same population as a smaller city in Germany, there are only two tram lines. It is currently difficult to imagine how the many employees will get into the factories and offices on the outskirts of the city without traffic jamming at rush hour.
Unrest among the population too
Papp promises to tackle such problems as part of the Debrecen 2030 project. The mayor has to take action, otherwise there is a risk of unrest among the population. “Many residents wonder where all the people should live and which schools the children will attend,” says the local journalist Zsolt Porcsin. Rising rents are also an issue in the city.
Porcsin is bothered by the fact that the city government portrays the planned development of Debrecen as having no alternative and dictates it from above. Interlocutors look back at the past with a certain sadness. The city’s industrial companies used to specialize in processing agricultural products from the region, such as meat. Back then, e-cars were at best a futuristic product. But almost none of the food manufacturers survived.
More: After breaking with the EPP: Orbán seeks alliance with right-wing national forces.