Budapest Business Journal 20/11

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VOL. 20, NUMBER 11

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I JUNE 01, 2012 – JUNE 14, 2012

Budapest Business Journal

OF HUNGARIANS THINK THEIR FINANCIAL SITUATION HAS WORSENED IN THE PAST 10 YEARS SEE TRENDS

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STILL STANDING

The ongoing euro crisis SPECIAL REPORT with its epicenter in Energy efficiency is a must Greece represents Amongst the continuously deteriorating possibilities, a huge threat to the energy efficiency and a fragile Hungarian change to renewables are not just options but very often economy. The BBJ for Hungarian looks at the reasons and necessities businesses to survive the long lasting crisis. consequences.

PAGES 10-11

PAGES 14-15

Q&A

TRENDS

Bosch gaining further ground in Hungary

Car market in coma

The Bosch Group is expanding here thanks to its well-qualified workforce and Hungarian ties with Germany, says the head of the group in Hungary and the Adria Region. PAGE 23

The number of new car registrations is a good indicator of a country’s economic health.

A fresh survey by PwC shows that the Hungarian picture is not just dark now; it is not expected to lighten in the next two years, either. PAGE 13

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04 Last flight takes off from Terminal 1 New telecom tax may change mobile tariffs 07 Greek fire rages on 10-11 – will it engulf Hungary too?

digest

It occurred to me that nothing is more interesting than opinion when opinion is interesting HERBERT BAYARD SWOPE, THE NEW YORK EVENING WORLD, 1921

MEDIA LAW CRITICS NOT SATISFIED Hungary’s Parliament once again amended the widely criticized media law on May 24. However, it seems unlikely that the changes will be enough to satisfy the government’s critics.

The controversial regulation has been in the international crossfire since its very first moment in force on January 1, 2011. Criticisms made of the bill included that it was ill-defined and confusing, and therefore was open to misuse by the newly established five-member Media Council, which has a nine year mandate and is dominated by government-friendly appointees. The panel was able to impose huge fines on media outlets for such dimly defined reasons as “imbalanced news coverage”, materials considered “insulting” to a particular group or “the majority” or for content that violates “public morality”. The law also removed legal protection against the disclosure of journalists’ sources by giving wide grounds for the media authority to order disclosure.

Although Hungarian journalists reported that they had not felt their hands to be tied even after the introduction of the media law, and also that self-censorship, which critics identified as the biggest threat, had not evolved among professionals, the regulation caused major controversy internationally. And since not only the content but also the timing of the law was quite unfortunate, Hungary’s six months of the rotating EU presidency in the first half of last year was clouded by loud criticism over how it undermined democratic values.

The current amendments, which came in response to a court decision last December declaring the legislation unconstitutional, reverse the clause that gave NMHH the power to order journalists to reveal their sources. However, journalists could still be forced to do so through a court order.

Also, from now on, the media authority will have no say in cases concerning the violation of human dignity, interviewee’s rights, human rights, or privacy.

Still, as the make-up of the powerful government-friendly NMHH remains the same, the law’s critics, including EU Commissioner on Digital Agenda Neelie Kroes, are hardly satisfied with the amendments. Neglecting the EU’s recommendations is particularly interesting in the light of Kroes’s February statement, in which she said that if Hungary did not act in accordance with recommendations from the Council of Europe on media laws, she would approach the Council of the European Union to start proceedings against the country, which could result in suspension of Hungary’s voting rights.

[THE GOVERNMENT] DID NOT RESPECT THE REQUEST TO CHANGE THE NOMINATION AND APPOINTMENT PROCESS OF THE MEDIA COUNCIL PRESIDENT AND MEMBERS. Népszabadság

May 17, 2012 In an article headlined ‘The legislation factory does not rest,’ liberal weekly Magyar Narancs focused on a specific element of the media law and its recent amendments. A provision, the precise meaning of which is otherwise still being debated by media law professionals, states that only the Media Council is authorized to approve a broadcasting agreement, excluding courts from playing an oversight role in such agreements. Another amendment states the Media Council is not obliged to conclude contracts, which practically means that it could ignore the results of public tenders for broadcasting licenses and award them as it wishes.

These amendments are particularly interesting in the case of Klubrádió. The oppositionminded independent radio station had already won a bid to keep operating on its frequency in 2011, but as the Media Council never concluded the contract, the case is now in court. Although the Budapest Court in February ruled that the Media Council could not refuse to conclude the contract, as the agreement was valid, the case continues at second instance, with a verdict scheduled to be made early summer.

However, according to the amendment, Klubrádió’s

frequency might easily get trapped in a vacuum, as the court is no longer authorized to approve such agreements and the Council has the right to refuse.

“Even apart from the current case, this amendment makes the entire frequency bidding procedure completely pointless,” the article claims.

It also notes that Klubrádio might lose its status of a communal radio station, which means it would no longer be able to use the frequency free of charge, while Lánchíd rádió, a station with a similar program structure but a more government-friendly attitude, can keep operating free of frequency charge.

“In light of these things, it is of secondary importance that further amendments cleared the concerns about politicians’ rights to withdraw interviews and established guarantees for source protection in criminal procedures,” the article says, drawing a contrast by mentioning modifications it considers positive. “The bottom line: tangled, non-transparent, precipitate and crappy law making, just as usual,” the article concludes.

May 26, 2012 Ekkehard Kern in German conservative daily Die Welt hits a more balanced tone. In

the article ‘Fidesz only wants to win time – why Hungary eases its media law,’ the author points out that “by the amendment of the internationally criticized” media regulation, “the possibility of the state censorship decreased” while “source protection increased”.

Interestingly, about the Klubrádió case it says “Contrary to the aims of the conservative governing party Fidesz, a provision making opposition radio station Klubrádió’s future questionable has been eliminated.” At the same time, citing Klubrádió presenter Júlia Váradi, Kern adds that the future of reporters working for the station is “insecure” as the media authority still has the right to analyze electronic media content for balanced coverage.

May 25, 2012 The traditionally left-wing daily Népszabadság goes for all-out attack. “[The media law] serves the authoritarian aims of the Fidesz-KDNP government: it opens the door to bridling, penalizing or eventually silencing those with opposite opinions.”

Author Imre Bednárik points out that the government ignored the recommendations of the Council of the European Union, saying the cabinet “did not honor the request to change the nomination and appointment process of the Media Council’s president and members”.

Citing new President János Áder, who said he was committed to fully complying with the rights and duties the Constitution imposes on him, the article presents the media law case as a test. “János Áder said that if he gets 100 impeccable laws, he will sign all of them while if he gets 100 imperfect laws, he will send all of them back,” Népszabadság recalls. “Mr. President! There you are!”

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QUOTE OF THE WEEK

My hopes are that there aren’t any further European crises waves in the future that could knock Hungary off its feet, PRIME MINISTER VIKTOR ORBÁN IN AN INTERVIEW WITH INFORÁDIÓ

NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

Last flight takes off from Terminal 1

Photo: Ferenc Kis

Budapest Ferenc Liszt International Airport’s Terminal 1 was closed on May 29.

Airport operator Budapest Airport Zrt has blamed the closure on the February grounding of national airline Malév Zrt, which resulted in lower air traffic. Dozens of employees at the airport demonstrated on the day of the closure to protest against the decision. The employees, who blocked the busy clearway 4 for several hours in the afternoon, wanted to draw attention to the fact that Terminal 1 had always been full of passengers, even after the bankruptcy of the troubled airline.

The demonstrators said they want to find and call to account those responsible for the “dramatic situation” of the airport.

ECONOMY CENTRAL BANK KEEPS KEY RATE ON HOLD FOR FIFTH MONTH IN A ROW The National Bank of Hungary’s Monetary Council decided to keep the central bank’s key rate on hold at 7% at its meeting on May 29. The decision to keep rates on hold, taken for the fifth month in a row, was in line with market expectations. At a press conference after the meeting, MNB governor András Simor said two proposals were put to a vote: one to lower the base rate by 25bp in addition to the one to keep it on hold.

“The volatile risk environment and inflation running above target for an extended period continue to warrant a cautious policy stance,” the Council said in a statement published after the meeting.

The Council said near-term prospects for the economy were “weak” and growth was expected to resume only in 2013. However, the CPI is expected to “remain elevated over the next few quarters” because of tax changes and cost shocks, it added. Government measures announced as part of the Széll Kálmán Plan,

a structural reform program, are expected to directly raise inflation in 2013, while causing aggregate demand to contract, the Council said. This will reduce the risk of secondround effects on inflation, but such effects cannot be ruled out because of the persistent overshoot of the inflation target, it added.

MARCH RETAIL SALES POSITIVE SURPRISE, SAY ANALYSTS Retail sales in March were better than expected, analysts told MTI, after the Central Statistics Office (KSH) published fresh data on the period. Retail sales in Hungary edged up a calendar yearadjusted 0.9% year-on-year in March, after slipping 1.3% in the previous month, KSH said. Erste Bank Zrt’s Zoltán Árokszállási said most market players had expected retail sales to decline in March.

He added that the headline figure may have been lifted by purchases in the run-up to the Easter holiday, noting that food sales climbed a remarkable 2.7%. Árokszállási said the data was not likely to be so positive in April.

Magyar Takarékszövetkezeti Bank Zrt chief analyst Gergely Suppán also said a decline

in retail sales was expected for March. He added that the fresh data could contribute to an upward revision of Hungary’s Q1 GDP in a second reading.

economically active population in April. Some 19 companies announced 2,129 new redundancies to labor offices for the month, 42.4% less than in March but five times more than a year ago.

FEWER JOB SEEKERS IN APRIL Registered job seekers numbered 554,000 at the end of April, down 6.2% from the end of March and down 9.4% from a year earlier, according to data from the National Labor Affairs Office (NMH).

Job seekers’ numbers decreased more or less evenly across the country, however the largest numbers left unemployed status in east Hungary. Compared to March, 8.5% less men and 3.9% less women were registered as job seekers, the office said. The number of job seekers with an academic degree fell by 2.3% and that of unskilled persons by 6.4%, compared to the end of March. People trying to find work for more than a year numbered 132,500 at the end of April, that is 23.9% of all registered job seekers, 3.3% points less than a year ago. There were 16,000 vacancies in April, 63.9% of which were subsidized by the state. Registered job seekers’ numbers fell to 12.5% of the

PUBLIC WORK PROGRAM NUMBERS TO BLAME FOR SLOWDOWN IN WAGE GROWTH A big rise in the number of Hungarians participating in low-paying public work programs was the likely reason for a slowdown in wage growth in March, analysts told MTI. Average gross wage growth slowed to 2.7% yearon-year in March from 6.8% in February, the Central Statistics Office (KSH) said.

Takarékbank’s chief analyst Gergely Suppán said the growing proportion of public work program participants, which put downward pressure on the average wage, significantly influenced wage growth. He noted that public sector wages, which include participants in such programs, fell 4.5% during the period as headcount in the sector rose 4.1%. Although the data shows no inflationary pressure, Suppán said National Bank of Hungary ratesetters were unlikely to loos-

en monetary policy because of stability risks and because of a probable overshoot of the 3% mid-term inflation target.

Zoltán Árokszállási of Erste Bank agreed that the increase in the number of public work program participants weighed on wage growth.

He added that their number could continue to grow in the coming months, bringing full-year wage growth to 5%.

BUSINESS HALF A MILLION COMPANIES COMPLETE MANDATORY REGISTRATION About half a million companies have been registered with local business chambers under legislation in force from the start of the year, business daily Napi Gazdaság wrote. Hungarian Chamber of Commerce and Industry (MKIK) chief secretary Péter Dunai said 490,000-500,000 companies were registered by the weekend, although not all had paid the registration fee. Legislation in force from January 1, 2012 requires all Hungarian companies to register with their local chamber of com-

merce. The annual registration fee is HUF 5,000.

T-MOBILE TO EXTEND 4G COVERAGE T-Mobile Hungary plans to extend the service coverage of its 4G Long Term Evolution (LTE) network to suburban parts of Budapest and smaller towns around the country this summer, Magyar Telekom Nyrt said.

The 4G network, launched in January, now provides outdoor population coverage to 90% of the capital, while indoor coverage is at 73%. Before the launch of the program, the network had a 40% coverage rate in Budapest. By the end of June, the carrier hopes to increase its LTE footprint to the areas of Göd, Fót, Szentendre, Nagykovácsi, Tököl, Diósd, Csömör, Taksony, Piliscsaba, Üllő, Gyömrő, Sződliget, and Mogyoród in the vicinity of Budapest.

The towns of Szombathely, Debrecen, Kecskemét, Győr, Siófok and Keszthely and Hévíz will also be served at the same date.

FUTUREAL INVESTS €10 MLN IN RUSSIA Hungarian property developer Futureal is invest-

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Budapest Business Journal | June 01 – June 14

ing €10 million of its own money in developments in Russia, partnering with US-based Hines. Futureal is investing the money in a €100 million partnership program launched last year, said owner Gábor Futó. The company is seeking partners with projects that require capital, he added. Futureal joined the recently inaugurated Nova Park shopping center development in Poland in the same way, build-

Turizmus claimed in a recent survey. Among those who do plan a trip, 62% will spend their holidays exclusively in Hungary, and another 10% will choose mixed domestic and foreign destinations. Domestic travelers prefer Lake Balaton, where they expect to spend 7.5 nights on average, up slightly from 2011.

Almost none are planning domestic holidays of two weeks or longer. Respon-

introduction of a separate category for shares that were listed for “technical reasons” and generate minimal turnover, the bourse’s new CEO Zsolt Katona said in an interview published in business daily Napi Gazdaság. Establishing a separate category for the shares would indicate to investors a different risk dimension, increasing transparency, Katona said. He added that the establishment of another trading category exclusive to investors, both institutional and private, who make big purchases of shares or corporate bonds could create a broader source of capital for SMEs.

BANKING SECTOR PROFITS NEARLY HALVED IN Q1

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ing the €70 million center in Gorzow Wielkopolski with an Irish partner and a €50 million bank loan.

ONLY 35% OF HUNGARIANS PLAN TO TRAVEL FOR SUMMER HOLIDAYS Only 35% of Hungarians plan to travel for summer holidays this year, the state tourism agency Magyar

dents expect to spend as much as they did last year but it will cover less. Among foreign destinations, Croatia, Austria and Romania lead the way.

BUDAPEST BOURSE MULLS SEPARATE CATEGORY FOR SLEEPER SHARES The Budapest Stock Exng the change is considering

Hungarian banks’ combined after-tax profit was nearly halved to HUF 31.3 billion in the fi rst quarter from HUF 61.5 billion in the same period a year earlier, fresh data compiled by fi nancial market watchdog PSzÁF shows. The data, which excludes banks that operate as branches of foreign parents as well as the Hungarian Development Bank Zrt (MFB), the Hungarian Export-Import Bank Zrt and clearing house KELER Zrt, show the banks’ net interest income slipped 4% to HUF 210 210.6

talk of the town HUNGARIAN-ROMAIAN DIPLOMATIC BATTLE Relations between Hungary and Romania have recently become unfriendly. After that the two-month old government of Mihail Răzvan failed a no confidence vote on April 27, the president named social-democrat Victor Ponta to form government.

As one of its first measures, the new government prevented the setting up of a Hungarian department at the medical school of Târgu Mures (Marosvásárhely), a 45% Hungarian-populated city in central Romania. Also, it announced that Romania’s minority law would be approved without a chapter on cultural autonomy.

Meanwhile, Hungary also made efforts to lose popularity among Romanian politicians. Hungarians started to organize the reburial of the Transylvanianborn ethnic Hungarian writer József Nyírő in Odorheiu Secuiesc ((Székelyudvarhely). As László Kövér, the Speaker of the Hungarian Parliament also planned

to attend the ceremony scheduled to take place on May 27, the idea of the reburial soon generated a diplomatic row between Budapest and Bucharest. The latter denied permission for the remains of Nyírő, who was accused of collaborating with the fascist regime during World War II, to be taken from Hungary to Romania on a special train of pilgrimage.

Due to Romania’s opposition, the reburial ceremony had to be cancelled and only a commemoration ceremony was held, prompting Kövér to comment that “the unfriendly, uncivilized and barbaric behavior of the new Romanian government, refusing Nyírő the possibility of resting in his home land, had been extremely surprising”. Romania retaliated by calling the Hungarian initiative provocative, adding that its timing in the middle of the Romanian municipality election campaign was probably not a coincidence.

HUNGARIAN KENDO TEAM WINS BRONZE MEDAL IN WORLD CHAMPIONSHIP The Hungarian men’s kendo team won bronze at the 15th Kendo World Championship organized in Novara, Italy between May 25 and 27. Only the Japanese, who went on to beat South Korea in the finals, beat the Hungarian team. The World Kendo Championships have been held every three years since 1970, and are organized by the International Kendo Federation. Kendo, meaning “Way of The Sword”, is a modern Japanese martial art based on traditional swordsmanship (kenjutsu), which originated among the samurai class of feudal Japan. billion. Banks’ non-interest income came to a negative HUF 136.9 billion compared to a positive HUF 16.9 billion in the base period. The PSzÁF data shows a HUF 224.9 billion loss under “other non-interest revenue”, which includes the extraordinary tax on the fi nancial sector. PSzÁF said about 40% of banks were loss-making in Q1. It added that two banks alone generated four-fi ft hs of profits at all banks that fi nished the quarter in the black.

CONTINENTAL HOTEL BUDAPEST WINS INTERNATIONAL REAL ESTATE DEVELOPER AWARD Continental Hotel Budapest ****Superior Hotel was the winner of the hotel category at the FIABCI Prix d’Excellence Awards held in St. Petersburg, Russia, on May 15. More than 60 projects from 13 countries were competing in 14 categories judged by 47 judges (comprised of architects, town planners, engineers, economists, environmental experts, developers, builders, legal expects, brokers, financiers and others) from 27 FIABCI chapters. All projects submitted were evaluated based on aspects of planning, construction, financing, marketing, environmental impact and community benefit.

LIBRI GROUP TO CONSOLIDATE MEDIA ACTIVITIES Hungary’s Libri group will consolidate its media interests under the name Libri Media in the coming weeks.

Libri Media will integrate the activities of Port Data Kft, which is present in six countries, with the recently acquired Fidelio Media Kft. Libri Media will concen-

trate on the cultural and recreational content and services market. Bookseller Libri acquired a majority stake in PORT.hu, one of Hungary’s biggest online program guides, in February. “Libri sees its future not just in books, but wants to enter other markets involving cultural services with the expansion of its product palette,” Libri managing director Csilla Walitschek said at the time.

DOMESTIC HUNGARIAN SWIMMERS COLLECT GOLD MEDALS IN DEBRECEN Led by Katinka Hosszú, Hungary cleaned up with four golds and eight medals overall in one day at the European Swimming Championships held in Debrecen, east Hungary. Hosszú claimed the 200-meter individual medley to add to her 400 title from the opening night, then came back 90 minutes later and swam the anchor leg when Hungary took silver in the 4x200 relay. The team’s other winners were Dániel Gyurta, who improved his

own championship record in the 200 breaststroke; 26year old László Cseh, who won the 200 butterfly for his second gold of the meet; and 19-year-old Boglárka Kapás, who took the grueling 800 freestyle.

TAXI DRIVERS PROTEST AGAINST STRICT PROPOSAL Approximately 200 taxi drivers demonstrated in downtown Budapest to protest against a municipality proposal that would “eliminate thousands of taxi drivers from the sector”, online news portal Index.hu reported. The drivers carried a coffin that symbolized the end of their decades-long careers.

Behind the coffin, drivers pushed their vehicles, a gesture referring to the proposal that is planned to establish such strict requirements for taxi vehicles that thousands of drivers would have to replace their cabs, which most cannot afford. If an agreement is not reached soon, the taxi drivers threaten to hold a demonstration as huge as the so-called “taxi blockade” of 1990 that practically blocked Budapest’s traffic to demonstrate against rapidly increasing fuel prices.

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energy PANNONIA ETHANOL INAUGURATES $214 MLN BIOETHANOL PLANT, LAYS CORNERSTONE OF NEW PLANT Irish-owned Pannonia Ethanol on May 24 inaugurated a $214 million bioethanol plant in Dunaföldvár, central Hungary. The plant can produce an annual 240 million liters of bioethanol fuel and 175,000 tons of dry distillers grains with solubles (DDGS) a high protein animal feed.

The company also laid the cornerstone of a HUF 48 bln (€159 mln) bioethanol plant in Mohács, south Hungary on May 23, newswire MTI reported. The plant is scheduled to be completed by the end of 2013. According to CEO Mark Turley the plant is expected to produce an annual 240 million liters of bioethanol fuel and 175,000 tons of DDGS.

HUNGARIAN, SLOVAK FIRMS SIGN DEAL FOR GAS LINK Hungarian and Slovak companies have signed a deal to build a 115-kilometer natural gas link by 2015 between the two central European countries to cut reliance on Russian gas. The €160-mil-

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lion project between Hungary’s Magyar Gáz Tranzit Zrt, a unit of state-owned energy group MVM Zrt, and Slovakia’s Eustream is based on an agreement struck by the two governments last year. Eustream said on its website the new pipeline would allow Slovakia to benefit from planned pipelines running south of it and a planned LNG terminal in Croatia. The European Union is contributing €30 million to the cost of the pipeline, which will have annual shipment capacity of 5 billion cubic meters.

NORD STREAM LINE 1 REACHES FULL CAPACITY The first line of the Nord Stream natural gas pipeline through the Baltic Sea to Germany reached its maximum operating capacity, a Gazprom official said. Nord Stream is part of a network of pipelines planned to diversify Russian natural gas exports to European consumers. The first leg of the pipeline system went into service last year. Vitaly Markelov, deputy chief executive officer

at Gazprom, was quoted by Platts as saying the first line was delivering natural gas at a rate of 971 bln cubic feet per year. The three sections that make up the second offshore leg are set for pressure testing and connection this summer, he added.

becoming the second company after Magyar Telekom Nyrt to enter the segment.

Energetikai Központ is owned by Communication One International but operates as a unit of Energeticke Centrum, based in the Czech Republic.

ROSSI BIOFUEL INSTALLS METHANOL RECOVERY UNIT AT KOMÁROM PLANT

CROATIA READIES ALTERNATIVE LNG PLAN FOR 2013

Biodiesel manufacturer Rossi Biofuel has installed a HUF 250 mln (€840,000) methanol recovery unit at its plant in Komárom, northwest Hungary, CEO Zoltán Pivoda told MTI. The investment will reduce the plant’s annual nominal methanol use of 22,000 tons by 25%, Pivoda said. Rossi Biofuel inaugurated its €35 mln biodiesel plant in 2008.

It has capacity to produce 150,000 tons of biodiesel from rapeseed, sunflower seed and used cooking oil.

Croatia plans to complete a feasibility study next year for its own liquefied natural gas (LNG) terminal, following a delay in the construction of a similar project by an international consortium, Reuters reported citing a statement by the country’s gas pipeline operator.

“The study is expected to be completed in the second half of 2013,” the state-owned operator Plinacro said. Croatia’s slow decision-making process was widely blamed for the project’s limited progress before the crisis.

The alternative project, also planned on the northern Adriatic island of Krk, involves a floating terminal in the first stage, which could later evolve into an on-ground terminal. Plina-

NEW PLAYER ENTERS HUNGARY’S DEREGULATED RETAIL ELECTRICITY MARKET Energetikai Központ Zrt will start retail sales of electricity on Hungary’s deregulated market from June,

cro said the alternative LNG project would have a capacity of between 4 and 6 bln cubic meters of gas a year.

SIX ENERGY GIANTS EYE BULGARIAN BLACK SEA GAS FIELD Six of the leading oil and gas companies in the world have tabled bids for exploring the deep water gas field Khan Asparuh off Bulgaria’s Black Sea coast, Bulgarian Standart reported. The companies are British-based Melrose Plc, Austrian OMV, US ExxonMobile, French Total, Spanish Repsol and Anglo-Dutch Shell, the daily said. The energy giants are expected to fi le bids by June 17, the bid submission deadline, Delyan Dobrev, Minister of Economy, Energy and Tourism was cited by the newspaper as saying.

The exploration works on the Khan Asparuh block are expected to start within a month, while gas production could start in 2014-15, it said.

natural-gas pipelines in the country to a consortium led

by Macquarie Group Ltd for €3.2 bln ($4 bln), shoring up its funds as nuclear earnings decline. The price for Open Grid Europe, Germany’s biggest gas-transmission system, includes adjustments for pensions and other assets, Dusseldorf-based E.ON said in a statement. The buyers also include a fund of German reinsurer Munich Re, the Abu Dhabi Investment Authority’s Infinity Investments and British Columbia Investment Management Corp, E.ON said. It expects the deal, which requires approval from German authorities, to be concluded in the third quarter.

MOL Q1 NET INCOME FALLS

E.ON AG, Germany’s largest utility, has sold a network of

Hungarian oil and gas company MOL’s Q1 net income fell 20% to HUF 73.7 bln ($318.2 mln) from the same period a year earlier on narrowing margins and financial losses, the company’s consolidated IFRS report published on May 15 shows. After-tax profit fell 28% to HUF 80.9 bln. Total revenue rose 13% to HUF 1,360.3 bln. ■

a base for proper regulation and will hopefully lead to an implementable strategy. There are opportunities for the cloud in taxation and in system testing as well, according to Iván Futó, advisor at the National Tax and Customs Authority.

After another distributed presentation by SAP’s Rainer Zunow, showing how one of the largest global software companies has changed its direction of development, another roundtable of Hungarian business experts discussed investment opportunities in the cloud. Panelists agreed that of the three I’s to produce business success stories, Hungary definitely has innovation and investment as well, surprising as that may seem, after the EU’s Jeremie funds opened up a way for innovative companies. Incubation, on the other hand, is still in its infancy, although there are several promising initiatives countrywide. For cloud businesses, the recession is another factor to

boost success. “The market is excellent now: there is no better time for the cloud,” Dávid Szabó, regional cloud strategy advisor for Microsoft said. He added however, that, to make their way, startups have to think global and know what their competitive advantage is.

The event also hosted the first Hungarian EuroCloud Award ceremony, with first prizes in two categories and special prizes in another four. The Best Cloud Service Product prize went to Mobile Engine while the Best Business Case of the commercial sector was Telenor’s Origami Group case. Elastoffice got Best Startup prize for its virtualized enterprise management software, the Hungarian Water Rescue Association won the Cloud User category, Nexon got Best Transformed Service to Cloud prize for its project with Tesco and Central Europe On-Demand was awarded the prize for the Strongest International Impact. ■

E.ON SELLS GAS GRID TO MACQUARIELED GROUP

Clouds of data over Europe Europe celebrated the penetration of cloud computing services with a distributed conference across 14 countries simultaneously on May 23 and showed that efforts are being made to make the cloud available for all – even in Hungary.

BBJ ANIKÓ JÓRI-MIOLNÁR

If it’s IT, it’s happening in the US, so it could be considered a real success story if something is happening outside of the Silicon Valley-based ecosystem.

Building an institutional background around cloud computing is an idea that jumped this barrier and in a very short time EuroCloud has become visible on a worldwide level.

“It is the ultimate goal of all organizations,” said

Zoltán Bellák, president of EuroCloud Hungary in his opening speech of a cloud conference, “to have such a fast success in implementation of its idea.” Indeed, the parent organization was founded two years ago and in this timeframe, a lot has been achieved, including the forming of several local organizations Europe-wide and the announcement of the European Cloud Partnership strategy by European Commission vice president Neelie Kroes earlier this year in Davos.

In a online appearance at the conference, Kroes highlighted again that cloud computing, with more than $400 billion of revenue last year, can “change the way we do business.” The access to unlimited content anywhere on any device is something SMB’s and public administration can benefit the most of. However, the VP also made it clear that there are still problems ahead, especially regarding concerns

over protecting data when the cloud crosses borders.

The fact that 90% of cloud users have no idea of liability whatsoever puts barriers on a market of huge growth potential, Kroes said. In its cloud computing strategy, Europe works on leveraging the market for the public sector, looking through all the policies that are relevant for the cloud, creating a package of stimulation to promote market growth and agreeing on a common global framework “to make sure the cloud doesn’t happen to Europe but with Europe.”

After Kroes’ speech, it was time for the Hungarian experts to take center stage.

Gábor Poros of Fujitsu Siemens Hungary talked about whether the cloud is a revolution: he concluded that beyond technology, cloud computing is more of a new business model that enhances competitiveness and helps save costs, making it a new way of creating values.

Fujitsu itself invested €1.2

billion in cloud related developments in 2011: in data centers, application development platforms, M2M solutions and IT security. “Changes of great consequence happen fast, so chances have to be snatched as quickly as possible,” Poros added.

If a strategy can also be seen as a way forward, was largely disputed by the panel members of the first roundtable, although it can be appropriate to put an end to common fears. One of the major areas to implement cloud solutions could be administration: with its 20-30% share of the IT market, it is not at all indifferent where this money is spent. Central administration could set an example by expanding the market – slowly growing to HUF 1.6 billion – and it could have a significant multiplication effect, panelists agreed.

The government’s IT development agency rep told the audience about a pilot project the results of which will serve as

1 News 07

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Budapest Business Journal | June 01 – June 14

New telecom tax may change mobile tariffs In a desperate attempt to bring Hungary’s deficit under the EU’s 3% threshold, Parliament has approved a new set of taxes on mobile communications.

Service providers are protesting as they are already burdened with the so-called crisis tax, introduced in 2010.

BBJ KRISZTIÁN KUMMER

A new tax has been imposed on mobile communications by Parliament in May. According to the original proposal of the government, a HUF 2 tax was to be paid on every minute of phone calls and on each text message starting from July 1, with an upper limit of HUF 700 a month for individuals and HUF 2,500 for companies.

Emergency numbers and those for charity purposes would be exempt from the new tax, as well as the first 10 minutes of each call for individuals. Service providers protested heavily because of the perceived over-taxation of the industry and the lack of consultation. Opposition parties also objected, pointing out that low-income families stood to be more affected by the law due to the caps, and that the continued use of mobile phones was essential for the regular business of companies.

While the original proposal had won the approval of Parliament on May 18, the new law was already eased on Tuesday based on an amendment proposal passed by Parliament’s economic and IT committee as well as by the audit and budget committee. According to the amendment, the new telecom tax will be capped at HUF 400 per person and at HUF 1,400 per business per month in 2012, and the original upper limits will only be introduced starting from 2013. The economic committee’s proposal came in the wake of loud protest by services providers, who are already bearing the burdens of the so-called crisis

tax, introduced in 2010 on retail, energy, finance and telecom firms in a bid to rein in the deficit.

CONSUMER, PAY! “It is a very serious burden. Its magnitude could be compared only to the current crisis tax, almost half of which is paid by our company,” said MTelekom, the owner of the biggest Hungarian mobile provider, T-Mobile. According to the company’s calculations, this year’s HUF 24 billion tax liabilities due to the crisis tax could rise by an additional HUF 6-7 billion as a result of the new telecom tax.

The government hopes to bring in HUF 44 billion a year with the new levy to reduce its deficit. Taking into account the lowered caps and the six-month period for 2012, the government could collect around HUF 14-15 billion in levies this year. The crisis tax, which cost telecom providers HUF 60 billion in 2011, will expire this year.

The new tax will be introduced as of July 1, 2012, but service providers will have to make payments to the budget only two months after billing, i.e. payment of the July tax will be due only in September. Vodafone and Telenor have already announced that the new liabilities will be passed on to customers, as they cannot bear the burden of two separate “special” taxes.

CHANGING TARIFFS, CHANGING HABITS The new telecom tax could bring great changes in tariff packages and phoning habits alike. While providers have been coy and have not yet introduced their new packages, it is highly possible that tariffs not charged on a per-minute basis – typically corporate packages offering unlimited calls for a specified monthly fee – will disappear.

Smartphone sales could accelerate unexpectedly thanks to the new tax, as the use of “free of charge” voice over internet protocol (VoIP) applications such as Skype and Viber may rise sharply. This phenomenon could result in lower tax revenues than the government had planned, but also in overloaded mobile networks and increased internet usage fees.

Besides, the over-taxation of the telecom industry might prove counterproductive in the long run.

“The telecommunications industry is one of the driving sectors of the Hungarian economy. If this sector slows down, domestic investments and jobs might be at stake, which can negatively affect economic growth and the country’s competitiveness,” MTelekom told the Budapest Business Journal. ■

EUROPEAN COMMISSION TAKES HUNGARY TO COURT The European Commission will take Hungary to the European Court of Justice (ECJ) over its special telecom tax. Hungary introduced its “crisis tax” in 2010, including windfall taxes on the retail, energy, telecom and financial sectors to reduce its budget deficit. However, in March 2011, the Commission said it had concerns over the telecoms tax – worth about HUF 180 billion over three years – because under EU rules, specific charges on telecom operators have to be directly related to covering the costs of regulating the sector, and are not meant to reduce the overall deficit of the budget. Hungary was warned it would be taken to the ECJ if it did not take steps to amend the law.

Hungary insisted that the crisis tax levied for 2010-2012 did not break EU rules and would not be abolished. “The sectoral special tax does not aim to influence corporations’ activities or the conditions thereof. It is a temporary extra material contribution from taxpayers who can bear taxes above and beyond the general tax requirement in order to improve the balance of the budget,” the ministry said in a statement last November.

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Budapest Business Journal | June 01 – June 14

To measure the immeasurable?

A guide to quantifying results after training and coaching in leadership development programs.

INTANGIBLES IMPROVED RELATIONSHIP: REPORTS IMPROVED RELATIONSHIP: STAKEHOLDERS

REDUCED CONFLICT

71% 67% 63% 61% 52%

INCREASED ORGANIZATIONAL COMMITMENT

44%

IMPROVED RELATIONSHIP: CUSTOMERS

37% 31%

BBJ JUDIT ÁBRI

IMPROVED TEAMWORK On a personal note, I have to say that for me it is a constant challenge, and also a compulsion, to prove the financial results of my work. No surprise, perhaps, given that for my whole professional life I have represented the ‘soft’ professions of communication, training or coaching while supporting executives in attaining their business goals. I felt I was obliged to prove that my knowledge and skills, the things that I fix, support, teach and contribute also yield tangible results, and these can be measured in business outcomes.

A results-based attitude has always been part of my work style. By now I have learnt to apply the ‘scientific’, universally accepted way of calculating coaching ROI and, parallel to that, of identifying the intangible benefits that represent just as much value for the organization. For me, this is the manifestation of the result-oriented coaching approach.

HOW IS IT BUILT? WHAT DOES IT CONSIST OF? Effective leadership is essential to the success, and often to the very survival, of corporations.

Showing the value of leadership programs is just as imperative in times of economic crisis, shifting business priorities, and an increasingly competitive business environment. Pressure on leaders is growing, and so are expectations towards management. Organizations and CEOs have to make choices in where they invest their resources, and they want studies and calculations showing that they have made the right choice and picked a leadership program that is worth the investment and brings benefits across the whole organization.

IMPROVED RELATIONSHIP: PEERS IMPROVED JOB SATISFACTION

OTHER INTANGIBLES Many studies have shown the correlation between investing in people and the subsequent outcomes of profitability and productivity, customer satisfaction, and even employee turnover.

SIX TYPES OF DATA CAN BE COLLECTED TO SHOW PROGRAM SUCCESS: Reaction to the program Learning the skills and behaviors needed for success ■ Application of skills and competencies ■ Business impact related to the program ■ ROI showing cost versus benefits ■ Intangible benefits related to the program ■

■

Business leaders are increasingly interested in ‘people metrics’ and the alignment between people-related data and business priorities, sales performance data, and revenue. In a recent survey of Fortune 500 CEOs, 92 out of 96 said that they were interested in learning the business impact of LD programs but only 8% actually take the investigation all the way to the ROI level. Why only 8%? Perhaps because measuring is a time-consuming exercise. It requires resources and entails expenses. The scale of the leadership program and

the costs involved are usually the motivations behind ROI calculations.

Even if you do not go all the way to calculating ROI, just making a simple announcement to all involved that measurement along the LD program will take place can help: studies prove that this in itself will increase accountability and commitment to the goals of the program. Commitment will bring lasting change, which will be tangible at the application level where some things will be done in a noticeably different way. We can register results!

LET’S START SMALL! But what does this look like in

practice? Reaction to the program is measured using smile sheets of feedback collected at the end of each workshop, which take into account how a certain program is perceived and hence received.

The questions we formulate at this stage are: Did you find it useful, necessary, appropriate, timely, valuable, etc.? We have all come across such forms; using these is common practice nowadays.

At the learning stage, we measure what individuals involved in the project have acquired in terms of skills, knowledge, information, confidence and capability.

In the next phase, the application level, we measure

TANGIBLES (RATIO OF EXECUTIVES REPORTING IMPACT) PRODUCTIVITY QUALITY ORGANIZATIONAL STRENGTH CUSTOMER SERVICE REDUCED COMPLAINTS STAFF RETENTION COST REDUCTION

53% 48% 48% 39% 34% 32% 23%

77%

what participants do, change, or do differently based on what they learnt.

We work with verbs like increase or decrease a particular activity, or create or build a new procedure or process, eliminate, maintain, use, respond, etc.

Business impact is where we evaluate how the hard figures of business have changed.

What has improved to what extent? We usually talk percentages at this level.

When we monetize these numbers, we have reached the ROI level.

At the outset of the LD program, we need to determine the evaluation plan, which should include the data collection method, the isolation criteria whereby we separate and filter training and coaching results from other ‘environmental’ factors, and the method used for converting soft and hard data to monetary value.

Now let’s spend some time on soft data, i.e. intangible benefits.

Intangibles are the measure that cannot be easily converted to money, and yet in some projects intangibles are more important than monetary measures. Typical intangibles include culture, brand, reputation, innovation, creativity, engagement, etc. Quite often, when we examine the success

behind well-known organizations, we find that the keys to their success are the intangibles, the aspects listed above.

Intangibles transform the way organizations work, the way employees are managed, the way products are designed, the way services are sold, and the way customers are treated. And with training and coaching, these are the areas we work on.

In conclusion, and as proof of coaching ROI, I could list actual case study data from the ‘ROI In Action Casebook’

by Patricia and Jack Phillips, which data demonstrates triple-digit ROI percentage figures on major coaching and training projects. However, that is not the point.

What is essential in my opinion is to encourage all leadership program promoters to compile an additional evaluation forecast to their planned program (it does not matter if it does not go all the way to ROI), which will convince all decision makers that the LD program will yield benefits that can not only be felt but also measured, and if carried through all measurement levels, can even be expressed in both hard and soft business data.

Better to have an extra report than a scrapped LD program in the drawer or in the thrash can due to lack of funds. ■

Judit Ábri von Bartheld ACC, International Coach Federation accredited executive coach, organiser “Coaching Without Borders” www.coachinghataroknelkul.hu, and “Leadership Excellence Forum” abri.judit@executivecoach.co.hu www.executivecoach.co.hu

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Greek fire rages on – w i Disregarding the worst-case scenario of a collapsing Greece leaving the eurozone and the European Union itself, which might set off a worrisome chainreaction among other troubled countries in the Union, even the less pessimistic analyses admit that the Greek crisis represents a huge threat to the fragile Hungarian economy. What does the euro crisis hold for Hungary, and what can the country do to mitigate its challenges?

BBJ ÁGNES VINKOVITS

be so much impressed by the international bailout as it is outraged by the austerity required of them. Most recently, people had the opportunity to show how they feel, and this is what really worries the markets at the moment. In the national elections on May 6, centerright New Democracy and socialist Pasok, the forces that had ruled the Greek political scene for 40 years and the only candidates who had agreed to enact the unpopular belttightening measures the bailout packages required in return, gained only 35% of votes combined, while no single political force had sufficient support to form a government.

Since all the other parties have said no to austerity measures, which are otherwise essential for Greece to avoid bankruptcy, the world is now waiting for June 17, and the second round of the elections.

There is hardly a hotter topic nowadays than the ongoing euro crisis with Greece at its very epicenter. The country’s government debt was given junk status in April 2010, which was soon followed by a €110 billion bailout from the IMF conditional on the implementation of austerity measures targeting a sustainable economic path.

When fears over Greece still did not ease, eurozone leaders agreed in October 2011 to cut Athens’ debts by 50% and provide €130 billion in additional rescue loans.

The Greek population, however, does not seem to

CRISIS ROLLING OVER The current situation is about much more than the results of Greece’s irresponsible economic policies: it also draws attention to the shortcomings of the entire system.

As Annamária Artner of the Institute of World Economics at the Hungarian Academy of Sciences told the Budapest Business Journal, the European Union has reached the maximum level of integration that is possible between market economies.

The next step could only be absolute integration, which would entail the elimination of national monetary poli-

2001

Greece becomes the 12th EU member to adopt the euro

DEC

2009

Greece admits that its debts have reached €300 billion. Ratings agencies start to downgrade Greek banks and government debt

cies, and that is obviously impossible, as national sovereignty cannot be abolished amidst rivalry and the chase for profit.

The EU, and especially the euro, primarily benefited the stronger economies even though the euro was undervalued for them while it was overvalued for

JAN

2010

An EU report reveals “severe irregularities” in Greek accounting procedures. The country’s 2009 budget deficit is revised upwards to 12.7% from 3.7%

the weaker countries, which only increased the latters’ disadvantage in competitiveness. In the long run, maintaining the common currency amounts to suicide for the weak economies, while it requires huge sacrifices from the strong ones as well. “The eurozone in its current form is close to its

FEB

2010

In order to curb the deficit, Greece unveils a series of austerity measures and announces plans for further belt-tightening, sparking strikes and riots in the streets

end,” Artner claims.

However, according to a May 18 statement from investment consulting company Equilor Zrt, Greek bankruptcy would have only a very slight effect on the eurozone, since most market players have already written off their Greek exposure. Still, as Equilor

MAR

2010

The Eurozone and the IMF agree on a safety net of €22 billion to help Greece

pointed out, the psychological effect of the bankruptcy would make a difference and might increase pressure on Portuguese, Spanish and Italian government bond yields. That would threaten the ability of these countries to finance their debts, but since Spain’s population is above 45 million and Ita-

APR

2010

Following worsening financial conditions and more protests, Eurozone countries agree to provide up to €30 billion in emergency loans. The EU announces that the Greek deficit is at 13.6% of GDP, even worse than thought

1 NewsFocus 11

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Budapest Business Journal | June 01 – June 14

w ill it engulf Hungary too? union is not only necessary to save the rest of the eurozone but is also in the best interest of Greece. If it sticks with the euro, it will have to reduce both wages and prices in order to gain competitiveness for Greek products and services but, according to Sinn, “this would push the country to the verge of civil war”.

Even so, any kind of erosion in the eurozone would obviously hit back at the EU itself. “The Union either changes radically, which would mean transcending the competition-based, profit-oriented economy, or it will break up,” Artner argues.

ly’s is close to 60 million, it is impossible for Europe to save these countries on its own. But, all in all, Equilor does not expect Greece or any other member states to quit the eurozone.

Hans-Werner Sinn, president of Germany’s Ifo Institute for Economic Research, says that keeping the euro-

MAY

2010

The Eurozone members and the IMF agree on a €110 billion bailout package

zone together is clearly in Germany’s interest. Due to Greece’s two international loan programs, Germany would lose €80 billion through Greek bankruptcy alone, which is still nothing compared to the effect the collapse of the entire eurozone would have. This scenario would leave the Ger-

JULY

2011

The Eurozone agrees on the second bailout for Greece.

The €109 billion package is to resolve the Greek crisis and prevent contagion among other European economies

man central bank with €300 billion in bad debt in the eurozone interbank payment system Target2, which could result in losses of €1 trillion overall. “[Greece] has to give up the euro as soon as possible and relaunch the drachma,” Sinn said, adding that a Greek exit from the 17-country currency

OCT

2011

Some private banks holding Greek debt accept a loss of 50%

POOR LITTLE HUNGARY Whatever the future brings, Hungary is even more sensitive to the euro crisis than other countries.

It is widely accepted that the markets treat CEE economies as a single group and they obviously take their money into countries where they can hope for the highest profit with the lowest risk. In the first quarter of 2012, Hungarian GDP dropped by 1.3% compared to Q4 of 2011, the worst performance in Europe in that period. Also, Hungary’s key interest rate of 7% is the second highest in the region after Ukraine’s 7.5%. A high base rate might be appealing to investors on the one hand by offering higher yields, but on the other hand it keeps the economy under pressure by making it harder for businesses to secure funding. Also, while inflation is between 3.5-4% in the Visegrád countries,

FEB

2012

The Greek government finally agrees to pass the further austerities required by its international lenders, leading to a new round of protests

in Hungary it reached 5.7% in April.

If that was not enough bad news, Hungary’s economy is showing worsening tendencies, a point well illustrated by GKI-Erste’s latest business and consumer index which slipped to -24.9 points in May from -19.3 in April, a level last seen at the end of 2009.

Being so fragile, every minor aspect of the euro crisis has a negative effect on Hungary. Since the Greek elections in early May eventually resulted in deadlock between the forces supporting and opposing the EU-IMF deals, Hungary’s credit default swaps (CDS) have increased by 16% while the forint has weakened HUF 8-9 against the euro.

Such serious developments purely due to the international environment suggest that if the anti-austerity forces can form a government after the June 17 elections, which would soon push Greece into bankruptcy, the mistrust against Hungary might increase rapidly and hit the forint hard. Greece’s exit from the Eurozone, however, would weaken the euro, which could actually favor the forint in the short-term.

ON THE WAY UP Analysts agree that in order to stabilize Hungary’s economic perspectives in such an unpredictable environment, Hungary needs an agreement with the IMF and the EU as soon as possible.

Mihály Varga, Hungary’s brand new minister without

MAR

2012

The Eurozone backs another Greek bailout of €130 billion euros

portfolio in charge of negotiations between Hungary and the IMF/EU, said on May 22 he hoped to reach agreement by early fall, a date that analysts also see as achievable.

However, as Péter Duronelly, investment director of fund management company Budapest Alapkezelő Zrt warns, if things get worse in Greece, neither the EU nor the IMF would have enough capacity to renew their loans to Hungary. If this happens, even reaching an agreement by early autumn might come too late for Hungary. “If in the worsening environment Hungary does not have the possibility to call on EU and IMF sources, the country might have to face a crisis even more serious than in 2008 and insolvency would be a possibility as well,” Duronelly said.

“Hungarian politicians are playing with fire without even realizing it.”

Even if things do not turn out so badly, the IMF agreement would only mean a solution in the shortterm. “The main question is whether the Hungarian government undertakes to drive the country on a path of development that will pay dividends in the long run,” Artner noted. If it decides to do so, then it has to put money into education and health care, and use loans for funding if necessary to make these services available for every single child and citizen at the best possible quality, Artner said. “Then an educated and healthy nation can pull through any crisis.” ■

MAY

2012

None of the parties gain enough votes at the general election to form a government. A second round will be held on June 17

2 Business

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Enterprise

Slight renovations in the Orbán machine The Orbán government has reached mid-term and marked the occasion with the first significant cabinet reshuffle. There is not much of a transformation going on, however. Mostly, the overhaul has reinforced the relative influence of the Fidesz inner circle, i.e. of people close to Orbán. Especially crucial may be János Lázár’s shift from the leadership of the parliamentary faction to the PM’s office, and the nomination of Antal Rogán as Lázár’s successor at the helm of the Fidesz group in Parliament. Overall, Lázár did a fine job as a faction leader, but arguably his new office will make use of his better qualities while giving him less room to publicly display his weaknesses.

Rogán’s elevation marks the completion of a long rehabilitation process for one of Fidesz’ most talented young politicians.

BBJ POLICY SOLUTIONS

In the middle of Fidesz’ term in government, Viktor Orbán’s famously stable cabinet is finally undergoing a mediumsized overhaul. Despite problems on the economic front, a series of controversial reforms with little evidence of success thus far, and an aggressive and confrontational governing style occasionally marred by scandal, Orbán has famously stood

by his team, true to his own emphasis on loyalty.

The only change at cabinet level thus far had been Tamás Fellegi’s demotion from the helm of the Minis-

goings-on in his vast ministry.

Effectively, his junior ministers Rózsa Hoffman (education) and Miklós Szócska (health) were running their own shows, with little input

BEHIND CLOSED DOORS The only sop to adherents of “orthodox” economic policy was the elevation of Mihály Varga to the cabinet, to replace Fellegi as the leader

Lázár closer to him, though it does come at some cost to the young politician who rose very high very quickly. He has to give up the mayoralty of his hometown Hódmezővásárhely,

VARGA... IS CONSIDERED A STABILIZING INFLUENCE IN A GOVERNMENT WEDDED TO UNUSUAL ECONOMIC POLICY. try of the National Development to minister without portfolio in charge of negotiations with the IMF. Just when those finally got off the ground, Fellegi became the first minister to be completely let go, along with Minister of National Resources Miklós Réthelyi.

SUPERSIZE ME Réthelyi will be succeeded by the junior minister for Roma issues, Zoltán Balog, who will lead a significantly enlarged ministry. And when we talk of significantly enlarged, it’s worth keeping in mind that this behemoth department already deals with health, health insurance, education, family, youth, drugs and drug prevention, culture, sports, social and pensions policy, science and equal opportunities.

This is a cabinet within the cabinet. Now it will also feature social integration, the promotion of social and civil relations, church relations, as well as minority and Roma policy.

While Réthelyi had long been considered a certain candidate for ouster, Balog’s was only one of the names floated. The selection of him, a man who appears a far less pro-active – or aggressive, if you like – politician than, say, Lázár, whose name was also mentioned, suggests that hands-off supervision by the minister will likely continue. Réthelyi appeared to have very little to do with the

from their nominal superior.

The enlarged super-ministry and the little information that is available about Balog suggest that the junior ministers will probably continue to operate their fiefdoms relatively autonomously.

PLUS CA CHANGE What makes the current reshuffle interesting are not the changes, but how much things remain the same. To apply the framework of the government communication’s new buzzword, these changes mark the consolidation of old structures. The “in” people in Orbán’s circle reinforce their positions, while some of the few “out” people, well, they are really out now.

Most crucially, Minister of National Economy György Matolcsy retains his position as the official architect of economic policy. In fact, the personnel announcements followed just on the heels of the government’s official nod to Matolcsy’s new taxes on telecommunications and financial transactions.

Though he was upstaged by the reshuffle announcement – most likely timed to steer the media spotlight away from the new burdens imposed on the public – Matolcsy had plenty of opportunity this week to bask in the limelight and reinforce public perception that he remains in charge of the economy.

of the government’s IMF delegation. Though he talks little to the press and reveals still less, Varga, himself a former minister of finance in the first Orbán government, is generally considered more of a textbook type of economist and a stabilizing influence in a government that is wedded to unusual economic policy.

More importantly, in his role as leader of the IMF delegation, he will presumably have the authority to make concessions to the Monetary Fund (assuming that the government actually wants an agreement), and to reveal details about Fidesz’ real vision for the Hungarian economy. Whatever pronouncements Matolcsy makes in public, it is likely that Varga’s commitments and revelations at the negotiating table will have more bearing on the actual realities of policy-making, which is not to say that these will necessarily be in conflict. The only question is what Varga will do once the talks have been concluded – it appears extremely unlikely that he’d be on the way out, like his predecessor as IMF delegation leader.

YOUNG TURKS RISING Varga’s replacement as the junior minister in charge of the Prime Minister’s Office will be Fidesz’ current leader in Parliament, János Lázár. As Orbán put it, the appointment moves

which was the office that propelled his entry into national politics. Due to the new rules on conflicts of interest for MPs, he would likely have surrendered the mayoralty in 2014 anyway, but the early move nevertheless deprives him of an independent power base.

More importantly, his new position will give him far fewer opportunities to be in the limelight and will also lessen his influence over Fidesz 262 MPs, a significantly more crucial power base than Hódmezővásárhely, a town of 47,000. He will of course be closer to Orbán – and for those who wish to wield influence on policy that’s more important than controlling a few hundred MPs. In any case, the move is also smart because Lázár has proven supremely adept as an organizer – a key aspect of his new office. Fidesz’ parliamentary faction is a highly disciplined machine, which is a testament both to Orbán’s skill in selecting MPs and to Lázár’s managerial qualities. At the same time, though Lázár is passable as a rhetorician, he has proven highly gaffe- and scandal-prone over the past two years. His comments about public affairs reveal an extremely combative and often insensitive nature. Some of his remarks

betrayed a sense of entitlement and also a lack of empathy for the underprivileged. Keeping him off the TV screens for a little while meshes well with the notion of consolidation.

SMOOTH OPERATOR As Fidesz’ leader in Parliament, Lázár is succeeded by the mayor of Budapest’s central (5th) district, Antal Rogán. This marks the most recent apex of Rogán’s arduous climb back to prominence after years of political exile. During Orbán’s first term in government, Rogán was seen as potentially the most promising political prospect in Fidesz. Rogán shared this assessment and fatally went public with it, announcing that he could see himself as PM ten years hence. Though a horizon of ten years could hardly be construed as an immediate claim, his statement probably did not sit well with a PM who does not like competition very much.

Ten years later, the assessment hasn’t changed much: he could still be PM ten years from now, but he has learned not to say such things publicly. He suffered for his early hubris by being sidelined for many years, and paid tribute this term by introducing many of the most controversial pieces of legislation. With Rogán’s ascension, all the currently likely contenders for Orbán’s succession – Fidesz’ vice chair and Debrecen mayor Lajos Kósa, Minister of Public Administration and deputy PM Tibor Navracsics, and of course Lázár and Rogán – hold major offices in the party or in government. The pieces may all be in place, but don’t count on the game to begin any time soon. ■

www.policysolutions.hu Political Research and Consultancy Institute

2 BusinessTrends 13

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Budapest Business Journal | June 01 – June 14

Car market in coma

Our everyday bread

Consumer sentiment

Hungary’s new car sales remain terrible

White bread still a Hungarian favorite

Pessimism still on the rise

9%

16

th

OF SALES ARE FINANCED BY CREDIT

The number of new car registrations tells a lot about a country’s economy. According to a fresh survey conducted by consultancy PwC, the Hungarian picture is not just dark at the moment; it is not expected to lighten in the next two years, either.

The survey clearly shows that the market has not woken from its coma yet: new car sales, which have dropped by 60% since the breakout of the 2008 crisis, are expected to reach only about 46,000 units this year, slightly up from the 45,000 in 2011. More worrisome is the fact that market players see a chance for growth only after 2014.

Recent changes in the car taxation system are predicted to make things even worse. Car dealers expect the change in vehicle sales tax to lead to a 6% drop in used car sales, and the change in company car tax to lead to an 8% decline in new car registrations.

PwC partner Tamás Lőcsei points out that, at the current rate of new car registrations, it would take 60 years to replace Hungary’s passenger car park, which is estimated to number around 3 million vehicles. At the same time, such low sales volumes obviously result in a boost to the service industry: 55% of traders’ income came from this activity last year. No surprise then that most dealers plan to cut expenditures: 69% of respondents will reduce marketing costs, while 64% will cut headcount in order to save money.

The survey found that only 5% of auto dealers intend to leave the sector, Nearly every respondent which suggests that acknowledged the presence of most market players, the black economy in the new even in these hard times, car business. When asked how are more or less stable. this could be decreased, 72% However, the car dealer of respondents said that results market is not appealing to could be achieved if taxes were lowered, while 67% said that investors: the average age setting up mandatory databases of dealerships is 17 years, to keep track and verify servicing while the proportion of could help solve the problem. businesses younger than five years is only 4%. ÁV

Revenue from the sale of baked goods grew by about 10% last year from the previous 12 months – although that was down not to increased consumption so much as higher prices, a fresh study by GfK Hungária shows.

An average Hungarian household buys 2 kilograms of bread every five to six days, typically in a smaller shop of one of the Hungarian store chains, independent grocery stores or bakeries.

More than two-thirds of that revenue is generated from bread sales, one-fifth comes from rolls and the remaining 10% from other bakery goods. This latter category includes, among other things, salty and sweet pastry, croissants, and milk loafs.

All households buy basic bakery stuff such as bread and rolls, and some 90% of them also go for other bakery goods. On a list of the 20 most popular foodstuffs in Hungary, rolls are ranked ninth, while white bread is the 16th most liked foodstuff, the GfK research reveals.

Although the share of white bread is still significant, half-brown bread (bread partially made of wheat flour and partially from rye flour) is gaining ground. People in general spend HUF 21 out of 100 on this type of bread. While said to be healthier than that made of wheat flour only, brown bread (made of rye flour), and whole-grain bread have an insignificant share of sales.

Bread is bought once every five to six days, but households buy rolls less frequently. In general, people buy these in every ten days, buying an average of 14 pieces at a time.

“When buying baked goods, people favor traditional sales channels such as the smaller units of Hungarian food store chains or bakeries. If they buy them in supermarkets, they go for larger quantities,” says Rita Vella, key account manager of GfK Hungária.

“People usually go to bakeries to buy salty and sweet pastry, and they also favor hypermarkets in this area. At the same time, they hardly ever go to discount stores to get their bakery goods.” PF

97%

New Car registrations in 2011

Where do we buy our daily bakeries? (%) BREAD

Slovakia Slovenia Hungary

68,000 58,000 45,000

10

13

21

15

17

16

9

9

8

LOCAL CHAINS

28

29

16

INDEPENDENT STORES

18

16

12

BAKERIES

17

14

23

3

2

4

Source: GfK Hungária

OF HUNGARIANS THINK THEIR FINANCIAL SITUATION HAS WORSENED IN THE PAST 10 YEARS

Consumer sentiment is deteriorating for the fourth year in a row, according to an international survey by Cetelem in 12 European countries. The sentiment index fell to an unprecedented low, as the respondents rated their countries to an average of 3.8 points on a 1 to 10 scale.

Consumers in the vast majority of countries – including Hungary – feel that their situation has worsened compared to the previous year.

Although there are refreshing exceptions, such as Germany and Romania, Europe is still dominated by pessimism. The only country more pessimistic than Hungary (2.7) is Portugal (2.6).

Amongst countries studied by the survey of Cetelem, Hungary stands out in a negative sense, as 79% of respondents believe that their financial situation has deteriorated over the past 10 years.

The drastic decline in purchasing power, with shrinking income and the cost of living rising sharply, forced European citizens to change their consumer habits. The will to save is – not surprisingly – on the rise in eight of the 12 countries. Contrary to the experience of previous years, Hungary is also following this trend; the rate of those saving jumped from 13% to 20%. Even so, the country is amongst the lowest ranked.

Cost reduction is the most important tool in families’ hands, leading to innovative, creative consumer strategies. Some 64% of respondents started to rationalize the water and The overall European average energy consumption in of consumer sentiment fell 0.2 their households. European percentage point from last year costumers are increasingly to 3.8 points. Only German and turning from expensive Romanian citizens feel more prestige brands to more positive, while the sentiment in practical and cost-effective the most pessimistic Portugal hasn’t changed. Russia registered goods. Consumer awareness the biggest fall (–0.7 percentage of prices is on the rise too, point), while sentiment in increasing the turnover of Hungary, Italy, Spain and the UK discount purchasing channels fell by 0.6 percentage points. and online shops. KK

3.8

Consumer sentiment in European countries (2011-2012)

SALTY AND SWEET PASTRY

HYPERMARKET

OTHER

Source: PwC

ROLLS

SUPERMARKET DISCOUNT

79%

IS THE RANKING OF WHITE BREAD ON THE LIST OF MOST POPULAR FOODSTUFFS

Source: Cetelem survey, 2012

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THIS SPECIAL REPORT IS SUPPORTED BY:

Energy efficiency for businesses: not a While members of the European Parliament and Denmark, holder of the EU presidency, strongly back the Energy Efficiency Directive and the idea of environmentally sustainable growth, crisisstruck Hungarian businesses may find hard to invest in such developments and survive at the same time.

BBJ KRISZTIÁN KUMMER

Through various projects of the new Hungarian development plan, the Új Széchenyi Terv, hundreds of billions of forints are available from the Hungarian government, the European Union’s Cohesion Fund, the Regional Development Fund and the European Social Fund for tenders under the so-called Green Economy Development Program. By end of May 2012, more than HUF 100 billion in funding requests had been received by the Hungarian development agency, the Nemzeti Fejlesztési Ügynökség (NFÜ).

Although more than HUF 30 billion is already granted, the tenders are mostly open only to municipalities, local governments, and micro regions or newly built renewable power plants.

Hungarian businesses recognize the importance of increasing energy efficiency and/or the use of cheap renewable energies in these challenging times.

Under a tender which specifically aimed to increase the use of renewable energy,

126 applications were made for HUF 6.7 billion of funding, although to date only 37 have been accepted, with a total HUF 897 million of backing released. (Conversely, a tender that aims to help install solar panels on residential and individual buildings had to be prolonged, due to a lack of interest and additional funding.)

Small- and medium-sized enterprises may find it even harder to source financial or technical assistance to help them lower energy consumption and raise environmental awareness.

The Virtual Power Plant Program, started last March, aims to collect, organize and publish the energy efficiency achievements of Hungarian businesses.

Based on international experiences, the program will provide some basic data to users about the annual rate of savings, the type, cost and payback period of investments and the main occupation of participants.

The Virtual Power Plant Program serves several purposes. First, the data uploaded forms a knowledge base, sharing ideas and experiences of how to rationalize energy consumption.

On the other hand, the program will help to quantify and summarize energy savings already achieved, so state institutions will find useful information about the energy consumption and saving patterns of companies. The analysis of data provided by the program could also be used in energy system and network modernization.

The potential development of energy efficiency for Hungarian businesses is said to be one-third of all Hungarian energy savings.

To emphasize the improvement in energy efficiency, a program was

announced for “energyconscious companies”. Under the program, available from last March, public experts help to determine the steps needed in the development of energy management. Consultants present management training courses, outline special assessment opportunities and also promote energy efficiency credit programs and special tenders.

After a year, the consultants review the goals achieved and successful businesses are entitled to use the Energy Conscious Company title and the scheme logo. Further one-year commitments to the project can also be made.

One of this year’s winner of the title was CSO Gumifeldolgozó Kft, which has produced flexible rubber pavements from recycled granules since 1991, which are used mainly in playgrounds and sports courts.

The company has huge power demands, so energy efficiency was crucial to achieving higher profit margins. The company made a commitment to reduce energy consumption by 20% by the end of the year through long term production-process planning, and careful maintenance.

Also, replacement parts are selected not just based on price but also on energy efficiency measures.

In the longer-term, the company plans to fulfill its energy demands through its own high-efficiency and environmental friendly power plant fueled with waste. While the HUF 200 million investment might sound a little reckless given the harsh economic situation, the power plant would significantly reduce overall energy bills and also the long-term hindrance of ever growing energy prices.

The mentor (and role

model) of the Energy Conscious Companies is Audi Hungária Motor Kft, the car and engine manufacturing plant of Audi AG in Győr, which has paid special attention to sustainability as a value-added factor since its founding. To manage sustainability issues, the company created an environmentally-focused management system in 1999. It was the first such in Hungary to be registered under the European Union’s strict Eco Management and Audit Scheme (EMAS) regulations. From 2011, energy management was integrated into an environmentalfocused management system and certified by the international ISO 50001 standard.

The factory uses many methods to analyze the potential the environmental aspects of different activities. The so-called energy workshop system aims to explore the energyconsuming characteristics of the production processes and identifies areas where energy efficiency can be improved.

In addition to the optimization of processes, environmental awareness is also important on the level of technologies used, to make sure that environmental impact is as low as possible. Among many other things, the company testes engines to lower air pollutant and waste emissions, and minimizes lubrication throughout the mechanical working phases to reduce hazardous waste.

The company focuses on environmentally friendly solutions in production and in office operations too. As a result of careful planning, it says 98% of waste is recycled.

The company also pays attention to reducing energy and water consumption throughout the whole production process. ■

THE GREEN ECONOMY DEVELOPMENT PROGRAM IN NUMBERS

Source: NFÜ

Applications received (pieces)

1,970

Financial support requested (HUF)

106,874,701,794

Backed up

by Managing Authority (pieces)

854

Amount granted (HUF)

30,077,957,051

Signed contracts (pieces)

Amount signed (HUF)

783

27,799,324,559

Payments (pieces)

Amount paid (HUF)

475

2,890,330,965

EU BACKS ECO-INNOVATION PROJECTS The European Commission announced a €34.8 million call for eco-innovation projects in May. Businesses and entrepreneurs from across Europe can apply for funding to help bring novel environmental projects to the market, the EC press service announced.

The call is open for eco-innovative products, techniques, services and processes that aim to prevent or reduce environmental impacts, or which contribute to the optimal use of resources. This year’s call has five main priority areas: materials recycling, water, sustainable building products, green business and the food and drink sector.

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[ EXPERT OPINION ]

Motoring ahead takes skill PAYMENTS MUST BE ACCELERATED

The call is targeted particularly at SMEs that have developed an innovative green product, process or service, but which are struggling to find a place in the market. The tender, open until September 6, 2012, offers co-funding to cover up to 50% of the project costs, and is likely to support around 50 new projects this year.

Payments for EU-backed projects must be accelerated, said Zoltán Petykó, Chairman of the NFÜ at a press conference in May. In the period 2012-2015, about HUF 1,200-1,500 billion a year should be paid out to tender winners, Petykó said.

The closing of projects is also a problem, in that many developers still haven’t submitted bills worth some HUF 700 billion to the development agency.

Amongst delayed projects, those of municipalities represent a significant portion, as they have been struggling with a lack of funds since 2008.

Many municipalities have no experience in project management, which is essential throughout the process when using EU-backed funds, Petykó added.

Talking about the results so far accomplished, Petykó said, that in the 2007-2013 EU budget period, HUF 8.2 trillion was available for Hungary based on the current exchange rates, of which HUF 5.3 trillion is already committed in contracts. The total amount of payments had reached HUF 2.5 trillion.

The leadership of the development agency has recommended significant changes to the tendering system to speed up disbursement and to manage the jammed processing of tenders, Petykó said.

TAMMY NAGY-STELLINI Managing Director HAYS HUNGARY

The automotive industry is one of the fastest growing sectors in Central and Eastern Europe. Tammy Nagy-Stellini, Managing Director of Hays Hungary, looks at the challenges faced by organizations in sourcing the right skills.

To maintain its competitive advantage, the automotive industry in Hungary, the Czech Republic and Poland will need the right skills to meet the increasing demand for its products.

But it’s not quite as simple as that, as organizations are finding out.

ATTRACTING TOP TALENT KEY FOR HUNGARIAN EMPLOYERS The automotive industry is now one of the most important sectors in Hungary, employing more than 100,000 people and leading the way in engine manufacturing. German car giants Audi, Opel and Daimler are major players who have invested heavily in the local market.

Hungary attracts inward investment because of its excellent logistics network, explains Recruitment Consultant in Engineering Fanny Kapitány of Hays Hungary. It has a highly skilled and flexible labor force and salaries are lower.

The automotive market is candidate-driven, so top candidates often have several job offers.

Many organizations snap up the best graduates while still at university.

One area where junior and more experienced engineers fall down, however, is in linguistic ability, comments Fanny Kapitány. To compete in the current market, jobseekers need to demonstrate a proficiency in more than one language, particularly English and German for the engineering sector. But it’s not the kind of tuition that they’re getting enough of at university.

Another challenge is the heavy capital-intensive nature of the Hungarian economy and the concentration of the population in Budapest.

All automotive companies are headquartered in remoter countryside locations and many candidates, particularly those with three to five years’ experience, are reluctant to relocate. Attractive relocation packages will play a key part in enticing candidates to move.

EXPANSION FUELS DEMAND FOR SKILLED ENGINEERS IN THE CZECH REPUBLIC The automotive industry in the Czech market is influenced by a number of key factors, notably the demand for specialist expertize for new production plants close to Germany and the expanding capacity needed by ‘Just in Time’ (JIT) operations in west Bohemia.

Major employers like Škoda are looking for technically skilled operatives, such as project managers, process engineers and SQA engineers with a good grasp of English and German. Hyundai Motor Manufacturing in northern Moravia is on the lookout for skilled engineers and technologists.

When it comes to finding the right talent, organizations should not limit their searches to local candidates. For example, Slovakia is a hotbed for experienced talent and many of these candidates are often willing to relocate.

The focus of the automotive industry in 2012, as it has been in recent years, is on productivity gains and product development, which has led to an increase in the demand for Lean specialists and process engineers.

SKILL SHORTAGES PREVAIL IN POLAND’S ‘PRESTIGE’ SECTOR With 150,000 employees, the automotive industry is also a key GDP contributor in Poland. The majority of revenue is generated by component parts manufacturers rather than carmakers.

These providers not only supply the three biggest original equipment manufacturers (OEM) companies in the country – Fiat, General Motors and Volkswagen – but to all OEMs in Europe.

Finding the right level of experience for their roles remains a key challenge. Graduates often don’t possess the requisite skills and have to undergo induction programs when they join, which has clear cost and time implications.

Employers not only have to work hard to retain their own staff but also have to attract expertize from their competitors. This pushes up salaries and remuneration packages need to be more competitive. Language skills are also an added bonus, for example a strong grasp of German and French. There is huge scope for learning and career advancement, which boosts employee loyalty.

COMBATING SKILL SHORTAGES It is clear that the automotive sector will continue to create jobs and be a significant revenue generator for the Hungarian, Czech and Polish economies for many years to come.

With expansion plans in full flow, organizations need to think about their recruitment strategically to plug the knowledge gaps and ensure they remain competitive.

To find out more about how Hays Hungary can help your organization with its recruitment needs in the automotive and other sectors, visit hays.hu or call +36 1 501 2400.

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t an option

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HUNGARIAN BUS MANUFACTURERS ON THE VERGE OF EXISTENCE

Love me, tender!

Nobody knows what the future holds for hundreds of workers at various Hungarian bus manufacturers. Managing directors of factories and assembly plants have no idea how long they can operate their businesses.

Long-awaited state commissions and tenders have not been available for years. Why does Hungary order busses from other countries if there is quality know-how in the country with accessible facilities? Market players are losing patience and struggling for survival.

BBJ ROBERT V. WALLENSTEIN

The Ikarus brand used to be just as well known all over the world as the name of the great Hungarian football player, Ferenc Puskás. The 1970s and 1980s marked the golden age of the bus maker, as thousands of vehicles were sold annually to China, Burma, Canada, Egypt, the USSR, and across Eastern Europe. The decay of Ikarus is typical of what is happening in Hungarian bus manufacturing. Since the political transformation, the amount of

orders has decreased radically.

By 2007, Ikarus had closed its business. However, the good reputation of Hungarian manufacturing has remained a phenomenon worldwide.

NABI (North American Bus Industries) has produced buses in Hungary since 1992. The company knew that it could count on skilled local designers and bus-mechanical experts.

It opened its second factory in Kaposvár 10 years ago, investing more than HUF 5 billion in the region. It has produced more than 8,000 buses

since it started operations, of which 500 were made of a special plastic composite. This glass-fiber reinforced, vinylester resin laminate singlepiece structure contains both the bus’ body and chassis elements. A Hungarian invention, it provides significant weight reduction, ease of repair and full resistance to corrosion. No surprise that this structure has attracted the attention of foreign companies, which led to a booming business partnership between NABI and the city of Los Angeles. The company

recently announced that it had got another commission from California to produce 150 more composite buses by the autumn of 2013, providing secure jobs for almost 200 people, at least for one year.

“Our cooperation with the city of Los Angeles has been in existence since 2008,” Ferenc Baranyai, managing director of NABI’s Hungarian branch, NABI Kft, said in a recent interview with the Budapest Business Journal when the company hosted an open day at the Kaposvár factory. “We are proud and happy about it. We plan to target other US cities with our products, although we are also ready to produce buses for Hungarian and European roads. Everybody knows what the situation is with the thousands of old buses running in Hungary. They are in poor condition, and there is a need

to replace them with modern vehicles. We just do not know why the governments have not acted in recent years,” added Baranyai, who, like other bus manufacturers in the country, is eager to learn the reasons behind the complete lack of tenders inviting national bus manufactur-

ers to compete for the right to produce Hungarian buses for domestic use.

“Hungarian bus producers are being bled out. This traditional and once world-famous industry is in its 24th hour. It would be a shameful mistake to let this Hungaricum die out,” the president of the Bus

BUSES ON HUNGARIAN ROADS There are two major state-owned transportation companies: BKV in Budapest with its fleet of 1,300 buses and the 24 Volán companies around the country with approximately 7,500 buses. The average age of these buses is 14 years, but there are hundreds of vehicles that are more than 20 years old. According to industry experts, there is an urgent need to replace 500 buses at BKV and 1,500 at Volán. On average, a new bus costs HUF 50 million-75 million. BKV has recently decided to purchase used buses from foreign companies including Volvo, Mercedes and Van Hool. More than 150 buses break down in Budapest every day, including recently purchased ones.

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Association of Hungary, Sándor Vincze-Pap, told the BBJ. “Manufacturers today only exist at the edge of their limits by providing components and fixing broken buses. That is way too little for maintaining the whole industry.”

His lobbying organization is in weekly contact with the National Development Ministry. “We are aware of the current economic problems, and also understand that the government cannot act as rapidly as we would have liked. From time to time we are reminded that the government needs more time due to rationalizing the economy and its structures,” said Vincze-Pap, referring to recently announced

spending of domestic workers. So the investment would pay off, and there is an obvious national economic interest to reboot the industry.

NO BIG DREAMS Industry players admit there is no realistic chance to think big and dream about producing 10,000-12,000 buses annually as was the case during Ikarus’ heyday. However, manufacturing 400-500 vehicles annually could be a hopeful start. If the much-awaited tender were published, it would be a huge motivation for the sector.

“The industry could provide more revenue for the state if we had a chance to start producing again. We already have

LARGEST MANUFACTURERS According to market players’ estimates, manufacturing 400-500 buses annually would be a good start to reviving the industry. That would provide jobs for 1,000 people and for an additional 2,000-3,000 workers in the supplier sector. Kravtex, which has the oldest Hungarian machine factory Kühne Zrt in its portfolio, has the capacity to produce between 500 and 1,000 buses per year. The American-Luxembourg owned NABI has two factories and is able to manufacture up to 1,000 units annually. They are the only active bus manufacturers at the moment; however, they sell mainly to the US. The smallest of the giants is ARC-Ikarus (Auto Rad Controlle - Magyar Autóbuszgyártó Kft), which was also the most optimistic in 2009 when it obtained the rights to use the Ikarus brand. It has capacity to make 100-120 buses annually. plans by the government. Stateowned Volán has 24 subsidiaries, with a fleet of 7,500 buses.

According to a recent plan, the government wants to reduce the number of subsidiaries to six-eight in the near future.

“This should be the first step in a new direction. We do hope that after making the system more transparent and less bureaucratic, there will be a straightforward way to publish tenders for new bus manufacturing,” István Fórián, head of another lobby organization, the Cluster of Hungarian Bus Manufacturers, told the BBJ. “We have seen tenders in the last few months that were addressed to those bus service providers. But for several years there has been absolutely no sign of intentions to revive the manufacturing sector. At this point we would still have a chance to reboot the industry due to the skilled and elite professionals and the available infrastructure,” Fórián noted.

As the BBJ has learnt from other industry participants, it is possible to estimate the beneficial impact of state commissioned manufacturing: producing a single bus requires about six employees, if the buses are manufactured in Hungary there is a 10-15% direct budgetary revenue, and an additional 10% indirect revenue from the

a lot of foreign partners inquiring, but when they ask for references, hardly any of us can provide any due to the lack of actual manufacturing,” said the president of the Cluster of Hungarian Bus Manufacturers, which represents 19 companies.

Fórián mentioned “economic protectionism” and “positive discrimination” when asked how he would persuade the government to act in their interest.

“The government devotes special attention to expanding domestic production possibilities, however, in terms of trade and competition law, no single vehicle manufacturer’s interests can be prioritized,” the communications department of the National Development Ministry told the BBJ. Another discrepancy between domestic manufacturers’ desires and the will of the government can be observed in the words of János Fónagy, state secretary at the ministry, who commented last year on the future of national bus manufacturing by saying: “Bus production in Hungary may not be economical to operate, (…) since a bus factory’s annual ideal capacity is 10,00012,000, while Hungary needs only 600 to 800 units a year”.

The BBJ was keen on finding out whether the government had any interest in reviving the industry. However, the

ministry could not clarify if there was going to be a new tender announced later this year that primarily addressed domestic bus producers. By mid-summer this year, the ministry is planning to reduce the 24 Volán companies to no more than eight. The merging of vehicle fleets and the shared use of maintenance capabilities, together with the centralization of public procurement, may result in significant savings, the official statement reads. In order to improve the conditions of the public transportation system, the government made a resolution in which it set apart HUF 100 billion for the fundamental community transport program.

“This resource can be allotted to funding the purchase and renovation of new or used road vehicles,” the statement says.

“We fight for survival until the end, but we are not so optimistic. There is no functioning market at the moment.

There is no clear public policy and economic environment for investments and tenders, and this puts about 80 to 100 people’s jobs at stake,” Gábor Liptai, managing director of ARC-Ikarus said. It had sold more than 50 buses upto 2011, but none since. Beside NABI and ARC-Ikarus, there is one other major manufacturer, Győr-based Kravtex. The latter did not want to comment for this article; however, it had been revealed to the press earlier that it has had more than 100 completed buses waiting to be sold for several months now. István Krankovics, Kravtex’s managing director, expressed concern regarding the future a couple of weeks ago in the press. He said that if there was not going to be a tender available soon, his company might need to lay off hundreds of skilled workers.

An interesting coincidence regarding the town of Győr: it is the HQ of Rába Automotive Holding, one of the largest Hungarian companies in the automotive industry. The Hungarian state acquired majority ownership, 73.8%, in the company just six months ago.

Since the majority of domestic bus manufacturers use Rábaproduced mechanical parts like engine metal components, brake pulleys, and alternator wheels, it was hopeful about a possible mutual future. The company declined to comment, but Communications Manager Szilvia Martonicz said in a short answer that Rába was focusing mainly on export markets.

Maybe it is no surprise that as the only domestic manufacturer actually functioning, NABI, is the only one who has reasonable cause for optimism considering future tenders, with more likely in the near future from Los Angeles. ■

[ EXPERT OPINION ]

Better and cheaper repair and maintenance services from independent repairers?

Apart from fuel consumption and insurance, car repair costs play an important role for consumers in connection with the maintenance of their passenger cars.

PÉTER MÁRTON STAUBER OSZTHEIMER, Dr LL.M., ATTORNEY (D) EUROPEAN ATTORNEY (H)

One possibility to reduce car repair and maintenance costs is to use the repair services of “independent” car repairers, i.e. repairers not associated to a specific brand, instead of “authorized” repairers. In the past, independent car repairers often complained, however, that manufacturers limited access to technical information necessary for conducting certain repair and maintenance works and also restricted use of independent repair services by the “fine print” in their warranty terms.

In 2010, new regulations were adopted by the European Union to enhance competition between independent and authorized car repairers. The aim of these rules is to provide independent repairers with access to technical information of similar detail as authorized dealers receive from the manufacturer. Due to cars becoming more and more complex, such technical information is essential to conduct specific repair services (for example diagnosis of electronic devices etc.).

Thus, by granting access to such information independent repairers shall be put in a position to offer services comparable to those offered by authorized car repairers at potentially lower prices. Such technical information has to be made accessible via the Internet.

In cases where the manufacturer centrally operates an electronic database for its network of authorized dealers to save information on repair and maintenance services provided, the independent repairers shall receive access to this database at the same conditions as the authorized repairers.

Further, competition by independent car repairers shall be enhanced by additional restrictions concerning the manufacturer’s terms and conditions for warranty repairs. Accordingly, manufacturers may not require that repairs and maintenance works which are outside the scope of the statutory and, respectively, the prolonged warranty

ATTORNEY (H)

have to be carried out by authorized repairers. However, not any and all such restrictions are forbidden: In particular in case of additional warranties offered individually by the manufacturer, the customer may be legally required to use the network of authorised repairers. Similarly, car sales agents may also offer their own, additional warranty in connection with which they may require the consumer to use the repair services of the respective sales agent.

Neither the former nor the latter alternative would be in violation of European or national competition rules. Of course, independent repairers may also offer such additional services and commit the consumer to use its repair services instead of competitors’ services.

The aforementioned new rules and guidelines apparently advance the position of independent repairers vis-à-vis the network of authorized repairers. Consumers may thus have more confidence in choosing an independent service station when looking for a competitive offer. However, as is often the case, the cheapest alternative is not necessarily the best option.

Authorized repair services are regularly reviewed by manufacturers to ensure the quality of their repair and maintenance services. This is also often the case with larger networks of independent car service stations. Consumers should therefore base their decision not only on price considerations.

The quality of the services provided should also be considered, which can be assessed on the basis of quality certificates issued subject to the fulfilment of industry-standard quality tests.

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Electrify your ride Although large players of the energy sector have started raising e-mobility awareness, e-mobility as such is practically non-existent in Hungary, according to a recent study released by PwC Hungary.

The awareness-raising initiative of these companies is one of the promising signs in this segment: RWE, E.ON and MVM are paving the way by introducing electric cars in their company fleet and have started the development of a charging station network in Budapest. What’s more, one can now travel to Budapest from Vienna by electric car as three charging points, in Győr, Mosonmagyaróvár, and Tatabánya, were completed mid-April.

But if the e-vehicle segment in Hungary is to grow further, a welldeveloped charging infrastructure is crucial.

“Currently, the charging network is marginal. However, along with an adequate government incentive scheme, this part would be the most important thing to help the introduction of electric vehicles on a mass level,” Ádám Osztovits, leader of the energy industry group and partner of PwC Hungary, says.

According to PwC, there could be some 45,000 electric vehicles on the roads of Hungary by 2020, 1.2% of the national car fleet total. The company’s calculations show that at least 68,000 charging points will be needed to keep these vehicles moving. As home charging during the night and day charging at work are expected to be the most common ways of recharging vehicles, the required number of public charging points is a little over 25,000, the study says.

RECHARGING AN INDUSTRY The spread of the use of e-vehicles will certainly have an impact on the energy industry. When trying to assess the electricity generation necessary for e-vehicles, the study says it is important to establish how electricity consumption will develop in the future and which forms of electricity generation, be they nuclear, wind power, biomass, fossil fuel power plants, or renewable energy sources, can be implemented.

Battery charging levels required can be calculated on the basis of the number of electric vehicles on the market, as well as on the basis of traffic volume. Batteries will be charged via the public power grid. As energy is lost during the charging process, there will be less electricity in the battery compared to the amount

that has been charged from the power grid. Analyzes based on charging stations available on the market have shown that the loss factor for an average battery charging station is 20%.

The PwC study outlines three scenarios for the future of e-vehicles in Hungary: the optimistic one foresees some 189,000, the realistic 45,000, and the pessimistic 27,500 vehicles running on the roads by 2020.

Calculations show that e-vehicles’ share of the national electricity demand will not be higher than 1.1% even in the optimistic scenario, and will be as little as 0.2% in case of the most pessimistic predictions.

It is clear that the electricity demand of e-vehicles is quite marginal, the study states. Existing network capacity is already sufficient, thus the electric vehi-

DISTRIBUTION OF CHARGING POINTS

Source: PwC

Opel Ampera: an electric car that keeps you going Electric cars have long been touted as one of the best long-term solutions to meet society’s energy and environmental challenges. Opel’s extended range electric vehicle, the Opel Ampera, promises to do just that. The vehicle, which was named “Car Of The Year” for 2012, has just become available in Hungary, with the promise that it is the first electrically driven car in Europe suitable for everyday driving.

Electric cars are quiet and clean, but up until now, the limited range of their battery has nullified those advantages.

But Opel claims to have solved this problem with its Ampera model by creating an electric car that still keeps one mobile even after the battery starts to run low.

With its unique electric propulsion system providing lively acceleration and high levels of refinement, the auto features an extended range of more than 500 kilometers.

The Ampera is powered by electricity at all times and speeds. For trips between 40

to 80 km, power is supplied by the electricity stored in the 16-kWh, lithium-ion battery. The 288 lithium-ion cells in the T-shaped battery pack provide ample power. The nearly silent electric drive unit delivers 370 Nm of instant torque and 150 horsepower, with acceleration from naught to 100 km/h taking around nine seconds and a top speed of 161 km/h.

While driving on electricity delivered by the battery, the Ampera emits zero CO2. When the battery runs low, it can be recharged in eight hours at 230v by plugging the vehicle’s on-board charge system into a standard outlet, or in four hours at 230v 16A by using the wallmounted home charge station. Because the battery can be re-charged so quickly, it is predicted that most Ampera cars are likely to be driven in battery mode nearly all the time.

If a longer distance is being covered, the gasoline-fueled engine/generator will seamlessly extend the total driving range to around 500 kilometers on a full tank. This range-extending technology means the Ampera is suitable for worryfree daily use.

Unlike a conventional battery-powered vehicle, the Ampera eliminates range anxiety. It certainly gives the driver confidence and peace of mind that a depleted battery will not leave them stranded.

www.opel.hu

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cles alone would not require construction of additional power generation capacities.

INCENTIVES NEEDED First of all, there are infrastructure investment costs related to e-vehicles. The PwC study calculates varying investment costs due to the different technical requirements of charging points – home-based, public and fast charging points have different financial needs. One consumer will most likely use a home-based charging point, while at public stations a multi-user interface has to be established. The fast charging capability of large charging stations calls for increased power capacity.

Financial incentives will also be needed to make the use of e-vehicles more popular. In Europe, such incentives – an average of €5,000/car - are already in place. These incentives may include many forms, such as tax benefits, free parking, or waived traffic fees.

According to PwC’s expectations, there will be no need for excessive financial support in 2020, but in order to keep up with the

figures in the realistic scenario, the financial support required in the coming years would be substantial.

But there are inevitable negative financial effects in the long-term. PwC claims that there will be a significant loss coming from reduced fuel consumption, which will result in less income from taxes and duties imposed on petrol and diesel. That loss might be as high as €40 million a year by 2020. Although this will be compensated somewhat by the additional tax income on increased electricity sales, this revenue will only amount to onetenth of the tax loss due to the lower tax content and higher energy efficiency.

On the benefits side, however, fuel consumption can also be mentioned: at a national economy level, less fuel will be required, thus reducing crude oil import and therefore related costs for the national economy.

The positive impact on finances is in the magnitude of €35 million per year, the PwC study says.

Also, reduced carbon dioxide generation results in a higher amount of CO2

Realistic scenario

Optimistic scenario

Pessimistic scenario

Total number of electric vehicles in 2020

45,000

189,000

27,500

Number of charging points

67,500

283,000

41250

Realistic

Optimistic

Pessimistic

45,000

45,000

45,000

0.3%

1.1%

0.2%

Number of charging points in PwC’s three scenarios

Source: PwC

Required battery charging electricity demand for the different scenarios (2020) Overall national electricity demand (GWh) EV share for charging Source: PwC

capacity to sell, which could bring in about €2 million a year.

Although it is almost impossible to reliably calculate the benefits of secondary effects such as better health due to lower air pollution and less noise emission, the current health condition of Hungary’s population indicates that any change in this area might have a significant economic and financial impact.

The long-term success of electric cars is very much dependent on the success of other alternative propulsion systems technologies, the study says in summary. The wide acceptance of various types of hybrid and fuel cell vehicles could mean that a big chunk of the demand for these vehicles will be met, and therefore the growth of the share of electric vehicles will be slower. It is however certain that the road to pure electric mobility leads through hybrid technologies, which have indisputably claimed their place in global auto markets already. ■ This article is based on PwC Hungary’s e-mobility study titled Development of the electric vehicles segment in Hungary

Paving the way for e-vehicles Interview with Dr. Zoltán Kövesdi, member of the board of directors, ELMŰ-ÉMÁSZ What is the main goal of E-Mobility, the new initiative of ELMŰ-ÉMÁSZ? A wide range of experts agree that in the long run, electric motors can replace the internal combustion engine in transportation, since these will greatly reduce the emissions of CO2 and other harmful substances. Electric utilities and distributors should be prepared, as this new technology will have a major impact on everyday activities and will also set new tasks for them.

ELMŰ-ÉMÁSZ, the leading electricity utility in Hungary, wants to lead the way in this paradigm shift.

How could ELMŰ-ÉMÁSZ promote the spread of electric transport and electric vehicles (EV)?

Our company group in Hungary opened the first public power station in Váci út 72-74, Budapest, in front of the company’s headquarters in September 2010. In addition, electric cars were bought to serve in the fleet. However, it soon became clear that greater cooperation is needed for spectacular results. In order to provide more promotion, availability and publicity to electric cars, ELMŰ-ÉMÁSZ Company

Group launched its E-Mobility Network with its partners in the summer of 2011, creating an alliance for all the companies willing to take part in pioneering this advanced and environmentally friendly technology in Hungary.

What is the role of the network members?

Some of the E-Mobility Network members (our company, ABB, Észak-Budai, Geometria, Kábel Team, the Hungarian automobile club Magyar Autóklub and Tonic) made the first electric car purchases and installed the charging infrastructure, while others (Budapesti Közlekedési Központ - BKK, Ernst & Young, GA Magyarország and SAG) support the work of the community financially or in other ways. Members of the E-Mobility Network buy vehicles from manufacturers who offer mass-produced electric cars in the domestic market.

How fast can the electric charging network be developed?

As long as the charging infrastructure is not properly installed in homes and public places, use of electric cars will spread slowly, and vice versa, as in the absence of vehicles it makes no sense to develop the network.

It is therefore crucial to focus on both goals at the same time and ensure that a charging point is created for every new electric car. For this reason, in December 2011 ELMŰ-ÉMÁSZ

and the E-Mobility Network, together with six new members, installed six electric charging columns in Budapest’s public areas.

These are at the Szent István Bazilika, at Oktogon, in Clark Ádám tér, on Istenhegyi út, in Fő utca and on Margitsziget. The 20 kWh batteries of the completely noise-free electric cars, which are capable of running an average of 100-150 km on a single charge, could be completely “filled up” at these electric charging stations in three to four hours, while a 80% charge could be achieved during a shopping or lunch break.

The contracted partners of ELMŰ-ÉMÁSZ Group Company can use these stations for free until the end of 2012, and on behalf of the Municipality of Budapest, the Budapest Transport Center (BKK) has offered free parking for the duration of charging.

www.elmu.hu

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Time to wake up – new car marke After three years of struggle, during which new car sales dropped by 70%, Hungarian car importers finally see light at the end of the tunnel. How did the crisis rearrange the market and what longlasting trends have evolved?

BBJ ÁGNES VINKOVITS

Since the outbreak of the crisis in 2008, car sellers have not had many reasons for optimism. Not only did new car sales drop from 150,000 a year to 45,000 by 2011, but the unpredictable economic environment and increasing fuel prices might suggest that people will continue to think twice before

investing in a new car in the immediate future. However, 2012 might be the first year that brings a change. Based on their January-May data, importers predict a slow upturn from now on.

Fiat Magyarország, for example, welcomed a 10% increase in new cars sales in the first five months of 2012, which might suggest that the worst days are over. “We have probably reached the bottom of the hole already and now there is only one way, up,” managing director László Stekl told the Budapest Business Journal, before cautioning that the real upswing is not likely to cheer the market earlier than in two or three years’ time.

Porsche Hungária shares this slight optimism. As the 18,350 vehicles it sold in 2011 was 5% more than in 2010, communications director Dr. Sándor Vérten hopes that

“the decline has come to an end”, although he does not predict full recovery to take place until 2015.

NEW TRENDS In parallel with a decline in new car registrations, consumer habits have also changed. While previously only 30% of new cars were paid in cash and the rest were bought on credit, in 2011, as a recent study conducted by consultancy PwC shows, only 9% of purchases were financed by credit.

This tendency is probably due not only to the stricter requirements buyers have to meet when applying for a loan but also to the precaution that evolved in people witnessing the struggles of hundreds of thousands of troubled borrowers.

As a result of the crisis, there is still one emerging trend that is clearly positive: buyers have become

more conscious and circumspect, and try to gain more information about models when considering which one to buy. This consumer approach is highly welcomed by Magyar Suzuki. “People usually have negative visions about Suzuki cars and underestimate our current models,” marketing manager János Hársfalvi told the BBJ. “But when they try one of our cars, they soon realize that this Suzuki is no longer the one they might have deprecated years ago.”

The hard times have rearranged the popularity list of the cars as well. While before 2008, passenger vehicles accounted for 70% of new car sales and the proportion of fleet vehicles was only 30%, those positions are now reversed, with company purchases propelling the market and providing 70% of the sales. As

fleet cars are usually more impressive models, this also means that category C cars are the most in demand nowadays. According to the head of Hungarian Vehicle Importers Association (MGE) Péter Erdélyi, most business purchases involve middle-class models like the Volkswagen Passat, the Ford Mondeo or the Toyota Avensis, but lower-middle-class models such as the Opel Astra, the Volkswagen Golf, the Ford Focus and the Toyota Corolla also sell well to companies.

The growing popularity of fleet cars at the expense of passenger cars has hit Magyar Suzuki particularly hard, as the company reached its market leading position by focusing on sales of passenger cars and putting less emphasis on fleet vehicles. No surprise then that they have been recently dethroned. Aiming to get

2 BusinessSpecialReport 21

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ket over the worst days? back on top, Suzuki will soon renew its brand image, and plans to triple its 2011 sales this year.

LOW CONSUMPTION RULES Reduced spending power is not the only driver behind the decline in car sales. High petrol prices, currently around HUF 425 per liter, mean people tend to use their cars less and, as such, the amortization time also decreases.

At the same time, increased petrol prices might slowly change the trend of big cars being preferred.

Magyar Suzuki’s most popular models are already feature low consumption, such as the Swift or the SX4.

Porsche Hungária, importer of five brands from Audi to Seat, also reported that Volkswagen’s BlueMotion technology, which puts low consumption into focus, or Skoda and Volkswagen mod-

els with 1.4 TSI and 1.6 CR TDI engines, are of increasing popularity nowadays.

The sales data of Fiat Magyarország also supports this notion. In the first five months of 2012, the demand for cars in category A and B finally increased after years of decline. While the two categories provided a combined 19% of purchases in 2011, in January-May 2012 this figure was up to 25%.

SUSTAINABILITY TOO EXPENSIVE “In general, it is true that compared to average salaries, new cars are much cheaper now than 10 or 20 years ago,” MGE’s Erdélyi pointed out. In addition, as importers had already priced in the crisis years ago, car prices have shown no significant changes in the past 12 months and are not likely to do so in the coming months, either. Still, as most importers try not to burden cus-

tomers with the extra costs of currency rate changes and of the VAT hike (the tax rate increased from 25% to 27% on January 1, which was only slightly compensated by the reduction of registration costs), the budget of these businesses has become more unpredictable.

From a buyer’s point of view, cost can obviously be saved in the long run driving a car with a lower consumption, although all the importers surveyed by the BBJ agree that environmental consciousness in itself is, unfortunately, not yet appreciated by buyers as an individual value. “Cost efficiency and finding solutions for everyday problems are the priorities for Hungarian people at the moment,” Suzuki’s Hársfalvi pointed out.

“Vehicles powered by alternative sources such as electricity or hybrid solutions are far more expen-

sive at the moment,” Erdélyi added. Porsche’s Vérten concurs: “The prices of these cars cannot compete with those of regular ones.” Most of the importers agree that global sustainability makes it necessary for carmakers to open up to alternative power sources in the long run, but to make such solutions more widespread, state or EU subsidies would be essential.

According to Fiat Magyarország’s Stekl, natural gas-powered cars might be the solution in the shortand medium-term as this technology is already much more well-established and these vehicles use a “clean material” while also being able to lower fuel costs. The number of conversions of petrol-run cars into gaspowered ones, which at Fiat costs around HUF 230,000 and does not void warranty, has quadrupled in the past 18 months. ■

Purely powerful For most of our lives we were forced to believe a car could be either powerful or environmentally friendly, but certainly not both. Then Lexus came along and proved that it was indeed possible to combine these two values. The Japanese luxury carmaker has already been awing the public with its high performance hybrid vehicles, but the new GS sedan is opening up dimensions hitherto unknown to mankind.

Man has a tendency to always want more. We want our elegant and comfortable sedan to have the acceleration potential of a sports car – but also to be as gentle on Mother Nature as a small city car. Lexus has managed to find an answer to this apparent contra-

diction in its brand new GS 450; a vehicle with a unique full hybrid driveline that launches the premium sedan from standstill to 100 kph in merely 5.9 seconds, but only consumes 5.9 l/100km and emits no more than 137 grams of CO2 per kilometer.

Of course specifications are nothing but boring data: it is looks that make that all important first impression – and as the first representative of the new Lexus design, the GS does indeed manage to impress right away. The perfect ratios of the body and the spectacular spindle-shaped front mask make you want to get behind the wheel right away. But don’t start the engine just yet: immerse yourself in the interior harmony for a moment. Wherever you look, whatever you touch, you will find the highest quality materials, premium craftsmanship and the most up to date technology available.

And the highest of high technology is the Lexus Hybrid Drive. It does its job almost unnoticeably while the driver can make best use of the impressive 343 HP by selecting one of the four available drive modes (ECO, NORMAL, SPORT S and SPORT S+). At the driver’s command the GS 450h will not only accelerate like a sports car but also handle like one: perfectly tuned suspension, rear wheel steering and a host of modern driver assistance and stabilizing systems allows the GS 450h to remain confidently composed and enjoyable even at the highest of speeds.

And since the GS is a Lexus, after all, the most advanced convenience features the world has seen pamper passengers. A perfect example of this is the climate control system, which factors in the intensity of sunshine in adjusting its settings, thereby providing personalized thermal comfort for each passenger. Through the intervention of the unique Nano-e air-cleaning technology, the system releases unique nano particles into the interior, which bind odor molecules as well as hydrate your skin and hair. But that is not all: the new climate control system will only blow air to occupied seats thereby consuming far less energy – another fine example of how luxury, energy efficiency and environmental awareness combine in every aspect and detail of this brand new Lexus sedan.

www.lexus.hu

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Car importers SECOND HAND CAR TRADE

FLEET MANAGEMENT

HYBRID

DIESEL, GAS

BIOETHANOL

ELECTRIC

–

–

–

Renault, Dacia

Renault, Dacia

Renault

YEAR ESTABLISHED

ASSISTANCE

6386

LEASING

25,679

REPAIR

RENAULT HUNGÁRIA KFT www.renault.hu www.dacia.hu

CAR BRANDS

FINANCING

1

SERVICES

SPARE PARTS SUPPLY

COMPANY WEBSITE

TOTAL NET REVENUE (HUF MLN) 2011

NO. OF NEW VEHICLES SOLD IN 2011

RANK

Ranked by total net revenue in 2011

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

1991

– Renault Groupe BV (100)

Miklós Maróthy Honfi Andrea Rosta Gergely

1135 Budapest, Róbert Károly krt. 96–98.

(1) 358-6000 (1) 358-6001 ugyfel.kapcsolat@renault.hu

Hiroshi Saito Károly Katus Péter Varga

2040 Budaörs, Budapark, Kalati 4.

(23) 885-101 (23) 885-006 info@toyota.hu

TOYOTA MOTOR HUNGARY KFT www.toyota.hu 2

17,805

3309

–

–

–

–

–

Toyota, Lexus

Toyota, Lexus

–

–

1991

– Toyota Motor Europe NV/SA (50), Belgium, Toyota Tsusho Corporation (50), Japan

3

BMW VERTRIEBS GMBH MAGYARORSZÁGI FIÓKTELEPE www.bmw.hu

17,370

1400

–

–

–

BMW

BMW, MINI

–

–

2004

– BMW Österreich Holding GmbH, Austria (100)

Paul de Courtois – Attila Oros

2220 Vecsés, Lőrinci út 59.

(29) 555-100 (29) 555-101 info@bmw.hu

4

FIAT MAGYARORSZÁG KERESKEDELMI KFT www.fiat.hu

12,443

3134

–

–

–

–

–

–

–

Fiat, Lancia, Alfa Romeo, Jeep, Fiat Professional

–

–

1992

– Fiat Auto S.P.A (100)

László Stekl Dávid Kovács Tünde Krupp

1123 Budapest, Alkotás utca 53.

(1) 458-3100 (1) 458-3129 info@fiat.com

5

HYUNDAI HOLDING HUNGARY KFT www.hyundai.hu

11,000

»

–

–

–

–

–

–

»

Hyundai

»

»

2007

– AutoBinck Holding N.V., Netherland (100)

Zoltán Markó János Kerekes –

1182 Budapest, Sallai út 15.

(1) 887-5700 (1)887-8701 info@hyundai.hu

6

VOLVO HUNGÁRIA KERESKEDELMI ÉS SZOLGÁLTATÓ KFT www.volvocars.hu

1995

– Volvo Car Corporation, Sweden (100)

Gábor Bodrogai Ágnes Tárkányi Andrea Sztárcsevity

1044 Budapest, Cinkotai út 50–58.

(1) 238-8100 (1) 238-8190 huinfo@volvocars.com

»

– Emil Frey AG, Switzerland (100)

Gábor Mátrai – –

1149 Budapest, Mogyoródi út 34–40.

(1) 422-3910 (1) 111-1111 info@subaru.hu

1994

»

– – –

2040 Budaörs, Törökbálinti utca 25/B (23) 506-406 (23) 416-650 info@honda.hu

»

» »

Ingo Fröhlich, Stephan Kröl Marianna Könczöl Edina Kozári Sztipichné

1133 Budapest, Kárpát utca 21.

(1) 887-7004 (1) 887-7001 internet-hu@daimler.com

2004

– Emil Frey AG., Switzerland (100)

Gábor Mátrai – –

1149 Budapest, Mogyoródi út 34–40.

(1) 422-3910 (1) 111-1111 info@mitsubishimotors.hu

2005

» »

– – –

1117 Budapest, Infopark sétány 3/B (80) 333-888 (80) 333-888 hungary@ nissan-services.eu

Bruno Klein Lidia SokolowskaPosmyk –

2040 Budaörs, Szabadság út 117.

(23) 446-100 (23) 446-339 info@opel.hu

EMIL FREY IMPORT KFT NR www.subaru.hu

10,000

»

HONDA HUNGARY GÉPJÁRMŰIMPORTÁLÓ ÉS -FORGALMAZÓ KFT NR www.honda.hu

»

MERCEDES-BENZ HUNGÁRIA NR KERESKEDELMI KFT www.mercedes-benz.hu

»

MM IMPORT KFT NR www.mitsubishi.hu

»

NISSAN SALES CENTRAL AND NR EASTERN EUROPE KFT www.nissan.hu

»

1184

68

»

»

449

24000

–

–

–

–

» » » » » » »

» » » » » »

–

–

–

–

–

» » » » » » »

–

–

–

»

NR

PEUGEOT HUNGÁRIA KFT www.peugeot.hu

PORSCHE INTER AUTO HUNGARIA KFT www.porsche.hu NR

»= would not disclose, NR = not ranked, NA = not applicable

»

6176

»

»

»

»

–

» » » » » » »

Subaru

»

Mercedes-Benz, smart

Volvo

»

»

–

»

–

»

»

smart

Mitsubishi

»

Micra, Note, Juke, Qashqai, Qashqai+2, X-Trail, Navara, Pathfinder, NV200, Murano, 370Z, GT-R, Cabstar

»

Corsa, Meriva, GTC Astra, Astra, Astra Classic III, Insignia, Zafira, Zafira Tourer, Antara, Corsavan, Astravan, Combo, Vivaro, Movano

»

Opel Ampera

1990

– General Motors Europe Holdings S.L. (100)

»

»

»

»

1993

» »

György Gábor Kuats – –

1113 Budapest, Bocskai út 134–146.

(1) 279-5555 (1) 279-5556 kapcsolat@peugeot.com

Porsche Cayenne, Porsche Panamera

Porsche Cayenne, Porsche Panamera

2009

– Porsche Holding GmbH, Austria (100)

Szabolcs Nagy Tamás Tótvári Yvett Könczey

1117 Budapest, Szerémi út 63.

(1) 382-3000 (1) 382-3001 ertekesites@porsche.hu

»

–

»

(100)

»

OPEL SOUTHEAST EUROPE KFT www.opel.hu 1

Volvo

Leaf

–

This list was compiled from responses to questionnaires received by May 16, 2012 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345.

The research department can be contacted at research@bbj.hu

2 BusinessQ&A 23

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Bosch gaining further ground in Hungary Along with several other German companies, the Bosch Group sees part of its future in Hungary. Recent and future expansions throughout the country are in part down to common history and highly qualified engineers and laborers, says Javier González Pareja, general manager of Robert Bosch Kft and representative of the Bosch Group in Hungary and the Adria Region.

Q: WHY HUNGARY? A: Bosch has a history of 114 years in Hungary. It was Robert Bosch himself who founded the company in Budapest. Operations since 1991, when the group was reorganized, have proved that Hungary can provide a highly qualified workforce – though in terms of language skills, there is room for improvement. The distance between the countries is not large: I am not talking about the 900 kilometers between Stuttgart and Budapest, but the cultural closeness. Hungary is a country with a long intellectual tradition, with a high number of Nobel-laureates and inventors. What started with five development engineers in Budapest in 2000 has grown to 700 by now.

Q: HAVE RECENT INVESTMENT-BOOSTING MEASURES BY THE GOVERNMENT HAD ANY BEARING ON THE GROUP’S EXPANSION PLANS? A: These government subsidies are among a series of factors like the availability of workforce, infrastructure, and costs of manufacturing. These grants have to be repaid in the form of jobs created or additional taxes: what we are given, we have to return. Let’s say it is relevant, but not the most important factor.

Q: WHAT ABOUT SOME LESS INVESTOR-FRIENDLY STEPS SUCH AS THE CRISIS TAX OR THE NEW PHONE TAX? A: These tend to have a bigger effect on Bosch’s 8,000 employees and the 20,000 people who directly depend on the company. With the financial state of many European countries where the situation is critical, the government has to increase the taxes it collects. Obviously, it needs to weigh the benefits from additional revenues created by taxes against decelerated consumption or insecurity. From the company’s viewpoint, these costs are not significant, but any additional cost is a factor shrinking competitiveness.

Q: IS IT EASY TO DO BUSINESS IN HUNGARY? A: It could always improve (laughs). But if it weren’t easy, we wouldn’t be here. There are some things that can be found in other countries: for example, bureaucracy could be reduced.

Q: THE HUNGARIAN AGENCY FOR TRADE AND INVESTMENT (HITA) IS NOW COMPILING A STUDY OF THE DIFFICULTIES MULTINATIONAL COMPANIES FACE IN HUNGARY. COULD YOU HIGHLIGHT THE MAJOR ISSUES BOSCH HAS TO DEAL WITH? A: The approach that HITA takes – that they are intending to reactivate the Hungarian economy by attracting investments that we can call interesting – seems to me the right direction. If a company is after locations where labor is the cheapest, no country in Europe will offer that. So the strategy must

focus on attracting companies that can create added value and development. As for the difficulties we encounter, it is the flexibility in working hours. Some of our businesses, like Bosch Powertech (a photovoltaic sensor maker), a start-up in fact, never plans how much it will produce in the next two years as they do in the automotive industry. Instead it says ‘I will need the panels by next month’.

So we may have to work 24/7 for weeks, but when there isn’t that much workload, we should be able to transfer the work hours, as they do in other countries, for other periods when necessary. Making reaction time more flexible: in this respect, Hungary, like many other countries, could do better.

Q: WHAT ROLE DOES THE DEVELOPMENT CENTER IN BUDAPEST PLAY IN BOSCH’S PLANS? A: This is the biggest such center in Europe, with more than 700 employees. Here we have, we train, and we struggle to retain qualified professionals who work in six out of the nine automotive fields of Bosch, that is, in two-thirds of the sector’s business.

Bosch in Budapest has filed 64 patents. One of them is Park Pilot, a self-parking system that parks your car. It has often been said that Hungary and Hungarians are worth much more than they think. We do have qualified and motivated contributors.

Q: HOW DO HUNGARIAN SUPPLIERS FARE IN INTERNATIONAL COMPARISON? A: When people buy a Bosch product, they don’t really care about suppliers; they buy something made by Bosch. The standards must be the same anywhere in the world.

One of the key components of success in our reading is: be global, go local. One of the priorities of the purchasing department is to find suppliers within 50 kilometers of the factory. The Development Center in Budapest is also the base of the purchasing department, which analyzes suppliers markets from the Czech Republic to Turkey and Russia.

Q: HAS THE OPENING OF THE MERCEDES FACTORY IMPACTED THE DECISION OF BOSCH? A: Being a good client as it is, Mercedes definitely helps us with its presence, but there are various others. As we say, there is only one car make that has no Bosch products in it: toy cars. The factory in Hatvan is the biggest automotive electronics plant in the world, and it supplies the whole world. As I said before, Hungary, in terms of the automotive industry, but not only that, is an attractive country.

Q: FIGURES, HOWEVER, SHOW THAT EXPANSION IN ASIA IS OCCURRING AT A FAST PACE. IN SOUTH KOREA AND CHINA,

CURRICULUM VITAE JAVIER GONZÁLEZ PAREJA The 43-year-old general manager of Robert Bosch Kft was born in Madrid, and studied economics and mathematics in Germany. In 1988, he got HR qualifications in Madrid, where he also pursued finance and tax studies in the Universidad Politécnica and as a student at the Centro Estudios Financieros. González Pareja started working for Bosch’s Spanish subsidiary in 1994. In 1996, he moved to Bosch Germany, and then returned to Spain and Portugal where he dealt with, among other things, finance, controlling, purchasing, logistics and information technology in management positions.

Prior to his arrival to Budapest in 2009, he headed the HR department of the International Missions in Bosch’s Stuttgart center. González is married – her wife is Hungarian – with two children.

BOSCH SET UP NEW FACILITIES LAST YEAR. COULD THESE BE THE CENTERS OF PRODUCTION IN FIVE YEARS’ TIME, IN LINE WITH GLOBAL TRENDS? A: In India, a new plant for electrical drivers will go into operation in Chennai this year. Within China, we are supporting the “go west” strategy. This means that the next wave of spending for new locations will focus more on the interior than on the east coast. More specifically, we are currently building new plants for brake control systems and packaging technology in Chengdu, central China - in each case the second such plant in the country. Some 60% of Bosch’s sales are generated in Europe. Of the 303,000 employees the company has, 114,000 work in Germany.

Is Bosch a producer that goes where the cost of workforce is low? No. What is relevant is where the clients are. The Chinese market has some 1.4 billion people and Bosch has a staff of 3,400, while for the Hungarian market of 10 million, we have 8,000 employees. Car sales may be dropping in Europe, but in China there are an average of 40 cars for 1,000 people. This figure is more than 400 in Europe. Will these figures grow in Asia?

Of course. For us, the European market is first, and we want 50% of sales to remain here. ZsV

24 2 BusinessPartnerWatch BBJ

WWW.BBJ.HU

Budapest Business Journal | June 01 – June 14

Electronics manufacturers Ranked order Rankedin byalphabetical in alphabetical order

YEAR ESTABLISHED

AUTOMOTIVE ELECTRONICS

AVERAGE NO. OF FULL-TIME EMPLOYEES ON MARCH 1, 2012

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

Nakajima Shoji – –

2760 Nagykáta, Jászberényi út 116.

(29) 640-100 (29) 640-160 clarion@clarion.hu

»

»

»

1997

480

2

CONTINENTAL TEVES HUNGARY KFT www.conti-online.com

»

»

»

»

»

»

»

1990

1,118

– Continental Automotive Holdings Netherlands B.V. (100)

Tamás Pápai Kai-Uwe Walther –

8200 Veszprém, Házgyári út 6–8.

(88) 540-100 (88) 540-101 –

3

DELPHI HUNGARY KFT www.delphi.com

»

»

»

»

»

»

»

1990

1,078

– Delphi Packard Austria GmbH & CO KG (100)

Werner Vukits, Karl Aschemann – –

9700 Szombathely, Zanati út 29/A (94) 517-800 (94) 328-838 –

»

– AB Electrolux (100)

János Takács – –

5100 Jászberény, Fémnyomó utca 1.

(1) 467-3200, (57) 415-999, (42) 594-800 (1) 467-3204, (57) 415-986 –

Péter Juschitz, Ulrich Hans Röder, Balázs József Takács – –

9700 Szombathely, Szent László király utca 6.

(94) 522-100 (94) 522-168 szo.hu@epcos.com

IT

»

TELECOM

»

– Clarion Co. Ltd. (100)

ODM

1

CLARION HUNGARY KFT www.clarion.com

OEM

COMPANY WEBSITE

EMS

RANK

TOTAL NET REVENUE (HUF MLN) 2011

CONSUMER ELECTORNICS

SECTORS HOUSEHOLD ELECTRONICS

ACTIVITY TYPE

4

ELECTROLUX LEHEL HŰTŐGÉPGYÁR KFT www.electrolux.hu

5

EPCOS ELECTRONICS PARTS KFT www.epcos.com

»

»

»

»

»

»

»

»

1994

1,499

– Epcos AG (100)

6

FIH EUROPE KFT www.foxconn.com

»

»

»

»

»

»

»

2003

445

– Success World Holdings Ltd. (100)

Chuang Mu Wong – –

2900 Komárom, Bánki Donát utca 1.

(34) 886-000 (34) 886-001 –

7

FLEXTRONICS INTERNATIONAL KFT www.flextronics.com

»

–

–

1992

7,995

Flextronics Sárvár Logistics Kft (0.02) Flextonics International GmbH, Austria (99.98)

Márk Hetényi – –

8660 Tab, Munkás utca 22.

(84) 526-000 (84) 526-021 mark.hetenyi@hu.flextronics.com

8

IBM DATA STORAGE SYSTEMS KFT www.ibm.com/hu

850

– IBM International Holdings B.V., Holland (100)

Péter Mohácsi Tamás Káldi Balázs Horváth

2600 Vác, Deákvári fasor 16–18.

(27) 500-400 (27) 517-026 horvath.balazs@hu.ibm.com

9

JABIL CIRCUIT HUNGARY KFT www.jabil.com

Lajos Palásti, Zoltán Király, Forbes Alexander – –

3580 Tiszaújváros, Huszár Andor út 1.

(49) 548-500 (49) 548-512 –

10

»

26,606

–

»

»

–

»

–

–

–

–

–

–

–

–

1991

2002

»

–

–

»

»

»

»

»

2001

9,000

– Jabil Circuit Limited (2), Jabil Circuit Luxembourg II S.a.r.l. (49), Jabil Circuit Netherlands B.V. (49)

NI HUNGARY KFT hungary.ni.com/debrecen

120,000

»

»

»

»

»

»

»

»

2000

1,071

– National Instruments Corp, USA (100)

László Csaba Ábrahám Zsófia Diószegi –

4031 Debrecen, Határ út 1/A (52) 515-400 (52) 515-970 ni.hungary@ni.com

11

NOKIA KOMÁROM KFT www.nokia.com

»

–

–

»

»

»

»

1999

»

– Nokia Corp. (100)

Yrjö Eskola – –

2900 Komárom, Nokia utca 1.

(34) 542-000 (34) 542-099 hr.komarom@nokia.com

12

PHILIPS HUNGARY KFT www.philips.hu

»

»

»

–

–

–

2000

98

– Konniklije Philips (100)

Joost Leeflang, Zoltán Mészáros – –

1117 Budapest, Alíz utca 1.

(1) 382-1700 (1) 382-1800 –

13

PROCONTROL ELEKTRONIKA www.procontrol.hu

–

» »

– – –

6725 Szeged, Veresács utca 28/B (62) 444-007 (62) 444-181 info@procontrol.hu

14

ROBERT BOSCH ELEKTRONICS KFT www.bosch.hu

2,508

– Robert Bosch Investment Nederland B.V. (100)

Volber Schilling – –

3000 Hatvan, Robert Bosch út 1.

(37) 549-111 (37) 549-112 robert.bosch.elektronika@ hu.bosch.com

15

ROBERT BOSCH POWER TOOL ELEKTORMOS SZERSZÁMGYÁRTÓ KFT www.bosch.hu

1,226

– Bosch Power Tools Holding AG (100)

Ansgar Lengeling – –

3526 Miskolc, Robert Bosch park 1.

(46) 518-500 (46) 519-399 robert.bosch.elektronika@ hu.bosch.com

16

SAMSUNG ELECTRONICS MAGYAR ZRT www.samsung.hu

2,081

– Samsung South Korea (100)

Yun Yeop Kim, Gee Sung Choi – –

5126 Jászfényszaru, Samsung tér 1.

(80) 726-7864 (57) 522-300 –

»

»

»

»

»

»

–

»

»

»

»

–

»

»

–

–

»

–

–

»

–

»

–

»

»

–

»

1981

1998

2001

1989

2 BusinessPartnerWatch 25

BBJ

WWW.BBJ.HU

Budapest Business Journal | June 01 – June 14

YEAR ESTABLISHED

AUTOMOTIVE ELECTRONICS

AVERAGE NO. OF FULL-TIME EMPLOYEES ON MARCH 1, 2012

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

380

– Sanmina-SCI Dutch Holdings B.V (100)

Christopher Sadeghian – –

3571 Alsózsolca, Gyár utca 3.

(46) 520-600 (46) 520-621 –

Károly Hoffmann, Friedrich Dietmar Günther – –

2800 Tatabánya, Kóta József utca 2.

(34) 515-600 (34) 515-601 –

»

»

»

»

»

»

»

»

1997

961

– Sanmina-SCI Systems Holdings Inc. (100)

19

SANYO HUNGARY KFT www.sanyo.hu

»

–

–

–

–

–

1999

1,010

– SANYO Electric Co. Ltd. (90.84), SANYO Component (9.16)

Nishikuni Masato – –

2510 Dorog, Ipari park (33) 531-000 (33) 531-003 info.hushg@sanyo.com

20

SONY HUNGÁRIA KFT www.sony.hu

»

»

»

»

»

»

»

1994

479

– Sony Europe Holding B.V (»), Sony Overseas AG (»)

Koichi Nakayama, Gábor Imre Vadász – –

2100 Gödöllő, Dózsa György út 73.

(1) 346-8200 (1) 346-8225 support.hu@eu.sony.com

21

TEMIC TELEFUNKEN KFT www.conti-onilne.com

»

»

»

»

»

»

»

»

1989

1,080

– Conti Temic Microelektronic GmbH (100)

Luc Emiel, Gilberte Quisthoudt – –

1106 Budapest, Napmátka utca 6.

(1) 881-9500 (1) 881-9585 –

22

VIDEOTON HOLDING ZRT www.videoton.hu

9,100

–

–

–

1938

7,600

Gábor Széles (47.05), Péter Lakatos (26.47), Ottó Sinkó (26.47) –

Péter Lakatos, Ottó Sinkó Gyöngyi Ráczné Rácz Csaba Horváth

8000 Székesfehérvár, Berényi út 72–100.

(22) 533-421 (22) 533-429 marketing.sales@videoton.hu

–

IT

TELECOM

18

SANMINA-SCI HUNGARY KFT www.sanmina-sci.com

»

ODM

17

SANMINA HUNGARY KFT www.sanmina-sci.com

OEM

COMPANY WEBSITE

EMS

RANK

TOTAL NET REVENUE (HUF MLN) 2011

CONSUMER ELECTORNICS

SECTORS HOUSEHOLD ELECTRONICS

ACTIVITY TYPE

»

»

»

»

»

1996

CORRECTION: In the Facility management companies list in the Budapest Business Journal’s May 4 issue we wrote the name of facility management company REIWAG incorrectly. The company’s name is REIWAG Facility Services Létesítménygazdálkodási Kft. The BBJ regrets the error.

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Budapest Business Journal | June 01 – June 14

MANUFACTURERS’ NEWS HUNGARY DAIMLER PLANT TO TURN OUT 40,000 B-CLASS MODELS THIS YEAR German carmaker Daimler will turn out 40,000 Mercedes B-Class models at its new plant in the Hungarian city of Kecskemet this year, MercedesBenz Manufacturing Hungary managing director Frank Klein told MTI. The plant will start producing CLA coupes at the beginning of 2013. Production is to grow to standard capacity or about 100,000 cars in 2013, Klein said. Daimler presented the first B-Class model made entirely at the new plant to the local council of Kecskemet in September 2011. The €800 million plant started serial production late March.

The number of employees is expected to grow to 3,000 from 2,500 at present.

BOSCH REVENUE IN HUNGARY CLIMBS TO HUF 134 BLN IN 2011 The revenue of German engineering giant Bosch’s businesses in Hungary climbed

13% to HUF 134 bln in 2011, JavieGonzalez Pareja, who oversees the units, said at a press conference. Including sales within the group, revenue rose 27% to HUF 508 billion. Bosch’s 11 units in Hungary created 1,700 jobs last year, bringing total headcount to 8,000, said HR director Anikó Nagy. Headcount rose most at plants in Miskolc and Hatvan, and the number of engineers in R&D rose by 160 to 860, she added. About 700 engineers work at Bosch’s Budapest Development Center, 100 work at the hand tools plant in Miskolc and 60 work at the automotive industry unit in the city. Bosch spent HUF 47 bln on investments in Hungary last year, more than double the amount in 2010, Pareja said. He added that the production portfolio had been expanded with the start of serial production of electric bicycle motors at the plant in Miskolc, and new production lines had been installed at the plants in Hatvan and Eger.

MAGNA AUTOMOTIVE HUNGARY STARTS TEST PRODUCTION AT HUF 5.6 BLN PLANT Magna Automotive Hungary has started test production at a HUF 5.6 bln plant it built near German carmaker Daimler’s new base in Kecskemét (central Hungary), the company told MTI. The plant will turn out carpets, door covers and parts for the boots of compact models made at the Daimler plant, which launched production in April. Magna Automotive Hungary aims to boost headcount at the plant to 100 by the end of 2012. The company won a grant of almost HUF 1 bln to support the investment.

Magna Automotive Hungary is a member of the Magna group, owned by Austro-Canadian Franz Stronack.

AUDI LAUNCHES TRAINING PROGRAM FOR WOMEN AT BASE IN HUNGARY The Hungarian unit of German carmaker Audi is launching a training program that

aims to raise the proportion of women employed at its base in Győr (northwest Hungary) from 2 to 10%. The training program started with 32 participants. By the end of the year, Audi Hungária Motor plans to train about 130 women in metalworking and other trades specific to the automotive industry. It will offer employment contracts to participants who successfully pass the program’s exams.

BMW CONSIDERS HUNGARY FOR POSSIBLE PLANT German carmaker BMW is considering Miskolc (northeast Hungary) as the possible site for a plant, business paper Handelsblatt said. The company is also considering Kosice, in Slovakia, the paper said.

CSABA METÁL SPENDS HUF 1.63 BLN ON CAPACITY EXPANSION Metal parts maker Csaba Metál Zrt is undertaking a

HUF 1.63 bln capacity expansion at its base in Békéscsaba, southeast Hungary, CFO Lajos Dénes told MTI. Production will start in the 4,200 sqm hall the company is building on June 18. Csaba Metál won a HUF 542 mln grant for the investment. The company counts BMW, Audi, Daimler, Delphi and Trelleborg among its business partners.

MANUFACTURING SECTOR STAGNATES IN Q1 Hungary’s manufacturing sector stagnated in the first quarter, a survey by KopintTárki Konjunktúrakutató Intézet shows. The measure of assessment and outlook in the electronics industry fell 12% in Q1. The gauges for the food and automotive industries were up 7.8% and 6.4%, respectively.

HANKOOK TIRE PLANT IN HUNGARY OPERATING AT FULL CAPACITY Korean-owned Hankook Tire Magyarország Kft’s plant in Rácalmás, south of Budapest,

is operating at full capacity, turning out 34,000 tires a day, communications manager Katalin Roy told journalists.

The plant will turn out 12 million tires this year, thanks to a €230 million capacity expansion that went online in 2010 and reached full capacity last year, Roy said. Headcount at the plant has reached 2,100, she added. Hankook has so far invested €550 mln in Hungary. Production at the plant started in 2007.

GE PLANT IN HUNGARY DELIVERS TURBINES TO ISRAEL General Electric has delivered 12 aeroderivative gas turbines from its plant in the Hungarian city of Veresegyháza to Wood Group for a power plant it is building for Dorad Energy in Israel, company officials said. The turbines are part of a $200 mln contract GE signed with Wood Group. Dorad Energy’s plant in Ashkelon will supply 8% of Israel’s electricity when completed.

A hybrid sporty car? Yes, it’s a Porsche Hungarian sports car buyers still go for the vroom, but carmakers nonetheless need to focus on future technologies, Szabolcs Nagy, managing director of Porsche Inter Auto Hungaria Kft says.

While hybrid car sales are only marginal at the moment, Nagy thinks they will have a measurable chunk of all sales in the near future.

The Porsche brand usually connotes sports cars, with sleek design and impressive power. But there is a hybrid line in Porsche’s portfolio where the luxury exterior comes with eco-friendly features, without compromising performance.

Yes, hybrid versions of Porsche’s luxury sedan the Panamera and its SUV the Cayenne have been introduced and are available in Hungary as well. In both cases, the manufacturer has managed to create

vehicle’s that live up to a sports car buyer’s expectations but that also meet the requirements of a changing market.

How do Hungarian buyers approach hybrid models?

In Hungary, hybrid sales are marginal compared to overall sales data. Only extremely environmentally conscious customers buy hybrids; annually, it makes up only a very small portion of our total sales. Also, a typical sports car buyer really appreciates the powerful roar of a sports car – and hybrids are rather quiet cars. In my opinion, it will take several years before hybrid technology becomes widespread in Hungary and we see more hybrid buyers at our salons.

But if you consider that diesel cars quickly gained a great chunk of overall sales after their introduction, there is hope that hybrid sales will grow somewhat in the future as well. These customers are mature enough to make a well-founded decision based not only on price but on other factors as well.

How do you think the spread of hybrid technologies changes the automotive industry?

Hybrid technology in general is in the early stages of development all over the world. Car manufacturers see the opportunity, and this is inevitably the future for the industry. There will be revolutionary changes in hybrid technologies in the near future as all manufacturers now focus on

such technology innovations. However, the real big step will be the shift to purely electric cars. Of course, all this will have an impact on importers and services as well: service networks, for example, will have to restructure their operations based on modified needs.

You say the paradigm change will come with the wider appearance of purely electric cars. How does Porsche prepare for such a change?

Porsche will also come out with a plug-in model in the foreseeable future. The plugin hybrid version of its Panamera is likely to begin production next year.

Is promoting hybrid technologies worth it for a car wholesaler?

I think a pure hybrid campaign would not pay off at the moment. Most dealers feel it represents innovative capability, and build their images with such campaigns, but there are no economical decisions behind them. Nevertheless, communication and raising awareness are important.

www.porsche.hu

NOTE: ALL ARTICLES MARKED “PROMOTIONAL FEATURE” ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

[ PROMOTIONAL FEATURE ]

3 Socialite

BBJ

Reading corner Sir Terry Leahy: Management in 10 words I had no intention of writing a book, says Sir Terry Leahy in the preface of ‘Management in 10 words’. Eventually, he did write his book, to be published in June, which reveals what turned Tesco from being a struggling supermarket into the third largest retailer in the world.

BBJ BBJ

In his 14 years as CEO of Tesco, Sir Leahy trans-

formed the company into the largest supermarket chain in Britain and spearheaded its expansion abroad.

It is without doubt one of the country’s major success stories, turning over nearly £62 billion in 2010 and accounting for more than £1 in every £7 spent in the UK’s high streets. And Sir Leahy himself is one of the world’s most admired business leaders: an inspiration to many and constantly in demand on the speaker circuit.

In ‘Management in 10 words’, Sir Leahy distils and shares a lifetime’s experience at the forefront of business. Drawing heavily on his time at Tesco and his observation of other companies,

he identifies the key traits that every good manager needs, pinpoints the ways in which effective leaders inspire those they lead, and analyses how innovative and successful business strategies are forged. His book will prove invaluable to managers around the world, showing them what makes a company great and inspiring them to lead theirs forward.

Sir Leahy was educated at St Edward’s College, Liverpool, and then went on to the University of Manchester Institute of Science and Technology, where he gained his BSc (Hons) in management sciences. Sir Terry joined Tesco when he was 23, became the compa-

ny’s first marketing director and was responsible for the introduction of the highly successful Tesco Clubcard. As CEO he oversaw Tesco’s expansion into everything from groceries to electrical goods, built

a £1 billion clothing business and was one of the first to see the potential of the internet for selling groceries. He was knighted in 2002 for his services to food retailing and has received many industry honors and awards, including an honorary degree from the University of Liverpool in 2007, Sunday Times Business Person of the Year in 2010 and a Lifetime Achievement award from Retail Week in 2011, and was voted Britain’s Most Admired Leader

by Management Today for five consecutive years from 2005 to 2010.

Since he stepped down as CEO of Tesco in February 2011 he has been in con-

stant demand as a public speaker. He has joined Clayton Dubilier & Rice, the US private equity firm, as a special advisor, and also serves as director of the Liverpool Enterprise Partnership. He invests in, and advises entrepreneurial businesses and is a champion of education and has recently invested in a video-based online teaching tool for GCSE students.

He is also involved with various charities.

Management in 10 words

by Sir Terry Leahy Random House Business Books ISBN: 9781847940902 Available now at www.hungaropress.hu

Taste

Berlin!

WHAT TYPE OF TRAVELLER YOU ARE?

BUSINESS TRAVELLER Brasserie Le Faubourg

Midtown Grill

Restaurant Facil

PURO Sky Lounge

ood deals take good meals – and vice versa.

If you have a day or two packed with meetings, try to place some of them in chic Berlin restaurants and enjoy every bite! An exquisite and elegant place to go is Brasserie Le Faubourg (Augsburger Straße 41). French cuisine (with three daily menus and classics á la carte), smooth ambi-

ence and a sunny terrace will tone down stress and perk you up. If you fancy a good meat feast, find Midtown Grill (Ebertstraße 3). You will be able to peek at the chef preparing the succulent steaks (Filet Mignon, New York Strip, Wellingtons, etc.) and the fresh dressings in the show-kitchen.

Lounge music, special business lunch offers and

a pinch of London-hip will lubricate any deal.

How about dinner? If you are looking for one of the most acclaimed menu cards in town, go to Restaurant Facil and try Michael Kempf’s innovations. Our pick of the menu would be the Fillet of sturgeon and imperial-caviar, watermelon, purple curry and sorrel - clearly, Facil, though

quite pricy, lives up to its Michelin star in every bite. Crown your business trip with a night out! Invite your partners to PURO Sky Lounge (Tauentzienstraße 9-11, in the tower of Europa Center) where breathtaking scenery, fine drinks and special dance performances will lend your evening an air of exclusiveness.

G

I CAME TO EAT Anna Blume

Sowohlalsauch

Restaurant 44

Thyme Supperclub

beehive of foreigners and star-chefs, Berlin has evolved into a gourmet paradise – you can easily fill your agenda by visiting different restaurants. Rule No. 1: Start the day with a hearty breakfast! Anna Blume (Kollwitzstraße 83) offers one of the richest breakfast menus in town (from various types of cheese to pesto, hams and sweet cakes), but if you really want a wholesome treat, try the Swiss breakfast at Nolan (hash, smoked bacon, and eggs). Other places worthy of your attention include Sowohlalsauch (Kollwitzstraße 88) and Café Kapelle (Zionskirchplatz 22-24).

Rule No 2: Experiment! If you fancy classy venues with

haute cuisine, two places are highly recommended: Restaurant 44 (Augsburger Straße 44), where you will find the best Mediterranean cuisine with a French touch to it, and Restaurant Quarré (Unter den Linden 77), where the chefs reinvent traditional German entrées and prepare the best crème brulée in town. Dos Palillos (Rosentahlerstraße 53) amazes with its minimalist interior and Asian tapas that the chefs prepare in front of you, as well as serving and present each course themselves. German specialties are given new takes at Neu (Oranienburger Strasse 32) in Sven Howitt’s kitchen, while German regional courses are matched up with the best

European wines at Weinbar Rutz (Chausseestraße 8). If you really want to delve into the Michelin star experience, visit Reinstoff (Schelgelstraße 26) which occupies an old factory building and offers a taste of avant-garde cuisine in a very modern, minimalist-industrialist setting.

This combo has earned many fans and two Michelin stars for the restaurant. Or you want something less formal?

VOLT (Paul-Lincke-Ufer 21) uses a substation in Kreuzberg and guarantees high taste value: reinvented Berlin cuisine (where salmon meets sausage on your plate) and the most modern ambience. Do not miss Berlin’s culinary sex appeal, the supperclubs! These are under-

ground restaurants with great chefs and a homely environment. One of the bests is Thyme Supperclub (Winsstrasse, Prenzlauer Berg), which holds one or two dinners a month with five to six courses (their last menu included ajo blanco, monkfish wrapped in ham, and cranchan).

Another shrine for gourmets is The Owling Supperclub (Rosa Luxembourg Platz) showcases British nosh at its best. Two pieces of advice before you visit a supperclub: do not expect it to be cheap (prices range between €2060), and book well ahead (on their websites).

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Berlin is something of a German renegade – and not only because its mayor once labeled the city as “poor but sexy”. From the culinary perspective, Berlin shuns conventions and seems to defy German predictability. It represents a taste revolution.

BERLIN FACTS Population: 3.5 million Area: 891.85 km2 Airports: Berlin-Brandenberg Schoenefeld, Berlin-Tegel, and Berlin Brandenberg International (to be opened in 2012) Flight time from Budapest: 1h 25min Summer weather: Temperatures range between 22-30°C, with occasional showers.

Public transport: Very developed. A Tageskarte costs €6.80 and is valid for one day in the A, B, and C zones.

Prices: Berlin is mostly cheaper than Paris or Stockholm; average prices are similar to those in Vienna and Brussels.

FAMILY Familien-Restaurant Charlottchen

Kiiwii Familienrestaurant

Vanilla & Co.

Ritter Sport Chocowelt

amilies with kids face a central problem: the little ones are always on the move, leaving no rest for their parents. Sounds familiar? Then try Familien-Restaurant Charlottchen (Droysenstraße 1) where your kids will have rooms of toys to explore while you are enjoying your meal. The place also houses theater shows for kids. Another children’s’ heaven is Kiiwii

Familienrestaurant (Güntzelstraße 10) where your kids have a separate section to have fun. The menu is versatile (ranging from Mediterranean to Mexican and African) and includes special treats for children. When lunch is done, sweets must come – try Berlin’s best ice cream bars!

Caramello Eis (Wühlisch Straße 31) will surprise with the creamy, very consistent ice cream made of local milk and

fair-trade cocoa, pistachio, etc. Or take a dive into the specialties of Vanilla & Co. (Joachim-Friedrich-Straße 27).

You will have to return several times to this daydreamlike shrine of sweets, where they flavor bio-ice cream with tropic fruits like cupucaçu, marsala, açerola, caju and guava. You can buy high-end chocolate and other artisan produce while munching on exquisite cakes and bis-

cuits. Your kids will love this one: Ritter Sport Chocowelt (Französische Straße 24) lets your children make their own Ritter Sport chocolate! Kinder-Wirtschaft (Schreinerstraße 15) is registered as one of the best places for kids.

On Sundays, their restaurant holds a family brunch. Prepare to lose your kids out of sight for a while as they disappear in a network of labyrinths designed for endless play!

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DATES AND MATES Gel Gör Inegöl Köfteci

Hamy Cafe

Volkspark Friedrichshain

outh is full of romance, not so full of money – Berlin is a place where these facts add up to an unforgettable experience. Kreuzberg has its famous Curry 36 alright, but there are similar places to sample – Gel Gör Inegöl Köfteci (Kottbusser Damm 80) for example, where tasty, seasoned meatballs come along with fresh salad and baguettes for a pocket-friendly €3.5. The bustling Vietnamese restaurant, Hamy Cafe (Hasenheide 10) will sooth your hunger any time with fresh salads, spicy soups and noodles. Do not shy away at the sight of the long queue: service is extremely

fast! Dating someone in Berlin? How about a romantic dinner in a mill? Yes, under 34 Goldammerstraße you will find a mill with a restaurant that offers a special (and affordable) menu for couples.

Picnicking emerges as another option for romantics. Volkspark Friedrichshain, Viktoriapark, and Englischer Garten are arguably the best picnic spots in town. A tighter budget does not exclude you from the supperclub experience either. Try Fisk & Gröönsaken (Helmholzplatz, Prenzlauer Berg) where two Berliners will serve you mainly vegetarian dishes at a fairly affordable rate hov-

ering around €25 (for a three-course meal!). Once there, feel the international buzz – the guests at your table will probably be chatting in at least five different languages.

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Fisk & Gröönsaken

For hundreds of other remarkable restaurants visit this URL:

30 3 Socailite BBJ

WWW.BBJ.HU

Budapest Business Journal | June 01 – June 14

[ EXPERT OPINION ]

Even holidayers get the flu Come summertime, we can rest assured: the flu season is over, no need to worry about new strains. Unless you travel south of the Equator, where the seasonal epidemic is the other way round. To make it worse, a long journey in the confined space of an airplane is exactly where bugs and viruses get passed on easily. A preventive jab might help avoid unpleasant holiday memories.

Go through your checklist before you head off.

You packed your best swimwear, you booked a room with a view, did not even forget travel insurance. All is set for a perfect holiday. Not quite. Your precautions are worthless if your immune system is not prepared for what is really coming your way: so far unknown viruses and infections.

“Only one thing can ruin an exotic holiday: an exotic illness,” says Dr. Zsolt Pintér, pediatrician at Dr. Rose Private Hospital. “Once we set the destination, it is worth inquiring about the recommended vaccination. Dr. Rose is a certified international vaccination center, so we are always up to date with information and vaccines.”

We need to think in advance and not leave it to the last day, because total immunity takes some time after inoculation – and even that time varies with different vaccines, some of which also require a repeat vaccination. It is best to seek advice from a specialist months before the holiday.

“It is impossible to eliminate all the health risks of a long-haul journey. However,

immunization, in-depth information on health conditions and hazards in the region, and preventive measures – in the form of medicine if it comes to that – are essential steps to-wards a worry-free holiday,” says Pintér. “Being bedridden for days on a holiday is one thing, having to rely on an unfamiliar healthcare system away from home is another matter. It is best to avoid both.

The vaccination center at Dr. Rose has immediate access to all the vaccines and medicine for the most remote and exotic travel, and we can issue the WHO-approved international certificate of vaccination – the ubiquitous yellow document – on site. There are no queues to wait here, one needs to book an appointment for consultation with an immunization specialist, who makes a personal vaccination plan according to the destination and purpose of the travel – be it business or pleasure. The consultation gives the patient a clear knowledge of possible health risks and conditions, and a way to tackle them.

POTENT VACCINE – MENVEO A recent addition to the army of preventive immunization is Menveo, a combined vaccine against certain bacteria that cause meningitis and diphtheria. The symptoms of meningitis are high fever and shivering, mottled, blotchy skin with rashes (septicemia), stiff neck, dislike of bright lights, delirious confusion, dizziness, uncertain walk, and nausea. The disease spreads with nasal discharge and phlegm. Lately, word had it that an meningitis epidemic was threatening in Hungary, but it proved to be a rumor.

www.drrose.hu

Check in well before your holiday for a consultation with our immunisation spe-cialist.

Call (+36)1-377-67-37 or book online at www.rendelo.drrose.hu

JUNE 5

JUNE 5

JUNE 9

JUNE 11

AmCham Communication School with Judit Iglódi-Csató, communications director of TESCO Globál Áruházak Zrt LOCATION AmCham Conference Room, 1051 Budapest, Szent István tér 11, 6th floor TIME 6:30 – 8 p.m.

FEE AmCham members: HUF 30,000 + VAT/person for the entire series; Non-members: HUF 45,000 + VAT/person for the entire series ORGANIZER American Chamber of Commerce in Hungary CONTACT www. amcham.hu

CR SIG event: Financial and economic literacy – a rediscovered growth factor LOCATION PwC Hungary, 1077 Budapest, Wesselényi u. 16 TIME 9 – 11 a.m.

FEE BCCH members and invitees of the organizing partners: free of charge; Non-members: HUF 5,000 + VAT ORGANIZER British Chamber of Commerce in Hungary CONTACT www.bcch.com

Olympic Family Day in association with Bringóhintó LOCATION Margitsziget, Bringóhintó premises TIME 11 a.m. – 5 p.m.

FEE BCCH members: free of charge; non-members: HUF 3,000 + VAT for adults; HUF 2,000 + VAT for children aged 3-12; free of charge for children under 3 ORGANIZER British Chamber of Commerce in Hungary CONTACT www.bcch.com

AmCham Career School Series with György Beck, President of Vodafone Hungary LOCATION AmCham Conference Room, 1051 Budapest, Szent István tér 11, 6th floor TIME 6:30 – 8 p.m.

FEE AmCham members: HUF 30,000+VAT/person for the entire series; Non-members: HUF 45,000+VAT/person for the entire series ORGANIZER American Chamber of Commerce in Hungary CONTACT www. amcham.hu

3 Socialite 31

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Budapest Business Journal | June 01 – June 14

WHO'S NEWS

Do you know someone on the move?

Send information to research@bbj.hu

CBRE Group’s current CEO Brett White will retire at the end of the year and Sulentic, who currently serves as president, will take over, the company has announced. White will remain on the board following his retirement from the firm. Sulentic served as chief financial officer in 2009, during the depth of the financial crisis, and before that, as Group President with responsibility for the EMEA, Asia Pacific and Development Services businesses. He joined CBRE in 2006 with the acquisition of Trammell Crow Company, where he was serving as CEO at the time of the merger.

László continues his career with SAP in a new position and at new venue. As of June 1, he moves to Walldorf, Germany, where he will be responsible for SAP’s procurement processes in Europe. He joined SAP in 2007, and participated, among other projects, in the introduction of paperless procurement processes at the company. He will be succeeded by Zuzana Belaiova, who is based in Prague, from where she will also oversee the Hungarian company’s procurement processes.

Name Robert Sulentic Current company/position CBRE Group/CEO Previous company/position -/-

Name Zsolt Sepsi Current company/position Telenor Magyarország Zrt/ chief technical officer Previous company/position -/-

Sepsi is the new chief technical officer of Telenor Magyarország.

Predecessor József Huszlicska continues his career with the group in Norway. Sepsi has been working on Telenor’s telecommunications and IT networks since 2003, and was director of operations from 2009. Before joining Telenor, he was a system-testing consultant for Nokia in Finland. Prior to that, he filled executive positions with the Romanian electricity provider and an ICT company based in Szatmárnémeti.

Name Ádám László Current company/position SAP Hungary Kft/ procurement expert Previous company/position SAP Hungary Kft/ purchase manager

Name Levente Tóth Current company/position Telenor Magyarország Zrt/ corporate sales director Previous company/position -/-

Tóth joined Telenor on June 1 to oversee its corporate team.

Most recently, Tóth has been a management consultant supporting companies such as Synergon and Sciamus. Until 2009, he was enterprise sales director of T-Systems Hungary.

Before that, he oversaw large enterprise and government accounts at T-Mobile. He started his career in investment banking as a portfolio manager.

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Name Sándor Hidegh Current company/position Sága Foods Zrt/ domestic sales director Previous company/position Meggle Hungary Kft/ country manager

Name Gergely Kézdy Current company/position SAP Hungary Kft/regional channel director Previous company/position -/-

In a newly created post at Sága Foods, Hidegh is responsible for marketing, trade marketing, product development and sales. He has been in the FMCG industry for nearly 15 years. He started his career at Sió-Eckes Magyarország Kft in 1997 as a sales representative, and was later promoted to key account manager. In 2002 he joined Findus Hungáris Kft as trade manager. Later he worked with Colgate-Palmolive Magyarország Kft, and joined Meggle Hungary in 2008 as country manager.

Kézdy, who works at SAP as channel director, is taking on extended responsibilities. In addition to the Central European, Russian and CIS markets, he will also be in charge of Turkey and the Middle East. Kézdy has been in this position since 2004. He will remain based in Budapest.