I have just returned from a visit to
Budapest, Hungary, taking part in a trade convention that included many
aspects of industrial plant and machinery. It was a revelation to see
such a modern, dynamic city in a country that has suffered from so much
conflict and oppression over the past century.
Unfortunately, the weather we experienced was similar to that of the UK
throughout June and July; rain of monsoon proportions. However, staying
indoors enabled us to focus on business and understand the common
ground that we had with our Hungarian hosts.
During
all the upheavals in Eastern European countries following the 1989
revolution, the issues in Hungary had a much lower profile than, for
example, East Germany, Ukraine and Romania. This is because changes were
introduced to its political and economic structures as early as the
1970s, making the transition to democracy and capitalism much smoother
than elsewhere.
Hungary
experienced market liberalisation in the early 1990s as part of the
migration process from a socialist to a market economy. It was hit
particularly hard by the global financial crisis in 2008/9, but is now
recovering strongly, with an industrial production growth rate of 11%,
one of the highest in the world outside China and India.
It
has been a member of the EU since 2004, but not part of the Eurozone.
Because it was able to devalue its own currency and set its own interest
rates, recovery has come much more quickly – Greece, Ireland and Portugal take note!
A legacy of the Soviet era is that Hungary
has a strong specialisation in machinery production, both industrial
and agricultural. Its scarcity of natural resources and traditional
reliance on farming resulted in State-sponsored programmes to build
production machinery for other Eastern Bloc countries. This background
has given it a head start in that particular sector, together with a
skill-set that is easily adapted to other large-scale manufacturing.
The 21st
century, the main areas of Hungarian industry are, as well as
machinery, steel production, energy, mechanical engineering, chemicals,
food and drink and, last but by no means least, automobile production.
Hungary,
with its strategic Central European location and industrial competence,
now boasts car plants from four major brands: Mercedes Benz, Audi, Opel
and Suzuki, as well as a whole host of sub-contract companies.
There are parallels with our own economy here. Since the 1980s, both the UK and Hungary
have disposed of inefficient state-run industries in favour of
home-grown enterprise and foreign investment by global companies.
In the UK, we have BMW Mini, Nissan, Toyota,
Honda and Tata (controlling Jaguar and Land Rover), as well as SAIC,
the Chinese owners of Rover. Both countries now produce a greater volume
of vehicles than at any time in their histories. Furthermore, both have
manufacturing growth rates that are outperforming their European
neighbours.
This volume of manufacturing activity creates work for thousands of sub-contractors. Both the UK and Hungary
have a large reservoir of skills and knowledge, particularly in the
finishing sector, that make a major contribution to the efficient
operations of their foreign-owned automotive companies.
We
can feel a great affinity with the Hungarians and learn a great deal
from them. It is enlightening to know that a country once best known for
Paprika, Bulls Blood wine and the Danube has now become a powerhouse of Central European industry and a shining example to us all.
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