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					THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY

                        HUNGARY
                           Fact Pack




                Swedish Trade Council in Hungary
                             2006



                               1
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

             Hungarian Construction Equipment Industry

             Recommendations

             References




                           2
                THE MANUFACTURING INDUSTRY IS TRADITIONALLY IMPORTANT
                IN HUNGARY
                - The automotive industry is the second largest within manufacturing
                      Net revenue, 5 largest manufacturing industries in
                      Hungary, 2005
                                                                                                        •   The total net revenues of the Hungarian
                                                                                                            manufacturing industry is SEK 568 billion
        Electrical and
    optical equipment
                                                                                                        •   There are approximately 85,000 companies within
             Automotive                                                                                     the manufacturing industry in Hungary
                                                                                                              − 700,400 employees
                     Food
          Basic metals,                                                                                 •   The automotive and machine engineering
       fabricated metal                                                                                     industries are traditionally strong
               products

              Chemicals                                                                                 •   The average labor cost for an industry worker in
                                                                                                            Hungary is app. SEK 44 per hour.**
                                0              50             100             150            200
                                                                                         Billion SEK*

                                  The automotive industry amounts to 16% of the total manufacturing industry
 *1 EUR=9,29 SEK
                                                                                                   3                                   **Monthly average labor cost//20 days/8 hrs a day.
Source: Investment and Trade Development Hungary, Hungarian Central Statistical Office
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Hungarian Construction Equipment Industry

             Recommendations

             References



                               4
                THE HUNGARIAN PRODUCTION OF CARS AND COMMERCIAL
                VEHICLES TOTALS SEK 89 BILLION

                 billion SEK                            Production cars and commercial vehicles industry in Hungary
                100
                  90                                                                                        The lion’s share of Hungarian vehicle production
                                                                                                             goes on export
                  80
                                                                                                                Export ratio is around 94 % for car
                  70
                                                                                                                  manufacturers and 88 % for engine and
                  60                                                                                              components manufacturers.
                  50
                  40                                                                                        The production is dominated by passenger cars
                  30                                                                                         and engines.
                  20
                  10
                   0
                           2000        2001        2002        2003         2004        2005
                                              Domestic         Export

                                                   Production has grown steadily due to increasing exports
                                                                                                     5
Source: Investment and Trade Development Hungary, Association of the Hungarian Automotive Industry
                149 700 VEHICLES ARE PRODUCED IN HUNGARY
                - 99 % of these are passenger cars


                                                                      VEHICLE MANUFACTURERS


                                            COMMERCIAL VEHICLES (1,167 vehicles)


                         LIGHT TRUCKS                          HEAVY TRUCKS                       BUSES                  PASSENGER CARS
                               -                                (158 vehicles)                (1,009 vehicles)            (148,533 vehicles)
                       No manufacturing of                   1 manufacturer                4 manufacturers            3 manufacturers
                        light trucks in Hungary                    Rába Automotive               Ikarus                      Audi (VW)
                                                                                                  Nabi                        Suzuki
                                                                                                  Rába Automotive             GM Opel (engines)
                                                                                                  Kravtex




                                                                                      6
Source: Association of the Hungarian Automotive Industry
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Hungarian Construction Equipment Industry

             Recommendations

             References



                               7
                PASSENGER CAR PRODUCTION IS PICKING UP
                - Suzuki plans to expand output to 300 000 units by 2008
                           Passenger Car Production in Hungary                                Development the last 5 years

                      Vehicles
                 150000                                                                After a period of stagnation and decline,
                                                                                        passenger car production is picking up again
                                                                                          Audi and Suzuki produce 100% of
                 120000
                                                                                              Hungarian passenger car output.
                                                                                          Between 2002 and 2004 Audi cut
                   90000                                                                      passenger car production with over 50%,
                                                                                              causing a sharp decline in total output.
                                                                                          Suzuki has invested around 400 MEUR
                   60000
                                                                                              since 2004 and plans another investment
                                                                                              of 54 MEUR, expanding it’s production
                   30000                                                                      capacity to 300 000 units by 2008.


                          0
                                  2001         2002        2003   2004   2005

                                                                                8
Source: Association of the Hungarian Automotive Industry
                THE MAJORITY OF PURCHASE DECISIONS ARE MADE OUTSIDE
                HUNGARY
                 Passenger Cars




                                  Manufacturer Employees Business               Purchase decisions
                                  Audi (VW)         5022   Passenger            HQ, Ingolstadt, Germany. (In Györ for purchasing related
                                                           cars, engines        to operations of the plant)
                                  Suzuki            2700   Passenger cars       Locally, approved by HQ in Japan

                                  GM Opel            694   Engines,             Global purchasing, different locations depending on the
                                                           transmission         business segment




                                                                            9
Source: Company websites, STC interviews
                THERE ARE 2 CAR MANUFACTURING PLANTS IN HUNGARY
                - Audi and Opel also produce engines


                                            Esztergom
                           Győr




                                                    o                         Manufacturer          Plant     Models and         Production
                                                Budapest                                                        focus              volume
                                                                             Audi (VW)       Győr                     Audi TT          12,307
                                                                                                                      Engines       1,600,000
                                                                             GM Opel         Szentgotthárd            Engines         456,000
                                                                                                                 Transmission             N/A

                                                                             Suzuki          Esztergom         Fiat Small SUV
     Szentgotthárd                                                                                               Subaru Justy
                                                                                                                  Suzuki Ignis        136,226
                                                                                                             Suzuki Small SUV
                                                                                                                  Suzuki Swift




                                                                        10
Source: Association of the Hungarian Automotive Industry, ITD Hungary
                OEMs TAKE ADVANTAGE OF CLOSENESS TO NEW MARKETS


                                                     Trends within the Hungarian passenger car industry - OEM

                                                       Large increase in production is expected
                    Production                             Suzuki is aiming to produce 300,000 units/year by 2008 (twice as much as now)
                                                           Audi’s production of engines went up 15% in 2005



                                                       Hungary is developing into a regional centre for the automotive industry
                                                           Manufacturing companies move production to Hungary to be closer to EU,
                      Supply of
                       nearby
                       markets                               Eastern European and/or Balkan markets
                                                           Companies set up regional components supply centres (Porsche, Peugeot)


                                                       Large market potential in Hungary and nearby markets
                       Market                              Density of automobile ownership is far behind EU average
                      potential




                                                                                                   11
Source: STC interviews and analysis, ITD Hungary, Association of Vehicle Component Manufacturers
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Hungarian Construction Equipment Industry

             Recommendations

             References



                           12
                COMMERCIAL VEHICLE PRODUCTION HAS BEEN DECREASING
                - Drop in production mainly due to less bus manufacturing
                       Commercial Vehicle Production in Hungary                                    Development the last 5 years

                        Vehicles
                 4500                                                                       The traditionally strong commercial vehicle
                                                                                             industry has lost importance in favor of
                 4000
                                                                                             passenger car production and components
                 3500                                                                        manufacturing
                 3000                                                                           Producers struggle with financial problems.
                 2500                                                                           Bus maker Ikarus cut bus production with
                 2000                                                                             over 90 % 2001-2004.
                 1500                                                                           After reorganization and changes of

                 1000
                                                                                                  ownership, Ikarus is Hungarian owned
                                                                                                  again and will likely take up production of
                   500                                                                            buses in 2006.
                       0                                                                        Trailers constitute the majority of heavy
                               2001          2002          2003       2004   2005                 truck production
                                                      Heavy Trucks   Buses




                                                                                    13
Source: Association of the Hungarian Automotive Industry
                 PURCHASE DECISIONS FOR HUNGARIAN OWNED COMPANIES ARE
                 TAKEN LOCALLY
                    Commercial vehicles




                                          Manufacturer Employees Business                                     Purchase decisions
                                          Rába                         3037       Buses, heavy                HQ, Győr, Hungary
                                          Automotive                              trucks
                                          Kravtex                       500       Buses                       HQ, Győr, Hungary
                                          Nabi                          380       Buses                       n/a
                                          Ikarus*                        n/a      Buses                       n/a




 *Ikarus is currently being restructured and had no production or employees in 2005. The company still
 exists and will likely take up production in the second half of 2006.
                                                                                                         14
Source: STC interviews
                THE COMMERCIAL VEHICLE INDUSTRY IS CONCENTRATED TO
                THE NORTH WESTERN PART OF HUNGARY



                               Győr              Budapest




                                                                                                                Manufacturer             Plant     Models and      Production
                                                                                                                                                     focus           volume
                                                                                                                Nabi              Budapest                Buses            851

                                      IKARUS
                                                                                                                Rába Automotive   Győr             Buses, Heavy            176
                                                                                                                                                          trucks

                                                                                                                Kravtex           Győr                    Buses             90

                                                                                                                Ikarus            Székesfehérvár          Buses                 *




                                   Székesfehérvár

                                                Bold=head office


*Ikarus is currently being restructured and had no production in 2005. The company still exists and will
likely take up production in the second half of 2006.
                                                                                                           15
Source: Company websites, Association of the Hungarian Automotive Industry
                AFTER SOME YEARS OF RECESSION BUS MANUFACTURING IS
                EXPECTED TO INCREASE

                                                     Trends within the Hungarian commercial vehicle industry - OEM
                                                       Production is expected to increase
                    Production                             With the reopening of the Ikarus factory, Hungarian bus production is expected
                      volume                                  to almost double
                                                           Truck production is expected to increase marginally for the coming years


                                                       Increased competition and continuous prices reductions
                     Economic                               Several producers struggle with financial problems. One example is Nabi
                     situation                                whose US sales dropped to 489 busses (down 196 buses)



                                                       Some parts manufacturers seem to shift to assembly and whole vehicle production,
                    Production
                     patterns
                                                        especially buses




                                                                                                   16
Source: STC interviews and analysis, ITD Hungary, Association of Vehicle Component Manufacturers
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Hungarian Construction Equipment Industry

             Recommendations

             References



                           17
THERE ARE AROUND 80 AUTOMOTIVE SUPPLIERS IN HUNGARY
- The world’s major suppliers are represented
         Hungarian automotive suppliers                            Geographical concentration of
                                                                      automotive suppliers

   There are around 80 suppliers of significance in                                      Miskolc
    Hungary
                                                                   Győr        Budapest

   The majority of the large automotive suppliers in
    the world have operations in Hungary

   The automotive industry is concentrated to the
    northern and north-western parts of the country

   Nearly 100% of the suppliers are foreign owned

   The companies operate in all segments of the
    industry                                                          Székesfehérvár



                                                             Low     High


                                                        18
                MORE THAN 50 TIER 1 SUPPLIERS HAVE OPERATONS IN HUNGARY
                -companies operate in all segments of the industry
                                                                             TIER 1 SUPPLIERS



                   Electrical systems                Interior equipment           Propulsion                Body                 Running gear

                Cables, bus systems,               Cockpit, seats, dash-     Power train, exhaust   Body, roof, glass, doors, Suspension, brakes,
                embedded systems                   board, air conditioning   systems, engines       lighting etc.             axles, steering, tires
                   AFL Hungary                       Autoliv                  Arvin Meritor          ADA Cast                 Continental Teves
                   Continental Temic                 Clarion                  Benteler               Alcoa                    Euro-Exedy
                   Delphi Packard                    Delphi Calsonic          Borg Warner            Asahi Glass              FAG
                   Diamond Electric                  Eissman                  Delco Remy             Bosal Autoflex           Haldex
                   Leoni                             Eybl                     Denso                  Erbslöh                  Knorr-Bremse
                   Mitsuba                           Isringhausen             Linamar                Firth Rixson             LuK
                   Robert Bosch                      Lear                     Visteon                Rába Automotive          Musashi
                   Saia-Burgess                      Johnson Controls                                 Sapu                     Phoenix
                   Sews                              Philips APM                                      Stanley Electric         Rába Automotive
                   Valeo                             Vogel-Sitze                                      ThyssenKrupp             Souftec
                   Zollner                           W.E.T                                            U-Shin                   ZF
                                                      Webasto

Source: Association of Vehicle Component Manufacturers, ITD Hungary                   19
               TIER 1 SUPPLIERS: ELECTRICAL SYSTEMS (1/2)
                 Manufacturer           Employees    Business                                              Location

                 AFL Hungary                 2 900   Electrical systems, production of car parts and       Mór, Hungary
                                                     accessories                                           Headquarter: Pittsburg, USA
                 Continental Temic           1 187   Electrical systems, production of car electronic      Budapest, Hungary
                                                     modules                                               Headquarter: Hannover, Germany
                 Delphi Packard               420    Air-conditioners, computers, door systems, lock and   Balassagyarmat, Hungary
                                                     latching systems, power closure systems               Headquarter: Troy , USA
                 Diamond Electric              n/a   Electrical systems, ignition coils                    Esztergom, Hungary
                                                                                                           Headquarter: Osaka, Japan
                 Leoni                       1 062   Wires, cables and wiring systems.                     Eger, Hungary
                                                                                                           Headquarter: Nürnberg, Germany
                 Mitsuba                      100    Electrical systems, windscreen wipers                 Salgótarján, Hungary
                                                                                                           Headquarter: Kuryu City , Japan
                 Robert Bosch                6 280   Electrical systems, accumulators, windscreen          Hatvan, Miskolc , Hungary
                                                     wipers, sparkplug products etc.                       Headquarter: Stuttgart, Germany




                                                                                    20
Source: Company websites, ITD Hungary
               TIER 1 SUPPLIERS: ELECTRICAL SYSTEMS (2/2)
                 Manufacturer           Employees    Business                                             Location

                 Saia-Burgess                 600    Actuators, switches and sensors                      Òzd, Hungary
                                                                                                          Headquarter: Murten, Switzerland
                 Sews                         780    Wiring harness and cable assembly                    Mór, Hungary
                                                                                                          Headquarter: Japan
                 Valeo                        723    Electrical systems and modules for cars and trucks   Veszprém, Hungary
                                                                                                          Headquarter: Paris, France
                 Zollner                     2 106   Electrical systems, shaft seals, gasket rings        Vác, Hungary
                                                                                                          Headquarter: Zandt, Germany




                                                                                   21
Source: Company websites, ITD Hungary
               ELECTRICAL SYSTEMS SUPPLIERS ARE LOCATED IN NORTHERN
               HUNGARY
                                                                     Eger
                                                                            Miskolc


                                                         Esztergom
                                                   Mór




                                                                     Budapest




                                        Veszprém




Source: Company websites, ITD Hungary                           22
               TIER 1 SUPPLIERS: INTERIOR EQUIPMENT (1/2)

                 Manufacturer           Employees    Business                                            Location

                 Autoliv                      900    Seatbelts, airbags                                  Sopronkövesd, Hungary
                                                                                                         Headquarter: Stockholm, Sweden
                 Clarion                      500    Audio and multimedia stations                       Nagykáta, Hungary
                                                                                                         Headquarter: Tokyo, Japan
                 Delphi Calsonic              420    Door systems and modules, safety and security       Balassagyarmat, Hungary
                                                     systems                                             Headquarter: Troy, USA
                 Eissmann                     370    Centre consoles, instrument panels, armrests and    Nyíregyháza, Hungary
                                                     door assemblies                                     Headquarter: Bad Urach, Germany
                 Eybl                          n/a   Autotextiles, seat covers                           Jánosháza, Hungary
                                                                                                         Headquarter: Krems, Austria
                 Isringhausen                 130    Seat covers                                         Szolnok, Hungary
                                                                                                         Headquarter: Mönchengladbach, Germany
                 Johnson Controls             250    Seating systems, instrument panels and cockpit      Solymár, Hungary
                                                     modules, door and overhead systems                  Headquarter: Plymouth, USA
                 Lear                        4 200   Automotive seat systems, flooring and acoustics,    Gödöllö, Gyöngyös, Hungary
                                                     door panels, instrument panels, cockpit systems,    Headquarter: Sulzbach, Germany
                                                     overheads and electronic and electrical products.




Source: Company websites, ITD Hungary                                             23
               TIER 1 SUPPLIERS: INTERIOR EQUIPMENT (2/2)

                 Manufacturer           Employees    Business                                              Location

                 Philips APM                 1 700   Audio modules                                         Györ, Hungary
                                                                                                           Headquarter: Taiwan, South Korea
                 Vogel-Sitze                   n/a   Seats for buses and trains                            Budaörs, Hungary
                                                                                                           Headquarter: Karlsruhe, Germany
                 W.E.T                       1 450   Seat climate technology, steering wheel technology,   Pilisszentiván, Hungary
                                                     cable technology, temperature controllers             Headquarter: Odelzhausen, Germany
                 Webasto                       12    Air-conditioning systems, seat heating.               Budapest, Hungary
                                                                                                           Headquarter: Stockdorf, Germany




Source: Company websites, ITD Hungary                                             24
               INTERIOR EQUIPMENT MANUFACTURERS ARE CONCENTRATED
               TO NORTH-WESTERN HUNGARY AND THE BUDAPEST AREA
                                                      Eger




                                        Győr


                                                               Nyiregyhaza

                                                    Budapest




Source: Company websites, ITD Hungary          25
               TIER 1 SUPPLIERS: PROPULSION

                 Manufacturer           Employees    Business                                           Location

                 Arvin Meritor                297    Air and emissions technologies                     Jászárokszállás, Hungary
                                                                                                        Headquarter: Troy, USA
                 Benteler                      n/a   Exhaust systems, engine applications               Mór, Hungary
                                                                                                        Headquarter: Paderborn, Germany
                 Borg Warner                  400    Engine and drivetrain technologies                 Oroszlány, Hungary
                                                                                                        Headquarter: Kirchenbolanden, Germany
                 Delco Rémy                   750    Starters and generators                            Miskolc, Mezökövesd
                                                                                                        Headquarter: Anderson, Indiana, USA
                 Denso                       2 631   Fuel management systems, radiators, spark-plugs,   Székesfehérvár, Hungary
                                                     instrument panel clusters, filters, robotics       Headquarter: Aichi, Japan
                 Linamar                     1 650   Vacuum pumps, injection modules, engine            Orosháza, Hungary
                                                     components                                         Headquarter: Ontario, Kanada
                 Visteon                     1 350   Ignition coils, fuel systems                       Székesfehérvár, Hungary
                                                                                                        Headquarter: Michigan, USA




Source: Company websites, ITD Hungary                                               26
               SUPPLIERS OF PROPULSION EQUIPMENT ARE LOCATED IN
               NORTHERN HUNGARY
                                                               Eger
                                                                      Miskolc


                                        Győr


                                                                                 Mezőkövesd


                                                                      Budapest




                                                                  Orosháza

                                         Székesfehérvár




Source: Company websites, ITD Hungary                     27
               TIER 1 SUPPLIERS: BODY (1/2)

                 Manufacturer           Employees    Business                                           Location

                 ADA Cast                     250    Foundry of metal parts                             Apc, Hungary (Headquarters)

                 Alcoa                       2 600   Truck bodies, extrusions, plastic closures, wire   Székesfehérvár, Hungary
                                                     harnesses and wheels for trucks, trailers and      Headquarter: Pittsburgh , USA
                                                     buses.
                 Asahi Glass                  400    Windscreens and other automotive glass products    Tatabánya, Hungary
                                                                                                        Headquarter: Tokyo, Japan
                 Bosal Autoflex                n/a   Towballs                                           Kecskemét, Hungary
                                                                                                        Headquarter: Lummen, Belgium
                 Erbslöh                       75    Foundry of automotive parts                        Györ, Hungary
                                                                                                        Headquarter : Wuppertal, Germany
                 Firth Rixson                  n/a   Forgings                                           Eger, Hungary
                                                                                                        Headquarter: Sheffield, UK
                 Rába Automotive             3 037   Seats and seat systems, chassis                    Györ, Hungary (Headquarters)




Source: Company websites, ITD Hungary                                              28
               TIER 1 SUPPLIERS: BODY (2/2)

                 Manufacturer           Employees    Business                          Location

                 Schefenacker                 559    Lights, mirrors                   Mosonszolnok, Hungary
                                                                                       Headquarter: Schwaikheim, Germany
                 Stanley Electric              n/a   Lights                            Gyöngyös, Hungary
                                                                                       Headquarter: Yamagata, Japan
                 ThyssenKrupp                 365    Metal components                  Kecskemét, Hungary
                                                                                       Headquarter: Essen, Germany
                 U-Shin                       200    Door latches and lock sets        Kisbér, Hungary
                                                                                       Headquarter: Japan




Source: Company websites, ITD Hungary                                             29
               THE SUPPLIERS OF BODY COMPONENTS ARE MAINLY LOCATED
               IN NORTH WESTERN HUNGARY
                                                                         Eger


                                                                  Apc
                                        Győr

                                                               ADACast
                                                                         Firth Rixson

                                                                           Budapest

                                                                                        Kecskemét




                                               Székesfehérvár




                                               Bold=head office


Source: Company websites, ITD Hungary                     30
               TIER 1 SUPPLIERS: RUNNING GEAR (1/2)
                 Manufacturer           Employees    Business                                            Location

                 Continental Teves           1 162   Electronic and hydraulic brake and safety systems   Veszprém, Hungary
                                                                                                         Headquarter: Hanover, Germany
                 Euro-Exedy                    30    Clutches                                            Tatabánya, Hungary (Headquarter)

                 FAG                           87    Bearings                                            Debrecen, Hungary
                                                                                                         Headquarter: Schweinfurt, Germany
                 Haldex                        60    Hydraulic and traction systems                      Szentlörinckáta, Hungary
                                                                                                         Headquarter: Stockholm, Sweden
                 Knorr-Bremse                 663    Valves, disc brakes and brake systems               Kecskemét, Hungary
                                                                                                         Headquater: Berlin, Germany
                 LuK                          730    Clutch systems, pumps, dampers, transmission        Szombathely, Hungary
                                                     components                                          Headquarter: Bühl, Germany
                 Musashi                      260    Ball joints, camshafts, gears                       Ercsi, Hungary
                                                                                                         Headquarter: Ueta, Japan
                 Phoenix                      437    Injection moulding and casting                      Nyíregyháza, Hungary
                                                                                                         Headquarter: Hamburg, Germany




Source: Company websites, ITD Hungary                                                31
               TIER 1 SUPPLIERS: RUNNING GEAR (2/2)
                 Manufacturer           Employees    Business                                 Location

                 Rába Automotive             3 037   Axles                                    Györ, Hungary (Headquarters)

                 Souftec                       n/a   Wheels                                   Tatabánya, Hungary
                                                                                              Headquarter: n/a
                 ZF                           550    Steering gear, steering columns, pumps   Eger, Hungary
                                                                                              Headquarter: Berlin, Germany




Source: Company websites, ITD Hungary                                           32
               SUPPLIERS OF RUNNING GEAR ARE LOCATED IN NORTHERN
               HUNGARY
                                                                                    Eger
                                                                                           Nyiregyhaza


                                                          Győr      Budapest



                                                                 Souftec
                                                             Euro-EXEDY                                              Debrecen
                                        Szombathely
                                                                                                         Kecskemét


                                                      Veszprém




                                                                 Bold=head office


Source: Company websites, ITD Hungary                                       33
                TIER 2 SUPPLIERS MAINLY PRODUCE INTERIOR EQUIPMENT AND
                BODY COMPONENTS
                -Videoton is one of the largest independent suppliers in the region
                                                                             TIER 2 SUPPLIERS




                   Electrical systems                Interior equipment           Propulsion                 Body                  Running gear

                Cables, bus systems,               Cockpit, seats, dash-     Power train, exhaust   Body, roof, glass, doors, Suspension, brakes,
                embedded systems                   board, air conditioning   systems, engines       lighting etc.             axles, steering, tires
                   Pfannenschwarz                    Bakony Rt                Ibiden                 EMT Hungaria             Caroflex
                   Tyco Electronics                  General Plastics                                 Emika                    Hübner
                   Videoton                          Lander Carlisle                                  Hydro Aluminium          Koepfer
                                                      Nief Plastic                                     Kirchoff
                                                      Pemü                                             Le Belier
                                                      Sanshin                                          Nief Plastic
                                                      Semperform                                       Prec-Cast
                                                                                                        S+C Magyarmet
                                                                                                        Semperform


Source: Association of Vehicle Component Manufacturers, ITD Hungary                   34
               TIER 2 SUPPLIERS: ELECTRICAL SYSTEMS



                 Manufacturer           Employees    Business                                             Location

                 Pfannenschwarz               380    Cable assembly, plastic technology                   Szekszárd, Hungary
                                                                                                          Headquarter: Flein, Germany
                 Tyco Electronics            1 100   Cable assemblies, protection products, tuning and    Bicske, Hungary
                                                     moulded products                                     Headquarter: Harrisburg, USA
                 Videoton                    9 000   Production and assembly of electronic components,    Székesfehérvár, Hungary (Headquarters)
                                                     plastic injection moulding, sheet metal processing




Source: Company websites, ITD Hungary                                            35
               TIER 2 SUPPLIERS: INTERIOR EQUIPMENT

                 Manufacturer           Employees   Business                                           Location

                 Bakony Rt                    800   Windscreen wipers, heating components,             Veszprém, Hungary (Headquarter)
                                                    instrument panels, plastic parts, horns
                 General Plastics             305   Die-cast plastic products, assemblies              Székesfehérvár, Hungary
                                                                                                       Headquarter: Vienna, Austria
                 Lander Carlisle              160   Radiator end tanks, fans and shrouds, warning      Mezölak, Hungary
                                                    triangles, insert moulded products, latching       Headquarter: Birmingham, UK
                                                    components etc.
                 Nief Plastic                 140   Production of lamp cases, lamp holders, starter    Kunszentmárton, Hungary
                                                    engine parts, water collectors, air conditioning   Headquarter: Genas, France
                                                    control panels, clutch pedals
                 Pemü                         800   Production of wheels, bumpers, air filters         Solymár, Hungary (Headquarters)

                 Sanshin                      470   Production of audio equipment, power supply        Nagykörös, Hungary
                                                                                                       Headquarter: Yokohama, Japan
                 Semperform                   140   Moulded rubber and plastic goods                   Sopron, Hungary
                                                                                                       Headquarter: Wimpassing, Austria




Source: Company websites, ITD Hungary                                            36
               TIER 2 SUPPLIERS: BODY (1/2)

                 Manufacturer           Employees     Business                                           Location

                 EMT Hungaria                   52    Stamping, deep drawing and assembly                Gödöllö, Hungary
                                                                                                         Headquarter: Bonneville, France
                 Emika                         247    Production of metal parts, assembly of             Kalocsa, Hungary (Headquarters)
                                                      components from steel, aluminum or plastic
                 Hydro Aluminium               650    Body and closure, rear, heat exchanger,            Györ, Hungary
                                                      lightweight components, magnesium and              Headquarter: Oslo, Norway
                                                      aluminum foundry alloys, sheets, tubes and
                                                      extrusions
                 Kirchoff                       60    Steel body components                              Esztergom, Hungary
                                                                                                         Headquarter: Iserlohn, Germany
                 Le Belier                    1 277   Safety related parts in cast aluminum; steering    Ajka, Hungary
                                                      columns, front heads, brackets, electric housing   Headquarter: Verac, France
                                                      etc
                 Nief Plastic                  140    Production of lamp cases, lamp holders, starter    Kunszentmárton, Hungary
                                                      engine parts, water collectors, air conditioning   Headquarter: Genas, France
                                                      control panels, clutch pedals
                 Prec-Cast                     700    Production of zinc alloys and high pressure die    Sátoraljaújhely, Hungary (Headquarters)
                                                      castings of aluminum




Source: Company websites, ITD Hungary                                            37
               TIER 2 SUPPLIERS: BODY (2/2)

                 Manufacturer           Employees    Business                                         Location

                 S+C Magyarmet                 120   Heat treatment machining, surface treatment of   Bicske, Hungary (Headquarters)
                                                     metals

                 Semperform                    140   Moulded rubber and plastic goods                 Sopron, Hungary
                                                                                                      Headquarter: Wimpassing, Austria




Source: Company websites, ITD Hungary                                          38
               TIER 2 SUPPLIERS: PROPULSION AND RUNNING GEAR


                 Manufacturer           Employees   Business                                           Location

                 Ibiden                       n/a   Propulsion: Sealing and insulation materials for   Dunavarsány, Hungary
                                                    catalytic converters, noise absorption and heat    Headquarter: Ogaki, Japan
                                                    insulation for exhaust systems
                 Caroflex                     380   Running gear: Break linings                        Kisvárda, Hungary (Headquarters)


                 Hübner                       195   Running gear: moulded rubber products              Nyíregyháza, Hungary
                                                                                                       Headquarter: Kassel, Germany
                 Koepfer                       53   Running gear: production of gears and gear boxes   Bicske, Hungary
                                                                                                       Headquarter: Furtwangen, Germany




Source: Company websites, ITD Hungary                                            39
                SUPPLIERS ARE INCREASINGLY INVOLVED IN R&D ACTIVITIES


                                                           Trends among Hungarian suppliers to the automotive industry

                                                       Many large and medium size international companies have started production in, or
                                                        outsourced production to, Hungary.
                    Production
                                                           Hankook, Dana, Bridgestone and Magna Steyer are examples of companies
                                                              who are making major investments into the Hungarian market in the near future

                                                       Increased competition and continuous price reductions
                   Competition
                                                            Clusters develop among smaller suppliers. Vertical integration to reduce
                  and economic
                    situation                                 transaction costs
                                                            Margins drop and suppliers are required to be more cost efficient

                                                       Shift from parts production and assembly towards more R&D activities
                                                           After mainly outsourcing production, firms now also establish R&D centers in
                  R&D activities
                                                                Hungary
                                                           Tier 1 and Tier 2 suppliers have taken over R&D activities from OEMs




                                                                                                   40
Source: STC interviews and analysis, ITD Hungary, Association of Vehicle Component Manufacturers
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

             Hungarian Construction Equipment Industry

                  Manufacturers

                  Suppliers


             Recommendations

             References




                           41
                 NO PRODUCTION OF CONSTRUCTION EQUIPMENT IN HUNGARY


                        Production of construction equipment was significant in Hungary during communist times
                           Hungarian state-owned firms cooperated with Volvo, Atlas Copco, Dyna Pac,
                             Liebherr and Elba.

                        After the political system change in 1990 the existing industries closed down and
                         production of construction equipment ceased.

                        Today there are a few sub suppliers of construction equipment in Hungary but no OEMs
                         produce or assemble.




                                                                                           42
Source: National Society of Entrepreneurs for the Mechanization of Construction Industry
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

             Hungarian Construction Equipment Industry

                  Manufacturers

                  Suppliers


             Recommendations

             References




                           43
                 FEW SUPPLIERS FOR CONSTRUCTION EQUIPMENT IN HUNGARY
                 - The companies are mainly producing steel components


                                                                                               SUPPLIERS




                    Electrical systems                   Interior equipment                     Propulsion                Body                  Running gear

                 Cables, bus systems,                 Cockpit, seats, dash-                Power train, exhaust   Body, roof, glass, doors, Suspension, brakes,
                 embedded systems                     board, air conditioning              systems, engines       lighting etc.             axles, steering, tires
                                                      etc.                                                            Aprítógépgyár            Pylon 94
                                                                                                                      Kaposgép                 Rába Automotive
                                                                                                                      Pylon 94
                                                                                                                      Teupen Hungaria
                                                                                                                      TLC




                                                                                                    44
Source: National Society of Entrepreneurs for the Mechanization of Construction Industry
               MAJORITY OF PURCHASE DECISIONS ARE MADE LOCALLY BY THE
               FIRMS


                             Manufacturer          Employees Business                 Purchase decisions
                             Rába Automotive            3037   Running gear           HQ, Győr, Hungary

                             Aprítógépgyár               665   Machinery production   Jászberény, Hungary
                 Suppliers




                             Transport-Logistic-         350   Steel structures,      Germany (city N/A)
                             Centrum (TLC)                     metal parts
                             Pylon 94                    116   Steel structures,      Zalaegerszeg, Hungary
                                                               machine production
                             Teupen Hungária             100   Lifting equipment      Bagod, Hungary
                             Kaposgép                     20   Crane production       Kaposvár, Hungary




                                                                            45
Source: Company websites, STC Interviews
                 THE SUPPLIERS ARE MAINLY LOCATED IN WESTERN HUNGARY
                 - The automotive industry is concentrated in the area
                                                                                              Jászberény

                                                                  Győr

                                                                      Balatonfüred




                              Bagod
                             Zalaegerszeg




                                                                  Kaposvár


                                                                                     Bold = Head office


Source: National Society of Entrepreneurs for the Mechanization
of Construction Industry, company websites                                              46
                PRODUCTION OF CONSTRUCTION EQUIPMENT REMAINS LOW


                                                        Trends within the Hungarian construction equipment industry
                                                        No major changes in the production structure can be expected
                    Production                              Hungarian firms maintain their role as suppliers of technically less complicated
                     structure                                parts and short series


                                                        Increased competition and continuous price reductions
                   Competition
                                                             Margins drop and suppliers are required to be more cost efficient
                    and price
                   reductions



                                                        Suppliers are expected to carry out more R&D activities
                  R&D-activities




Source: STC interviews and analysis, National Society of Entrepreneurs for the
Mechanization of Construction Industry                                               47
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

             Hungarian Construction Equipment Industry

             Recommendations

             References




                           48
                BUSINESS OPPORTUNITIES MAINLY IN THE PASSENGER CAR
                SEGMENT

                              Recommendations for making business with the Hungarian automotive industry
                 Country specific

                            1.        Business life is hierarchical – decisions are made on high levels

                            2.        German is more often spoken than English, especially at smaller firms

                                      Personal relations and trust are important when doing business in Hungary – building
                            3.
                                      these takes time
                 Industry specific

                            1.
                                      As many suppliers are foreign owned, it could be easier to target suppliers where
                                      decision making is local
                                      Customer- and supplier base in the passenger car industry is more developed and
                            2.
                                      involves more firms than the construction and commercial vehicle segments
                                      There are many companies active in the automotive industry – it can be worthwhile to
                            3.
                                      compare prices and quality between the different suppliers


                                                                        49
Source: STC interviews and analysis
CONTENT



             Overview Hungarian Manufacturing Industry

             Hungarian Automotive Industry

             Hungarian Construction Equipment Industry

             Recommendations

             References




                           50
STC HUNGARY CAN SUPPORT YOUR COMPANY FROM THE FIRST
MARKET CHECK TO AN ESTABLISHMENT
Country specific
                   Collection of data through interviews, press, internet, market reports and other relevant sources according to
Market Check
                   customer preferences. Analysis and compilation of gathered data.

                   Long list of potential distributors created through databases, yellow pages, interviews and industry press. List is
  Distributor
                   screened according to customer criteria and companies are contacted in order to create a short list. The most
    search
                   suitable companies are ranked and detailed information about them is presented to the customer
                   Long list of potential distributors created through databases, yellow pages, interviews and industry press. List is
  Customer
                   screened according to customer criteria and companies are contacted in order to create a short list. The most
   Search
                   suitable companies are ranked and detailed information about them is presented to the customer

    Pre            STC can support with financial and legal history of the potential target. Looking at e.g. growth, investments, ROE,
 Acquisition       ROA, profitability, share of equity, financial remarks and legal processes. Valuation of company through e.g.
  analysis         Price/Sales and EBITDA multiples or discounted cash flow models.
                   Long list of potential suppliers created through databases, yellow pages, interviews and industry press. List is
  Supplier
                   screened according to customer criteria and companies are contacted in order to create a short list. The most
   search
                   suitable companies are ranked and detailed information about them is presented to the customer

  Company          STC can aid the company in finding a suitable location, contacts with municipalities and authorities, contacts to
establishment      law firms and firms specializing in subsidies. Help in recruiting employees


    Legal          Contacts to suitable lawyers and legal firms can be supplied by STC



                                                           51
STC HAS HELPED SWEDISH COMPANIES TO DO BUSINESS WITH
THE HUNGARIAN AUTOMOTIVE INDUSTRY




            COMPANY       PROFILE

                          Subcontractor within cutting
                          machining . Delivering to customers
                          such as Volvo, Scania and Autoliv.

                          Engineering services. Design and
                          development of products.
                          Automotive is their biggest business.




                          52
  STC CARRIED OUT A MARKET ANALYSIS OF THE HUNGARIAN AND
  ROMANIAN MARKETS FOR UPPÅKRA MEKANISKA

                            Goal                                                            Outline of project
The main objective of the project was to support Uppåkra
in finding a suitable location for a mechanical workshop in
Hungary or Romania
                                                                                          Step 1: Find a suitable
                                                                                          location for an
                                                                                          investment
                                                                                                                             
                                                                                                                           Completed
                STC role and contribution                              Kick-Off        •Find the required information
• A market analysis was performed, focusing on four main                               •Summarise and present it
  areas:

                                                                                                                             
                                                                                          Step 2: Visiting
  − Legal issues, Cost levels, Business Environment and
                                                                                          programme
      Availability of Subsidies                                                                                            Completed
                                                                      Workshop I
• A visiting programme was conducted in different regions of                           •Meetings with local companies,
  Hungary and Romania                                                                  Swedish companies and looking at
                                                                                       potential rent objects.
                          Results                                      • At the kick- off the team from the Swedish Trade Council was
                                                                         educated and the project outline was discussed
• Uppåkra received information and recommendations upon                • At workshop 1 the Swedish Trade Council presented the
  which they chose the region most suitable for their business           results from step 1 and gave recommendation for how to
• However, stranded negotiations with a major potential client           approach the markets
  led to that no investment was made on the markets.

                                                                 53
 STC EVALUATED ALTERNATIVE LOCATIONS FOR SEMCON R&D
 ACTIVITIES
                              Goal                                                             Outline of project
The main objective was to support Semcon, a major Swedish
                                                                        Market prioritisation
IT company from Göteborg to evaluate different countries in
order to find the most suitable location for R&D activities. The                                               Summarise,
                                                                         Collect the required data
main reason was cost saving.                                                                                   analyze and
                                                                         specified for the selected
                                                                                                               present the
                                                                         countries
                  STC role and contribution                                                                    information

• Evaluation of seven different countries based on availability
                                                                        Partner search
  of competence, cost levels and closeness to potential
                                                                                                               Screen the most
  customers.
                                                                                                               suitable
• STC helped Semcon to find the most suitable                            Identify a long list of
                                                                                                               partners
                                                                         potential partners
  suppliers/partners in three short-listed countries, possibly                                                 and present
  for the purpose of acquisition.                                                                              them
• After reviewing the information from STC, Semcon chose
                                                                        Start-up / Recruitment
  to set up a branch office in Hungary. The STC helped out
  with recruitment, finding a suitable location for their office
  and contacts for legal advice and other practicalities.                Find the most suitable contacts, locations and
                                                                         employees for the client
                            Results

• Semcon could with the help of STC find the best location
  for R&D activities, and set up a subsidiary in this location.
                                                                   54