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The Economic and Regional Effects, and Concequences of the

Developement of the Automotive Industry in the Central East Europe György Kukely

Eötvös Loránd University

Tamás Czira

Hungarian Public Nonprofit Company for Regional Development and Town Planning, VÁTI Kht. In Central East Europe, after the transition the automotive industry has been dynamically developed, and nowadays almost in every country of the region it became one of the most important branch of industry. The foreign direct investments have been absorbed considerably by this sector and in every country the biggest investor was a car industry company: the Fiat in Poland (Daewoo is the second, Volkswagen is the forth), the VW in Czech Republic and Slovakia as well, the Audi in Hungary, the Renault in Slovania and Romania. During the years before the transition the production of the vehicles in Central East Europe (together with GDR and Yugoslavia) was more than 1 million, but most of the factories were undeveloped, with old technology and they struggled with over employment. There were 9 independent manufacturers: in GDR the Wartburg (Eisenach) and the Trabant (Zwickau), in Poland the Fabryka Samachodów Małolitrazowych (FSM, Bielsko Biela) and the Fabryka Samochodów Osobowych (FSO, Varsó, Lublin), in Czechoslovakia the Skoda (Mlada Boleslav), in Yugoslavia the Slovenian Industrije Motronih Vozil (IMV, Novo Mesto) and the Serbian Zastava Yugo Automobili (Kragujevac), in Romania the Dacia (Pitesti) and the Oltcit (Craiova). Nowadays all these factories (except Yugo) are owned by the biggest multinational companies (Volkswagen, Renault, GM-Opel, Fiat, Daewoo), but a lot of new and green-field investments have also occurred in this sector. However among the old marks only Skoda, Dacia and Yugo left, in the rest of the factories the global marks are fabricated (Skoda was the only one that could enter among these (the mark’s name of Dacia is being revitalizing at the moment). These factories lost their independence and they have been connected to the global network of parent enterprises and their connection is stronger with them like with their own country’s companies. In a few years, in the future too, thanks to the huge investments, Central East European region (Poland, Czech Republic, Slovakia, Hungary, completed with Slovenia and Romania) could become a real Detroit.

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Figure 1: Evolving volume of Central East European car and engine production until 2007

As beside the vehicle industry (car industry and component manufacturers) also in the auxiliary and serve industry branch were made significant new investments in each countries (especially in the sphere of tyre industry, plastic industry and glass industry), which starts to be similar with the USA’s vehicle industry, and in comparison with its measure – capacity, too (1. figure). Since 2000 the region became net exporter (Worral et al. 2003) at present the car production is 1.4 million, but until 2010 this may rise almost three times (2. figure).

Figure 2. Growth of the car production and the inland sales of the East and Central European countries in

recent past and future

vends

production

0

500

1000

1500

2000

2500

3000

3500

4000

1990 1995 2001 2006 2012

'000 units

Source: www.czechinvest.cz

Czech Republic, Slovakia and Hungary gives 60% of the region’s production, while Poland – where since 2000 the production declined significantly because of the financial problems of Daewoo and Fiat – gives 25%. But

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these proportions will thoroughly change within a few years, thanks to the huge development of Toyota, PSA, Renault, Kia and Suzuki in the near future.

The changes and increases of the automotive industry after the transition

Immediately after the transition 90% of the vehicle producing capacities of the Central East European countries has bees privatised to multinational companies (in 1991 VW, GM-Opel and Renault, in 1992 Fiat privatised factories, and in 1991 the Suzuki has planted a greenfield investment). In the privatisation process the historical relations took a big part, the Fiat has producing capacities in Poland since 1966, Renault with IMV and Dacia (the privatisation of Dacia started only later) are linked since 1972, but the GM has relations with Hungary for 30 years, either. The West German investors bought the East German companies. In this period, the national governments played a big role. Renault, VW and Fiat, as companies partially owned by state, were in a better chance in the negotiating process than their rivals, and in the privatisation of the Eastern German companies just Western company could take part. Governments gave big advantages to investors, e.g. in Hungary they had 10 years profit tax exemption, government support for the infrastructure, re- training and so on (Somai M. 2002). The vehicle producing companies had two aims: take the whole market as much as possible and to take advantage of the cheap producing possibilities hence they could re-export their products to Western Europe. So they produce especially low cost cars in this region (in Hungary Suzuki Swift, in Poland Fiat Cinquecento and Daewoo, in Slovenia Renault Clio, in Romania Daewoo, then starting from 2004 Renault/Dacia Logan), for what they had reliable market. These brands became major in the region, real “volkswagens”. But because of cheap producing costs most of the companies has relocated their producing capacities from Western Europe to this region, and they exported all of their products (e.g. Audi and Opel in Hungary, VW and Opel in Poland, and VW Bratislava has built giant capacities in vehicle, engine, gear-box producing for the export). In the region they produce 500 thousand cars more than they sell locally, this amount is 37% of their producing capacity – which will increase. Beside the car producers there are a lot of accessory producing and supplier companies did great investments in the region. Nowadays all of the biggest producers have filials in the region (Delphi, Bosch, Visteon, Denso, Lear, Johnsons Control, Dana, TRW, Magna, Valeo, ZF, Faurecia, Autoliv, Magnetti, Marelli, Eaton, etc). They are particularly producing for export, but also for the local market. The old, privatised companies (VW-Skoda, FSM-Fiat and FSO-Daewoo) have also kept most of their former supplier companies, while the new one, greenfields investments has been integrated less in the local economy, their import production, with some exception, was extremely huge. Outside Europe, in general the Asian companies (e.g. Suzuki) had to reach at least 60% of the European accessory proportion so that to receive a duty reduction for export towards EU countries – so they had to try to develop the local supplier network. Moreover it is characteristic that the local added value is lower than in Western Europe, as the most characteristic activity is the import accessory assembling, and the export of the final product (cars, motors, etc.). The protagonists of the automotive industry

The role of the automotive industry companies is pregnant in the Central East European countries, these companies are the biggest investors, the biggest exporters and the automotive industry is one of the most important industrial branch in every country. The Skoda, the Renault and the VW is the biggest Czech, Slovenian and Slovakian company, while the Audi is the second most important Hungarian company. In every country the sector is considered the motor of a dynamic economic rising, a sector that in the future gives more impulses thanks to the rise of the relocated Western European vehicle industry.

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Figure 3. The development of automotive industry of the Central East European countries

0

100

200

300

400

500

600

1997 1998 1999 2000 2001 2002

'000 units

Source: OICA Czech Republic is the biggest car manufacturer in this region. In 1991 the VW bought the Mladá Boleslav’s Skoda factory, then in 1995 in Vrchlabí and in 2002 in Kvasiny too by building new factories. They developed a mammoth-company with 22 thousand employees, where they produced 440 thousand cars. In the same time they kept and developed the Skoda mark, the only one among the old “Eastern” marks, which had a great success also on the market of the Western European countries. VW has already invested more than 3.5 billion Euros in the production of Czech Republic. The branch gives 10% of the whole industry production, 22% of the export and has 91 thousand employees. In 2005 the new leader of the industry, the PSA-Toyota consortium started its production, they invested 1.5 billion Euros in Kolín where they will produce 300 thousand cars with 3000 employees in a shared company. Thanks to it, the production of this branch will be almost doubled. By this investment many suppliers company will also be located in the country, moreover Toyota would like to plant research and development activity here. Though the production volume has decreased lately, there are still some considerable ancient vehicle producing companies that remained leaders of this branch. Here can be mentioned the Kopřivnice’s Tatra (1400 trucks) with its 4000 employees privatized by the American Terex, just like the Prague’s Avia with its 800 employees bought by Daewoo (800 trucks) and from the year 1991 Vysoké Myto’s Karosa with its 1600 employees, belonging already to IrisBus (1500 buses). Starting from 2007 Slovakia will become the biggest car producer in this region, where also nowadays this branch gives 25% of the industry production and 30% of the export. Nowadays VW is the only car producer company, which produces in the factories of Bratislava and Martin 280 thousand cars only for export. The factory of Bratislava that has 9000 employees is the second biggest factory in the region after Skoda factory. In Zilina the Korean Hyundai-Kia (200 thousand car capacity, 2300 employees) and in Trnava the French PSA (300 thousand cars per year, 3500 employees) has already started the development of the new plant with an investment of 700-700 million Euros, which beginning from 2006 they start producing. In a few years Slovakia will be the first in the world concerning the car production per person, and the vehicle industry will give 40-45% of the export. After these investments many suppliers will plant in the country (Hyundai investment will give a place of work to 4000 people) and the Ford has also declared that will make a new investment in Kosice. Before the transition there was no car producing in Hungary, but it was an important bus (13 thousand pieces/year) and accessory producer. Right after the transition by several multinational companies (Ford, Opel, Suzuki, and in 1994 Audi) this branch has developed very quickly, and following these companies several

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suppliers have also located here. In comparison with this, the bus production has been radically reduced, the production decreased to some hundred pieces per year. Although there is also car production in Hungary, the engine producing capacity is the really important one (it gives almost the half of the production of the Central East European region, 1st table), in 2003 they already produced 1.7 million in Hungary (Audi, Opel, Rába), and in every 25th sold car in the world it’s with a Hungarian engine. The 99% of the engine production is exported. Table 1. Evolving capacity of engine production in he Central East European countries until 2006

(thousand pieces)

Diesel Fuel VW Czech

Republic 400

Hungary 500 1000 Poland 550 GM Hungary 450 Poland 250 Fiat Poland 350 Toyota Poland 200 300 total 2050 2150

Source: by right of www.dree.org

Figure 4. Spatial allocation of the Hungarian automotive companies

The Hungarian automotive industry produces 10% of the industrial added value production. The biggest protagonist of this branch is Audi that can be find in Győr since 1994, which gives 10% of the Hungarian export thanks to the 1.3 million engine production and 34 thousand car production per year, and they have already located in Hungary an important research and development activity. The Hungarian Audi, which has 5000 employees, until now has invested more than 2.3 billion Euros in Hungary.

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The Hungarian Suzuki in Esztergom, which has 3500 employees, is the biggest car producer of this branch (89 thousand pieces), and will double its capacity until 2006 (200 thousand pieces). The national suppliers proportion is 50% at Suzuki, and almost the half of its trade is made on the Hungarian markets. Between 1992-1999 GM-Opel produced cars in Hungary, then it concentrated this activity in Poland and re-specialized the Szentgotthárd factory in engine (500 thousand pieces) and gearbox production. In Székesfehérvár the Ford factory (now Visteon – 1300 employees) produces accessories since 1990. Among the big former companies, Rába is still one of the biggest independent axle producer in the world and has more that 4000 employees. Hungary is a good example for the concentrated geographical settlement of the automotive industry, where most of the investments have been made in the Central or Northwestern regions, in the areas that are close to the Western Europe and accessible (4. figure), but there is similar concentration also in the rest of the countries. In Poland during the 1980’s the production capacity of the FSO and the FSM was of 400 thousand pieces. Since 1966 a significant number of cars were produced after the Fiat license. In 1992 the FSM was privatized by the Fiat, and now they produce 280 thousand cars per year in Bielsko Biela and in Tychy. In 1995 Daewoo bought the FSO (10 thousand employees), producer of the ancien marks like Warsawa, Polonez, and Polski Fiat 125, which had 10 thousand employees in Warsaw and Lublin. Later several producers have made new capacities in Poland, which is otherwise the biggest Central East European market, thanks to the low cost of the production and to a restrictive commercial policy (quotas, high protective customs, etc.). VW (with 3500 employees) produces cars in Poznan (150 thousand per year) since 1993, and 500 thousand pieces of engine per year in the factory of Polkowice since 1999. In 1995 GM-Opel has built the factory in Gliwice where it has concentrated the production of Central East Europe. Here they have already assembled more than 120 thousand pieces of Opel cars, especially for export with 2000 employees. GM Isuzu has an engine factory also in Tychy (250 thousand pieces/year). The Poland car producers sell three quarters of their production on foreign markets (Opel 93%, Fiat 76%, Daewoo-FSO 38%, Volkswagen Poznan 38%). In Poland there are also several bus and trucks factories (MAN, Volvo, Scania, Solaris, Autosan), especially in the regions of Poznan and Wroclaw. But the development of the Polish automotive industry has come to a sudden stop in 2000 because of the financial problems of Daewoo, Ford and Fiat and all three companies have reduced significantly their production. Daewoo has sold the factory of Lublin to Andoria Mot, Ford has closed the 20 thousand capacity factory of Plonsk and left the country, and Fiat has also reduced its production. In the same time Toyota, with its 500 million Euros investment, in 2005 built two new engine- and gearbox producer factories in Lower Silesia too (Walbrzych, Jelcz-Laskowice) in this way serving the new Czech Republic factory. In Romania the Dacia is in connection with the Renault since 1968, and in 1999 the Renault bought the factory of Pitesti where there are 15 thousand employees and produces 72 thousand cars, but they would like to increase the production to 200 thousand until 2010, especially because of the increasing interest for the “5000 Euros” Logan model, which they started to produce since 2004. In Craiova the Olcit factory is in connection with the Citroen since 1976, but after all the Daewoo bought it. Because of his financial problems in the 100 thousand capacity factory only 22 thousand cars are produced and the future of the factory is quite unsure. The American Cross Lander bought the ARO truck factory of Campulung Muscel and at the moment they have 2200 employees, but their yearly production is not relevant (560 pieces). The Renault-Revoz, the only Slovenian car producer, is in Novo Mesto. In 1991 Renault privatized the IMV, so that it became the most efficient European car producer factory. The 95% of the 120 thousand yearly productions is exported in Western Europe. The company has started its expanding also in Bosnia. The biggest ex-Yugoslavian car factory, the Zastava firm of Kragujevac has not been privatized and consolidated yet. This factory produces mostly for national and the American markets, and still has 9000 employees, but produces only 11 thousand cars.

Why do the car producers and the suppliers choose the Central East European region? In the Central East European region more car factories appeared at the beginning of the 1990’s, and then several new car and accessory factories have been established. The development of this branch was also helped by the favorable geographical location, the economical state of development of this region, the market liberalization,

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the privatization, the developed technological culture, the multitude of well-qualified and innovative working capacity, the low rate of wages, the weak trade unions, the former relations of cooperation, the diversity of different advantages, etc. The European automotive industry is going through an essential change. The great (possible or real) winners of this change are the post-socialist Central East European countries. Because of the cost efficiency strategies applied by the car producer companies they don’t increase their work capacities any more in the Western European factories, but their new European developments are built typically in the Central East European region. At the same time, because of the low increase of the Western European car market possibilities, at the level of sales it is becoming more and more important to gain solvent demand of this region. It is more characteristic that the significant parts of production are relocated and only the strategically important functions remain in the mother-country. As a consequence of the delocalization the Western European work places are ceased in great number, and most of these are relocated in the Central East European region. In the Central East European countries these new investments are greatly (sometimes more than necessary, for example the Hyundai investment in Slovakia) supported by the governements. In the region several producers are planning investments, exploiting those advantages that lately made this region the target area of foreign direct investments:

� The countries belonging already to the European Union, are close geographically to the European markets as well and they are not separated any more by the customs frontiers of the European central zone.

� The production costs are much lower than the Western European average costs (e.g. the rate of wages of the car industry in Germany is 10 times higher than those of Slovakia or Romania) (Figure 5)

Figure 5. Difference of wage costs in the automotive industry in 2001

0 10 20 30 40

Slovakia

Poland

Slovenia

Spain

Germany

euro/w orked hours

Source: L’impact de l’élargissement…

� The economical development of this region is much beyond to the average development of the old EU

member states. � The expansion growth of the local market has its great perspectives as well. The number of cars per one

thousand inhabitants is only 250 and in the ancien EU member states is its double, while the average age of the cars is twice higher in the Central East European countries (6. figure).

� It is also very attractive to have the local well-trained working capacity, the given industrial traditions and the European working culture.

Figure 6. The number of vehicles per 1000 inhabitants in 2002

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0 100 200 300 400 500

Slovakia

Hungary

Poland

Czech Rep.

Slovenia

EU average

Ssource: www.ikb.de In the Central East European countries the vehicle industry became the most important industrial branch and by 2002 the one fifth of the coming foreign direct investments arrived in this sector (in the Czech Republic 6, in Poland 5.5, in Hungary 3, in Slovakia almost 2 which can be doubled in the near future by the two new huge investments), in Romania one billion Euros. The big producers have invested almost 20 billion Euros in this branch. The VW group has invested the biggest amount of capital in its factories of the region (5 billion Euros) but the Fiat and the Renault have invested 2-2 billion Euros and beside this the PSA and the Toyota have invested more than one billion, too.

A new European Detroit - a regional cluster

At global level the Central East European region is becoming a more and more important factor in the automotive industry. The expanding capacities are already very important and there are still many new investments that are settled really concentrated. In the regions of south Poland (Lower and Higher Silesia: Walbrzych, Wroclaw, Gliwice, Bielsko-Biela, Tychy), western Slovakia (Bratislava, Trnava, Zilina), north-western Hungary (Győr, Szentgotthárd, Esztergom), and around the central Czech Republic (Mlada Boleslav, Kolín) as a core territory is becoming a very important industrial area to be set up. This region is becoming wider and wider as there is a dynamic increase of the production volume in Romania, Slovenia and East Germany and there are more and more producers in the Eastern part of these countries. Beside the great car factories there are several accessory producers as well, which have acquired the old factories by privatization, or by greenfield investments. Some of them have followed the car factories as their suppliers, while others tried to exploit the regional advantages. Inside this region around these multinational producers a regional cluster starts to be shaped to which local enterprises are joined, although their number is still low, and their importance is significant only in countries with considerable tradition in this branch like Czech Republic and Poland. Some of these factories – through their mother enterprise – are integrated in the international production network, though their relationship is getting closer inside the Central East European region as well. Across the boarder relationships are more and more important showing that this region is becoming an integrated branch of this area. The Slovakian VW for example builds in engines produced in Hungary and Poland, and there are several suppliers planted in South Poland for the new Czech PSA-Toyota investment. In the co-developed car of GM-Opel and Suzuki, the Hungarian Suzuki delivers the engines for the factory of Gliwice. The Suzuki builds in more than 60% accessories mainly coming from Central East Europe. In this region has appeared each great accessory producer company, and they are continuously rising their capacity and build new factories. (7. figure) There are several enterprises in the Western European countries that are planning to move their activity in the Central East European and Eastern European. The delocalization affects mainly the factories of Belgium, France and Germany and the main targets are still the four Visegrad’s countries and Romania. For example the Clarion accessory producer company is closing its factory in France in 2006. It will move this activity to its factory of Nagykáta in Hungary and the European production will be concentrate here. And there are a lot of similar examples. This delocalization generate more and more serious economical problems in the Western European countries and the unemployment is continuously increasing, there are several protests but the enterprises still move their activity in the Central East European region.

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In the automotive industry the outsourcing become more frequent, the suppliers have been involved at a higher rate by the car firms in their developments. In becoming suppliers the enterprises have been helped by new types of organizations (e.g. clusters). The cluster is considered to be a network oriented regional development and enterprise development means, which can increase the competitiveness of small and medium size enterprises by exploiting the possibilities of cooperation given by the geographical closeness. The members of the cluster can exchange informations, know-how, goods, services and they participate commonly in the regional infrastructure and in the working capacity market. Their object is to accelerate the formation of the new deliverers’ relationships. They support the starting of new investments to help competitiveness, the abilities of the suppliers and the increase of quality (Grosz A. 2000, Nikodémus A.-Gecse G., 2002, Somai M., 2002). The Central East European clusters are mainly formed by multinational enterprises that mainly cooperate inside their own network and they don’t try to take an advantage of geographical closeness (Szalavetz A, 2001). These clusters can become a real regional network only by the strengthening of the native small and medium size enterprises. But the cluster structural characteristics can help the formation and increase of co-operational relationships. The development has already visible signs: within the branch – even if not in big measure, but the rate of the local added value is rising and rising. Concerning the last years’ investments that are still in progress (the PSA-Toyota of Kolín, the PSA and the Hyunday-Kia of Slovakia) the rate of the export is becoming smaller and smaller than at the earlier planted enterprises as the suppliers arrive together with the parent company at the same time, and thanks to the national development and support programs, also among the national enterprises there are more and more those who are able to join like a supplier. Beside the new investments the capacity increasing of the actual enterprises becomes characteristic. The extensive development of the previous years is getting more and more intensified and it is more characteristic that they plant a bigger added value activity in the region, among which also the research-development (e.g. the Audi, Knorr Bremse, ZF Hungária in Hungary, the Toyota in Czech Republic).

Figure 7. Spatial structure of the Central East European automotive industry – the localization of car

factories and the biggest global suppliers

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The role of the automotive industry in the regional and local development – the Hungarian example

Before the transition the Budapest’s agglomeration, Székesfehérvár and Győr had a big role in the Hungarian vehicle production. But after 1990 most of the former big enterprises faced a crisis. The Csepel Autó truck factory has been closed, the Ikarus bus factory has difficulties continuously and Rába also had to sell some part of their activities. On the other hand a lot of new foreign enterprises appeared in this branch. Some of these have privatized the former accessory factories (ZF, Knorr Bremse) or have built completely new greenfield factories (Clarion, Bosch). Thanks to the appearance of these new investments the spatial structure of the branch has also changed, as most of the vehicle industry factories have planted in the areas that are close to the highways, first of all near the Vienna-Budapest highway, in Székesfehérvár and in its neighbourhood. The development of the automotive industry has been played a big role in the development of the national industry and economy. Two Hungarian Western counties (Győr-Moson-Sopron and Vas) produce more than three quarter of the added value of the automotive industry. Before the transition, in a lot of settlements with considerable tradition in the automotive industry (e.g. Győr, Székesfehérvár, Veszprém, Mór, etc.), new enterprises have moved beside the former old enterprises (Rába, Ikarus, Bakony Művek). This way they exploited the existing culture and infrastructure, and until nowadays these towns are the most important concerning the car accessory production. This branch has also appeared in those towns where there was no tradition in this activity; in this way it helped the structure changing of the former mining and heavy industry regions (e.g. Oroszlány, Tatabánya). There are less and less new investments in the North Transdanubian region; there is blank of working capacity in several areas – although they are still keeping the prepared place for the new future car factory in Tatabánya. At the same time, in the last years, the Northern Hungary acquisition of the great car accessory producing enterprises has became more and more important. The region characteristically with the mining and heavy

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industry has faced a crisis after the transition, and the structural change was very slow. When the Northwestern region of Hungary has become “full”, the new automotive industry investments have appeared in a bigger and bigger number towards the Eastern part of the country, in the neighbourhood of the built highway, further and further from the capital – mainly after the turn of the millennium. As earlier the ZF factory of Eger was the only significant actor of the branch, nowadays the three biggest global suppliers (Delphi, Bosch, Lear) have located enterprises in the region and also other small producers have appeared. Nowadays one or more autoéotive industry enterprise has appeared in almost every middle and big towns of Northern Hungary. The Bosch acquisition may be the best example. This has appeared in this region in 1998, and beside the development of the factory of Hatvan (1000 employees), in 2004 has built new factories in Eger and Miskolc, and between 2004 and 2006 thanks to the 150 thousand euros investment has provided 2000 new jobs and this way in this region it will be one of the biggest employer. There is a labour shortage also in the environs of Hatvan and most of the employees are brought by buses from the neighbourhood counties. The development of the automotive industry was the basis of the North-Transdanubian economical development, and this is the way that the North Hungary would also like to go through with the help of the multiplied investments. The vehicle production has a great role in some of the economical regions. Between 1994 and 2002 this branch gave more than one quarter of the GDP’s development of the Győr-Moson-Sopron County, 12% of the Vas County, and 7% of the Komárom-Esztergom County (while 2.6% of the national GDP development came from this branch). Győr-Moson-Sopron County gives more than half to the value added of this branch, Vas gives 14%, Komárom-Esztergom gives 8%, Feher gives 6%, Pest gives 4% and Budapest gives less than 4%. The branch has a smaller role in the employment than in production, only 0.9% of the employees work in the automotive sector, but the rate of the branch in Győr-Moson-Sopron County (11 thousand employees) is 6%, in Komárom-Esztergom County (3500 emplloyees) is 3%. The Audi said itself that they provide more than 12 thousand jobs in the region of Győr (www.audi.hu). The Central Hungary Region has a higher role in the employment. 8% of the employees of this branch work in Budapest, 9% in Pest County, but their productivity is left behind from the new investments of the multinational companies. A lot of automotive industry enterprises have been planted not only the middle and big town (Győr, Székesfehérvár, Szombathely, Esztergom, Mór, Gödöllő, ect.) but also in the areas around Budapest and in the North-Transdanubian regions, in the smaller towns and villages (Jászárokszállás, Mosonszolnok, Pilisszentiván, Nagyoroszi, etc.). At a local level both in the services and in the regional structural change the investments play a bigger role, as most of the vehicle enterprises are middle and big companies, and as they show up in small settlements they become the dominant economical feature. The settlement of a company provides the development of a lot of other branches as well, as the deliverers may locate, the services demands increase, etc.

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Figures 8 and 9. Regional proportions of employee (Figure 8.) and gross domestic product (Figure 9.) in

the automotive industry in Hungary in 2002

West-

Transdanubia

39%

Central-

Hungary

17%

South Great Plain

7%North-

Hungary

7%

Central-Transdanubia

24%

North Great Plain

3%

South-

Transdanubia

3%

West-

Transdanubia

66%

South Great

Plain3%North-

Hungary 4%

Central-

Hungary 8%

South-

Transdanubia 1% North Great

Plain 1%

Central-

Transdanubia

17%

Source: KSH

The companies affect not only for their own region but also the territories across the borders. Thanks to the boarder closeness a lot of companies employ foreigners, for example the Suzuki of Hungary has more than 40% foreigner employees, which come mostly from Slovakia. In some zones the labour shortage appeared, so employees are brought from further places. As in the shown Hungarian example, also in the rest of the countries these processes have been or are the same. For example along the Slovakian axe of Bratislava-Trnava-Zilina, where the new car factories and suppliers have planted, this region it promised to have a similar progress. In the regions of Central Czech Republic, Lower and Higher Silesia beside the former enterprises, thanks to the concentration of the new investments there has been a dynamic development and a structural economical change, as the automotive industry became dominant.

Summary

The vehicle production has definitively had its significant part in the structural change of economy and in the dynamical development of industry both in Hungary and in the Central East European region. By a more relevant delocalization in Western Europe, this tendency probably will continue in the future as well, and there will not only be the simple assemble, but also an other, higher assured added value activity may appear at a greater number in the region that earned its certification in the last fifteen years, firstly by new investments, and secondly by the continuous developing activity of those investors already present in the region. Due to this the clusters in this region are becoming larger and larger, giving a possibility to small and medium enterprises to join the branch. But for a successful linking there is a need for a further supporting of small and medium enterprises in the state development politics, because a long term development of the national industry can be reached only by their support and of course these are the ones that are strongly related to local areas.At the same time there has to be a strong capacity to attract the multinational enterprises, especially to those regions that have greatly missed them till now. There has to be admitted that they have an extraordinarily important role both in employment and regional development.

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References

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