HUNGARY: Hungarian government shows commitment to Suzuki
As Europe's economy stutters and automakers eye restructuring moves, Suzuki has secured a 'strategic partnership' with Hungary's government to secure its low-cost manufacturing operations there.
The Hungarian government and Magyar Suzuki Corporation (MSC) have signed a 'strategic partnership agreement for cooperation to strengthen the existing economic bonds and promote sustainable and steady operation'. Suzuki says the new agreement 'establishes the framework for further expansion of MSC’s manufacturing and developing activities in Hungary, and also enables MSC to maintain its competitiveness on the European market.'
“In the present situation in the European car market, even in very tough economic circumstances, we have been able to maintain our production and even launch new models from time to time, being in a special position as Suzuki’s sole manufacturing company on the continent providing vehicles to all of the European markets,” Hisashi Takeuchi, Managing Director of Magyar Suzuki Corporation said.
This agreement may be short on detail, but for Suzuki, the long-term commitment from Hungary's government is very welcome. It is a small player in Europe and makes low-margin small cars. Another small player, Daihatsu, exited Europe because of high costs on Japanese imports to the EU (the common external tariff and high yen wiped out its margins on small cars). The low-cost manufacturing operations in Hungary keep Suzuki viable in Europe (potentially also important if, post-VW fallout, it finds another strategic partner). A friendly host government can only help. And Hungary's government, for its part, is obviously very keen to keep Suzuki in Hungary.
SUZUKI ENTERS LONG TERM STRATEGIC PARTNERSHIP WITH HUNGARIAN GOVERNMENT
Continuing over twenty years of cooperation between the Hungarian Government and Magyar Suzuki Corporation (MSC), the parties signed a strategic partnership agreement for cooperation to strengthen the existing economic bonds and promote sustainable and steady operation. The new agreement establishes the framework for further expansion of MSC’s manufacturing and developing activities in Hungary, and also enables MSC to maintain its competitiveness on the European market.
By signing the partnership agreement, the Hungarian Government has expressed its intention to support, in several ways, a stable and predictable operation for Suzuki in Hungary, while Magyar Suzuki Corporation confirmed to the Government MSC’s plans for a long-term presence in the country and for manufacturing Suzuki models for the Hungarian and European markets.
“In the present situation in the European car market, even in very tough economic circumstances, we have been able to maintain our production and even launch new models from time to time, being in a special position as Suzuki’s sole manufacturing company on the continent providing vehicles to all of the European markets,” Hisashi Takeuchi, Managing Director of Magyar Suzuki Corporation said. “In order to further enhance our competitiveness, we need stability and a supportive economic background in the long run. Taxation, an incentive package for investment, well-trained labour force, improvements in infrastructure, as well as a healthy network of accomplished Hungarian suppliers are all parts of such a business environment, as are labour market regulations,” he added.
Magyar Suzuki provides jobs in Hungary through direct employment as well as through its extended network of Hungarian suppliers and dealers, which makes the company a major stakeholder in the automotive sector and a supporting pillar for the economy of Hungary. Under the umbrella of the present agreement, MSC hopes to increase its current share of nearly two per cent in Hungarian export and develop its uniquely wide suppliers’ base in the country, thus supporting the growth of small and medium size businesses in the automotive sector. Magyar Suzuki, as Suzuki’s only European car production base, delivers automobiles to the whole continent (as well as to several regions outside Europe). The new strategic cooperation can improve Suzuki’s competitiveness in Europe, too. For the UK market, Magyar Suzuki produces Splash, Swift, Swift Sport and SX4 models.
Magyar Suzuki hopes that the agreement will create a firm ground for further development and investments. The company has confirmed its plans to continue investments, which have exceeded 1.3 billion EUR since the establishment of Magyar Suzuki.
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Magyar Suzuki Corporation
The company was established by its major shareholder Suzuki Motor Corporation together with other business partners in 1991. The kick-off model, the first generation Swift in Hungary rolled off the production line in 1992, followed by Wagon R+ in 2000, Ignis in 2003, the 2nd generation Swift in 2005, SX4 in 2006, Splash in 2008, the new Swift in June 2010 and the latest model, Swift Sport launched in fall 2011. All models currently manufactured in Esztergom are built with engines complying with Euro 5 environmental standards. Throughout the past two decades, MSC has been steadily growing to play a major role not only in Hungary’s automotive market but in Europe as well, as the Hungarian factory is Suzuki Motor Corporation’s sole manufacturing subsidiary on the Continent serving European markets with automobiles. Currently operation takes place in five shop units (stamping, welding, painting, assembly and bumper). A series of investments followed one another in the last 20 years including the peak period of the factory between 2003 and 2008 under the era of Suzuki’s European Renaissance Program, which had the major objectives of heavily expanding the European network of distributors as well as preparing the manufacturing company for the production of 300,000 units. The latter objective was approached with more than 280,000 vehicles produced in 2008. Through its export activities MSC provides cars to European countries but also to Japan, Russia, Ukraine, as well as to the Middle East and some Northern African territories including Israel and Morocco.
In addition to the 3,100 jobs at the Suzuki factory, the company provides employment for thousands of people in Hungary through its circle of suppliers and dealers. Besides production for the European and domestic markets, MSC carries out other commercial activities such as selling imported cars, motorcycles and outboard motors. The imported models of the cutting edge technology bikes from the parent company, SMC Japan, are supported by one of the greatest dealership networks in Hungary taking care of customer needs, entrusted to live up to the expectations of customers with our wide range of offers. Magyar Suzuki Corporation plays a significant role within the region in the motorcycle business providing motorcycles to eight countries (Slovakia, Slovenia, Croatia, Serbia, Romania, Bosnia, Kosovo and Montenegro).
Original source: Suzuki UK