Continental Hungary says all Visegrad 4 countries are facing similar challenges as suppliers and OEMs address higher wages and volume pressure.
The Visegrad 4: Hungary, Slovakia, Czech Republic and Poland, have all enjoyed something of a boom during the past few years as a skilled workforce and competitive labour rates draw in overseas manufacturers, but this in turn has seen considerable wage pressure coupled with a market decline.
Go deeper with GlobalData
“We all face the same challenges,” said Continental Hungary GM and plant manager, Robert Keszte at the recent Central & Eastern European Automotive Forum organised by Adam Smith Conferences in Budapest. “Increasing labour costs; in all four countries we have wage increases of 60%, 80%, 100%.
“[Also] Due to free movement of workforce – especially within Europe – we see our region is a source of labour for high cost countries. There is another issue. After the peak year of 2017, the automotive market is visibly declining, we know sales are dropping. The outlook is not very positive.
“We need to see how our companies can compensate for declining volumes and find work for the workforce. We see we have a very complex situation, because not only the cost of labour, but the cost of materials is increasing, while our customers are in a very strong negotiating situation.
“They have leverage to push us for price reduction while volumes are not increasing as in the last decade. We are also in a strong position to our Tier 3 and Tier 4 suppliers. We expect our suppliers to contribute to our economics. What is [also] possible is working on manufacturing efficiency. Our cycle times are improving and our scrappage is reducing.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe Continental Hungary GM added the main driver for manufacturing efficiency continued to be a lean approach “every day and every hour” in a bid to be more competitive.
“What does lean industrialisation mean?” added Keszte. “It means we have to eliminate waste.”
