BMW’s Hungarian plant is symbolic

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BMW’s recent decision to build a EUR1 billion factory in Debrecen, Eastern Hungary also sends a message that goes beyond the investment’s direct economic impact.

According to Magyar Hírlap, Hungary beat neighboring Slovakia and Romania to the investment and there are several lessons to be learned from this. But before going into that, a short detour in Hungarian automotive history is in order.

Boros reminds us of prominent Hungarian inventors and engineers such as János Csonka, inventor of the carburettor, József Galamb, involved in the development of the Ford Model T, renowned Mercedes engineer Béla Baranyi and BMW’s Ferenc Anisits.

During the last decades of Communism, Western car makers were already building an Eastern European presence: Renault in Romania and Fiat in the former Yugoslavia and Poland. Hungary’s first such such investment only came in 1991 when Suzuki built its plant in the northern city of Esztergom near the Slovak (then Czechoslovak) border. Audi came shortly thereafter, followed after a long delay by Mercedes.

BMW’s presence is no doubt also explained by lower Hungarian wages which will increase the Bavarian company’s bottom line, but the investment – just as the recent news that Mercedes will double its production capacity in Hungary – also is of symbolic value. It shows that while German politics in general is critical of Hungary, their industry leaders are all too keen to invest.

And the main morale of the story is that Western productive capital likes political and market stability, as opposed to the left-liberal jumble typical of many current Western governments. And this is especially true for traditionalist German regions such as Bavaria.  

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