Two thirds of German companies operating in Hungary are working at no more than half capacity

English2020. máj 4.Növekedés.hu

According to the majority of German companies operating in Hungary, it will take them at least six months to regain their previous capacity. The German-Hungarian Chamber of Commerce and Industry, which is in constant consultation with the government, points out that normalization should ideally begin as soon as possible. How fast each country can restart the economy is a question of economic competitiveness - especially in the case of large companies, for which there is serious competition globally, András Sávos, president of the chamber, told növekedés.hu

What impact does the coronavirus situation have on German companies operating in Hungary?

The pandemic put our members in a difficult position. It takes its toll on everyone the extent depends on what industry a company works in. Many people associate the chamber with large German corporations operating in Hungary. Few people know, however, that around three-quarters of our members are small and medium-sized businesses and the chamber represents both blocks. This situation itself determines what feedback we will receive. For example, SMEs which supply to large automotive companies that have already resumed work or will soon do so, will sooner or later recover. It is not yet known, though, how fast the recovery will be. Germany, for example, already has very careful plans to ease restrictions, as it is in the long-term interest of all countries to return to normality.

As I mentioned earlier, it is sector-specific how deeply a company is affected by the crisis.

40 percent of our member companies operate at half, or less than half of their previous capacity. Nearly one third operate at half of their previous capacity, while 35 per cent operate at more than 80 per cent. Companies that are not directly involved in the car industry, such as Siemens or Knorr-Bremse, operate with unchanged orders and export activities.

How does the chamber support member companies?

We are keeping in close contact with our members, trying to help their work and planning by giving them as much information as possible. Since the beginning of March, we have conducted several surveys; we asked member companies e.g. how the crisis is affecting them. We were afraid that only few of them would give us feedback, but hundreds responded, which was a great help in our negotiations with the government.

The chamber is also in constant consultation with the government; they ask us for our opinion about the planned measures, so we act as a kind of bridge between the government and market participants, whose questions and feedback we pass on to the government.
We are seeking solutions to help small and medium-sized enterprises which, hopefully only temporarily, lost their orders and market, get through this period and be able to retain their skilled workforce. The Visegrad Group, Austria and Germany already have some experience with this, namely the so-called Kurzarbeit or reduced working hours, which has been announced by the government in Hungary, too.

Although the issue of retaining workers may also affect large companies, in their case, restarting operations as soon as possible is important in order to maintain long-term competitiveness. There is fierce competition worldwide for companies which bring expertise and technology into a country, and countries that are the first to restart production and restore the previous conditions can gain a competitive advantage.

The introduction of reduced working hours - which means that the state temporarily finances a certain part of workers' lost income - was a good decision. The regulations still need fine-tuning, proper communication is important, and the chambers also have a certain responsibility to help with the interpretation of the rules. Applications have only been available for a few days and it will take some time for the regulation to mature unlike in Germany and Austria, where the relevant institutions have been well-established since 2008. In Hungary, however, this concept is completely new.

How fast do you think the restart of the economy will take place and what are the conditions to meet?

Right now we can speak about aspirations rather than plans. 60 percent of respondents to our surveys say it will take them at least six months to regain their previous capacity. We would like recovery to begin in Hungary and Europe as soon as possible.

How fast each country can restart their economy is a question of economic competitiveness.

If we look at the corporate interests of our own members, which, I believe, coincide with the interests of our country and economy, everyone is hoping that the markets and countries that are vital for us in the European Union will be 'revived' within weeks and the recovery will begin.

Many people are watching how the biggest global companies with the largest value chains can restart, as they will kick-start the economy not only in Hungary but also elsewhere. Their restart depends on how their supply chains can recover.

The other factor is demand.

For the car industry, the question is when people will start buying cars again.

And in a broader perspective, when, in addition to the hard facts, the psychological moment comes when everyone thinks it is worth restarting. If such thinking begins, we are on the right track. The government is firmly determined to start reviving the economy as soon as possible. The main point is not the exact date; the main thing is that within a few weeks the economy starts ‘thawing out’ of deep freeze.

We are supporting all efforts to start the economy. It is about the livelihood of a lot of people, which requires serious decisions and a determined strategy.

Obviously, there are issues that still need to be clarified, but it is important that there is a dialogue between us and we take each other and each other’s feedback seriously. Companies are divided on what additional measures are needed to get the economy off the ground, e.g. how to ensure that workers can safely travel to work. Here the ideas greatly differ. Therefore, the time of the restart is not only up to the government, but it also depends on the views of specific company managements.