Mercedes to Select Suppliers Next Spring for Model to be Built in Hungary

KECSKEMET, Hungary - December 5, 2008: Auto giant Daimler AG will select suppliers this spring for the new next-generation A- and B-class compact model that the company plans to build exclusively at its plant in Kecskemet (C Hungary) beginning in 2012, supply manager Eberhard Gloger announced at an ITDH-sponsored auto suppliers' conference on Friday.

Minister of National Development and Economy Gordon Bajnai said that the government will launch a program next year to help suppliers survive the rise in unemployment due to falling demand. The goal of the program is to help businesses keep their employees, along with offering new loans and setting up clusters.

Mercedes announced earlier this year that it would build its eastern European plant in Kecskemet at a cost of EUR 800m.

The Hungarian automotive supplier market consists of 630 businesses that generate annual output of EUR 15.9bn and employ 110,000 workers. The market exports 90pc of its production and accounts for 20pc of Hungary's total exports.

A total of 14 of the 20 major global suppliers are present in Hungary. Mercedes purchased HUF 600m in products from Hungarian suppliers last year, while BMW spent EUR 800m.

Mr Bajnai said the government focuses on money, markets and employment in the course of crisis management. Suppliers could receive subsidies covering half their costs if they need to change technology. Mr Bajnai added that the contracts of the approximately 5,000 businesses, not all suppliers, that have received state subsidies over the last two years will be modified, allowing them to merely maintain the size of their workforce rather than to increase staff as originally stipulated.

Mr Bajnai said about 3,800 companies in Hungary export products worth more than HUF 30m per year.

ITD Hungary Business Development Director Laszlo Suveges-Szabo said Hungarian suppliers were involved in 65pc of the country's car production in 2002, adding that plans call for this figure to increase to 85pc by 2015. The performance of Hungarian suppliers is double and triple that of their Czech and Slovak counterparts, respectively, Mr Suveges-Szabo.

Source: Econews/ITD Hungary