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Automotive industry gets serious subsidies |
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Written by Gergely Kispál
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Thursday, 28 January 2010 |
Audi Hungaria announced on Friday, 15 January that the company would receive some HUF 15 billion (EUR 55.13 million) in direct support for the creation of 100 jobs at its site in Győr, as well as an unspecified tax break from the state. The total investment amount is reported to be some HUF 150 billion (EUR 551.25 million), which would mean that the state will provide around 10 per cent of the outlay of a highly-profitable company.
EU probing
The EU, however, has initiated a probe into the subsidy. Competition Commissioner Neelie Kroes said that the European Commission had launched an investigation since the Volkswagen Group – of which Audi Hungaria forms a part – has a considerable market share, so it is necessary to examine whether the support is really necessary and if the new investment will have a market-distorting effect.
Behind the scenes lobbying by the company and the state has already yielded success: the EC earlier established that the project is welcome, since in the western Transdanubia region “the quality of life is extremely low and there is considerable unemployment.” In the past Audi Hungaria has received state subsidies and tax breaks through aggressive negotiating and undisguised threats of abandoning Győr in favour of a new factory abroad.
Last Tuesday it became known that the Investment and Trade Development Hungary (ITD Hungary) is subsidising two expansion projects with a total value of HUF 12 billion (EUR 44.12 million). One of the recipient companies is German brake manufacturer Knorr-Bremse. The second beneficiary of the support is likewise reported to be a German company from the automobile industry. Some 260 jobs will be created as a result. ITD Hungary did not reveal how much money would be given from the dwindling state coffers. According to news website index.hu, the subsidy is likely to be 25-50 per cent of the total investment.
According to EU statistics, Hungary is the most generous EU member state when it comes to subsidising the major projects of foreign investors.
Motoring
along
According to state
investment agency
ITD Hungary, the
announcement of a
HUF 10 billion (EUR
36.88 million) investment
coming from the
car parts industry will
be made in the near
future. The development
is expected to
create 200 jobs.
Meanwhile Japanese
car parts manufacturer
Denso
announced its hiring
of 500 new temporary
staff. Due to
increasing demand,
the company has
switched back to a
three-shift production.
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