General Motors (GM) Europe unit Opel/Vauxhall is constructing a new engine plant in the western Hungarian city of Szentgotthárd, aiming to boost the company’s growing share of the south east Europe market.
Opel managers have said they want this Euro EUR500m investment (US$713.8m) to help the company grow its 5.5% market share (in 2010 – 35,456 cars) of the regional market, making it the sixth most popular brand (up from eighth in 2009).
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“With this new project we strive to become the best engine plant in the world, by producing world class products with modern technology in the most effective way”, said Tamás Solt, director of the Szentgotthárd plant.
The new facility will measure 30,000sq m, create 800 new jobs and produce 500,000 engines per year at its full capacity which should be achieved in 2012. The motors will be used exclusively in Opel/Vauxhall cars.
The factory will be built alongside an existing 60,000sq m Szentgotthárd plant which has produced 6.5m engines and 5m cylinder heads in around 20 years. Its success helped prompt GM’s decision to locate the new plant at the site and the two will operate in tandem.
“The plant has a reputation within the company for its teamwork, flexibility and excellent quality. It became a kind of ‘knowledge centre’ for midsize engines,” Solt added.
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By GlobalDataHungary in general seems to have become a hub for major automotive investors (GM, Daimler, Volkswagen). A country that is both a member of the European Union (EU) as well as being situated in the borderless Schengen area, Hungary has access both to the Balkans and Europe via four trans-European motorways. Its cheap, but highly skilled workforce has been a drawcard for investment.
In 2010, the average gross monthly wage in the Hungarian auto industry was EUR740 ($1,056.50), saving companies 30%-50% compared to labour employed in western Europe and the United States.
The Hungarian government is actively helping. György Matolcsy, minister of national economy, has offered cash assistance and tax allowances justified by the plant’s employment of new workers. In direct subsidies, the government has approved HUF5.5bn ($29.3m).
Although their presence in Hungary is significant, foreign automobile companies do not compete intensely in the domestic market because they mainly sell their products abroad.
Herbert Rupp, president of the Association of the Hungarian Vehicle Component Manufacturers, agreed. “I am convinced that all investors act only in accordance with their own interests and therefore the expansion of GM in Hungary has no impact on others.”
The new Opel/Szentgotthárd manufacturing centre will make families of small and medium-sized petrol and medium-sized diesel engines for the full range of Opel and Vauxhall models.
As the company continues to improve the efficiency of all its internal combustion engines and transmissions, one important step is the concept of ‘right-sizing’ whereby powertrains with larger displacements are replaced by smaller, turbocharged engines.
Solt said that these engines will meet Euro 6 emissions standards, petrol versions will have direct injection and such motors have a low power to weight ratio, provide smooth running and substantially reduce fuel consumption and CO2 emissions.
From Szentgotthárd, engines will be transported by rail to different Opel/Vauxhall assembly plants across Europe.
Zlatko Conkas
