Hungarian ‘uncertainties’ prompt freeze in Michelin plans

Although Michelin reportedly needs to increase output at its Nyiregyhaza plant in Hungary at least 400 per cent to remain competitive, a question mark now hangs over when and if previously planned expansion work will take place. On 25 January business daily Vilaggazdasag quoted the general director of Michelin’s Hungarian unit, John Young, as saying the tyre maker had put its expansion plans on hold due to legal and financial uncertainties in Hungary.

According to Young, the Nyiregyhaza plant needs an annual output of between eight and ten million tyres to remain competitive; at present it can turn out a maximum of two million tyres a year. Yet he told the newspaper “I can’t say today when we may continue our planned capacity expansion, which was aimed at improving the competitiveness of our base in Nyiregyhaza and naturally also would have led to increased headcount.”

Michelin has invested 100 million euros in the factory since 2005 and 300 million euros in total since it acquired Taurus Rubber in 1996. Reporting on the Hungarian language publication’s article, news agency AFP quoted Young as saying contacts with Hungarian governments since 1996 had been “excellent,” but “everything has drastically changed” since Viktor Orban took over as Prime Minister 18 months ago. “The attitude of the current government, the new taxes and the new laws make the economic environment unpredictable,” he said. “Before, we could plan for the long term. Today I cannot predict when we will be able to continue our project to expand capacity, which would have improved the competiveness of the Nyiregyhaza site and created jobs.”