“I can not say when the planned capacity expansion will take place, which naturally would have created new jobs,” Young said.

He recalled that Michelin enjoyed outstanding relations with all governments from 1996 to 2010, but said everything has changed fundamentally in the last 18 months.

Previously, it was possible to plan for the long term, whereas the mentality of the new government, along with the new taxes and new legislation do not make for a predictable economic environment, Young noted.

Michelin has invested €300 million in Hungary since 1996, when it acquired tyre-maker Taurus.

Wages have become an issue for Michelin in Hungary, Young continued, with the government telling companies to raise salaries without consulting them. He noted that annual wage hikes at Michelin have exceeded inflation every year.

“We managed to keep staff in Nyiregyhaza and Budapest while orders declined during the crisis,” he stated. The factory employs 1,050 people.

Michelin began manufacturing custom tyres in Nyiregyhaza from 2005, he said, and the factory has become one of the best Michelin plants in terms of technology over the last five years.

However, the Nyiregyhaza plant’s 2 million annual capacity is no longer competitive, as annual production of 8-10 million tyres is necessary to benefit from economies of scale, Young affirmed.

“Three years ago, we planned to continue the technology investment that was completed last year,” he added."

Source: Hungary Around the Clock

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