HUNGARIAN CHEMICAL INDUSTRY IN 2015 – a brief overview
Chemical Industry in Hungary: A snapshot on a growing industry in Central Europe – Presentation by Iván Budai, Director of Mavesz at the Budapest meeting of the Safety Commission of Fertilizer Europe on 29 April 2016
CHEMICAL INDUSTRY IN HUNGARY – a brief overview
Chemical industry in Hungary is an important branch of the national economy. Since 2007 it has been performing above the industrial and national economic average, contributing to the positive foreign trade balance of the country, producing 17 % of all industrial export.
Chemical industry has the largest output in the processing industry sector (17 billion Euro in 2012), producing 27 % of the added value of the whole industry of the country. Production of chemicals & chemical products (NACE 20) with an output of 4,5 billion Euro (2012) is the 5th largest branch of the processing industry sector (following automotive, engineering, electronic and food processing industries).
Since the early 1990s the industry underwent significant structural and technological changes. Its privatization has been completed, due to new investments its technological base has been renewed, the leading petrochemical companies in the country have become regional players in the Central European chemicals market.
About half of the chemical products manufactured in Hungary are exported, 93 % of them to European countries. Major destinations are (2012) Germany, Romania, Russia, Poland, Italy and the Central European region.
The chemical and pharmaceutical industries have a long history in Hungary, and so do research, development and innovation that are particularly essential now to the competitiveness and sustainable development of the chemical companies of the country. The sector has invested in this field, and operates laboratories and research centers. The Chemical Research Center of the Hungarian National Academy and the technical universities of Budapest, Veszprém, Debrecen and Miskolc are also engaged in both basic and applied research projects in cooperation with companies and/or under EU programs.
The industry is important from a social point of view, too. Although belonging to the less labor-demanding sectors of the economy, with the employment of 75 thousand people (among them 12,7 thousand in overall chemicals and 16,7 thousand in pharmaceuticals production), which amounts to nearly 10 percent of those employed in the processing industry, and with gross wages above the national average, it is considered and valued as an indispensable factor in providing employment in several regions of the country.
Hungary is a medium size country in Central Europe with good infrastructure in terms of motorways, roads and railways, and of fixed and mobile telecommunications and energy supply.
Important chemical clusters are located in three regions: Northern Hungary, Central Hungary (Budapest and the surrounding area) and Central Transdanubia.
a/ Northern Hungary: 15% of sales; focus on petrochemical and polymer production, two large companies with < 1 bn € turnover. Large presence of SMEs. Active involvement with universities in Miskolc and Debrecen.
b/ Central Hungary (Budapest and surrounding area): 50% of sales; focus on oil refining, petrochemicals and polymers; specialty and fine chemicals; pharmaceuticals. Large presence of SMEs. Active involvement with Budapest Technical University and Veszprém Pannon University.
c/ Central Transdanubia: 8% of sales; focus on fertilizers, carbon fibres and agrochemicals. Significant number of SMEs. Active involvement with Veszprém Pannon University.
STRENGTH AND WEAKNESSES
The industry has a strong petrochemical base: economies of scale, up to date technologies and environmentally conscious management practices are now characteristic for the industry. Stock exchange capitalization in Hungary is related to a large extent to chemical (and pharmaceutical) companies. Most of the Hungarian companies that have become multinational – at the regional level – belong to this sector.
Significant investments have been made to increase production capacities in view of demands from other sectors like automotive and electronic industries, agriculture and others. The geographical location of the country makes it a natural choice for numerous chemical companies, including multinationals, to cover the immediate region and South-Eastern Europe.
However, the industry is highly dependent on imported feedstock and energy sources, therefore the safe supply (and the diversification) of those resources is indispensable for its operation. High energy prices are weakening its competitiveness.
Like for the European industry as a whole, a supportive industrial policy and “smart regulation” at both the European and national level are prerequisites for the sustainability of the chemical industry of the country.
Hungary has a solid educational system, from elementary school to universities. For the past years special emphasis has been put on the teaching of science subjects at all levels of education as well as on the importance of the technical professions in higher education. This trend should be strengthened. Indeed, chemical companies are making considerable efforts to maintain and develop close relations with vocational training schools, specialized high schools and technical universities to provide the succession to an ageing workforce through the influx of young, well-trained and highly educated young people, and also to prevent the “brain drain” of professionals to industries in more developed economies.