1. Automotive Industry in Hungary

2. Main topics covered About the automotive business in Central- and Eastern Europe Facts and figures on the Hungarian automotive (parts) industry The largest automotive companies in Hungary About Clusters – General introduction of the concept The Pannon Automotive Cluster (PANAC) The goals of PANAC The company network of PANAC

3. Central East European concentration of OEM’s (car and engine plants) 100 km 200 km 300 km 400 km By 2006 Approx. 4-5 million cars in CEE Approx. 900.000 cars within 120 km of Györ Approx. 2.5 million engines within 160 km of Györ Approx. 3.5 million engines within 300 km of Györ ?

4. Automotive investments in Eastern-and Central Europe Gliwice: Opel (General Motors) New factory, Current production 85 700 cars, Extension planned M 500 € Investment Kolin: PSA and Toyota New Factory for 2005 300 000 Cars Bratislava: Volkswagen (VW) Current operations 225 400 cars Porsche Cayenne, Touareg, Polo, Golf, under further development Zilina: Hyundai, Kia New factory for 2005 Capacity 300 000 cars M 700–1 100 € investment Mladá Boleslav: Skoda (VW) Existing factory for 442 500 cars Györ: Audi (VW) Current operations 1 600 000 engines and 53 600 cars under further development Novo Mesto: REVOZ (Renault) Current operations 125 700 cars Under further development Pitesti: Dacia (Renault) Current operations 57 300 cars Esztergorn: MSK (Suzuki) Current capacity 84 600 cars By 2005 capacity 200 000 cars Trnava: PSA (Peugeot/Citroen) New factory for 2006 Capacity 300 000 cars M 800–900 € investment Tychy: Daewoo New factory, current capacity 25 000 cars, under further development, M 400 € invest Poznan: Volkswagen (VW) Existing factory for 40 000 commercial vehicles, Under further development, M 600 € East Slovakia: Rover New investment in preparation Warzawa: Fiat New factory for currently 158 000 cars, Under further development M 1 000 € investment Sources: Die Zeit, Der Spiegel, FhG-IPA, own sources, company information, EU

5. The Hungarian automotive sector in Numbers Production Value –6.44 Billion USD (2001), approx. 9 Billion in 2004 –14% of the total Industrial Production ; 31% of the machining industry Total number companies: ~ 280-300, approx. 350 in 2004 –Number of companies with system certificates: ~ 240 companies –Advanced automotive systems in place: ~ 120 companies Total number of employees: ~ 90.000 people Export ratio: above 90 % Most important export market: European Union Significant ratio of foreign ownership: above 80% –Approx. 10% of the total FDI, approx. 10 billion Euro in automotive field

6. The Hungarian automotive sector in Numbers Car and engine production @ Hungary – Car manufacturing, assembly Magyar Suzuki Rt, ill. Audi Hungária Motor Kft Suzuki: approx. 100.000 pcs – 2005 approx. 240.000 planned for 2005 Audi: TT, earlier A3 and S3, yearly 35-40.000 pcs –Engine manufacturing Audi Hungária Motor Kft. – 1.400.000 engines per year Opel Magyarország Kft. – 400.000 engines per year Regional engine production concentration!!!

7. Key indicators of the Hungarian automotive parts sector Advanced tech. Ownership structure LocalForeignMixed Positions in the supply-chain Modules, systemsParts, components Level of technology at the companies World class technology Other Distribution of technology Turning/Machining Pressed parts Electronic parts Plastics parts Rubber parts Sprins, screws, etc. Casting Other

8.  1 Akzo-Nobel Coating, Paints  2 Alcoa, Alu-casting, Rolling  3 Audi, Engines, Cars (TTs)  4 Bakony Művek, Dashboard, sceen-wiper  5 Bosch, Dashboard, contoroll units, horn  6 BPW, Carriage, suspension  7 Daewoo Ball Bearings, Ball bearings  8 Daikin, air-conditioners  9 Delphi- Calsonic, Compressors (Air-conditioners)  10 Delphi-Packard, Wires, Cables  11 Denso, Injection systems  12 Delco Remy, Barring engines, Generators  13 Excel-Csepel, Production machines  14 Erbslöh, Alu profiles – manufacturing, assembling  15 Firth Rixson Forgings, powder metallurgy  16 Federal Mogul, Rubber seals  17 GM Opel, Engines, cylinderheads, gear-boxes  18 Hydro, Alu cylinder heads, Alu engine bodyes  19 Continental Teves, ABS brake systems, ESP systems  20 Knorr-Bremse, Brake systems  21 Lear, Seats  22 Le Belier, Alu metallurgy, casting  23 Loranger, Machined parts 9 28 32 1 2 65 4 5 6 10 5 8 11 12 13 14 15 16 17 18 29 19 20 21 22 23 24 25 26 30 33 34 35 36 37 3839 40 41 427 43 44 45 46 47 48 49 50 515253 54 55 56 57 58 59 60 63 61 62 66 64 3 29 Most important automotive companies in Hungary

9.  24 LuK, Clutch, clutch disk,  25 Linamar (Mezögép), Fuel dosing systems  26 Michelin, Tyres  27 Mitsuba, Electrical engines, generators, transformators  28 NABI, Coaches  29 Nolato-Protec, Moulded parts  30 Perion, Accumulators  31 PREC-CAST, Die-cast parts  32 RÁBA, Axles, Carriages, military trucks  33 Suoftec, AL-wheels  34 Schefenacker, internal and external mirrors  35 Suzuki, Cars  36 Tauril, Rubber parts  37 UBP Csepel, Iron casting  38 Visteon, Fuel systems, barring engines, coils  39 ZF Hungária, Gear boxes, Carriages  40 TEMIC, Electrohydraulic break systems  41 Schwarzmüller, Body of vans, trailers  42 Musashi, Ball-joints, Balancing arms  43 Stanley Electric, Lightning  44 Carrier Transcold, Cooling systems  45 Ortech (U-Shin, Electrical components  46 AFL, Cable strands 9 28 32 1 2 65 4 5 6 10 5 8 11 12 13 14 15 16 17 18 29 19 20 21 22 23 24 25 26 30 33 34 35 36 37 3839 40 41 427 43 44 45 46 47 48 49 50 515253 54 55 56 57 58 59 60 63 61 62 66 64 3 29

10.  47 Hammerstein, Seats, Seat adjusment parts  48 Clarion, Car Hi-Fi  49 Eagle Ottawa, Leather coverings  50 Euro-Excedy, Clutch parts  51 Zollner, Moulding, Metalwork  52 Valeo Autoelectric, Car electronic  53 Philips – APM, Car Hi-Fi  54 Autoliv, Seat belts  55 Johnson Controls, Antiglare shields  56 Isringhausen, Seat covers  57 EDAG, Engineering, design  58 Magna-Steyr, Engineering, design  59 Vogel-Sitze, Coach seats 9 28 32 1 2 65 4 5 6 10 5 8 11 12 13 14 15 16 17 18 29 19 20 21 22 23 24 25 26 30 33 34 35 36 37 3839 40 41 427 43 44 45 46 47 48 49 50 515253 54 55 56 57 58 59 60 63 61 62 66 64 3 29 Most important automotive companies in Hungary

11. Latest investments in the automotive sector  Audi expansion of the production range  Opel/Daewoo regional headquarters for CEE  Suzuki expansion for car assembly  Ortech new capacity for supplying Opel & Suzuki  SEWS new capacity for the production of spare parts  Toyo new capacity for the production of car seats  Linamar new plant for producing diesel engine components  Phoenix AG development for logistics center  Porsche new logistics center  Visteon product development center for producing compressors  Schwarzmüller new capacity for producing trailers  Delphi-Calsonic expansion of compressor production  Renaultlogistics center  Boschexpansion of the production capacity  Saia-Burgess new capacity for producing controllers & door-locking systems

12. Clusters Cooperative network of businesses Manufacturers, consultants, Institutions for training and education, service providers Organized on a product basis Concentrated on a specific territory Utilizes cooperation opportunities To improve competitiveness of the participants

13. Role of cooperation through networks Goal: Creating new business opportunities trough synergies –New market segments –Improved level of supplier competencies Increasing power in the supply chain –Abilities, Competencies –Resources –Market intelligence

14. Driving forces of formulating clusters Glocalization - Parallel trends –Global site selection and Global Sourcing Strategies –Concentration of expertise –Increasing complexity Changing nature of competition Typical answers National companies on local markets Global companies with global supplier network on global markets 19201940196019802000 SME’sGlobal Co’s Networking, Clustering Mergers, Acquisitions, Strategic Alliances COMPETITIVENESS, COST REDUCTION

15. 1st Cluster in the Transition Economies

16. Pannon Automotive Cluster Common initiative of: –Audi, Opel, Suzuki, LuK Savaria, Rába, Citibank, IKT West- Transdanubian Regional Development Agency Supported by the Ministry of Economics Joined members of the Cluster-Core: –Széchenyi István (Technical) University, Győr (Sept. 2001) –HVB Bank Hungary (Feb. 2002) –Siemens Hungary (Sept. 2002) Country-wide Industrial Network for the Automotive Sector Since December 2000

17. Mission and goals of PANAC PANAC’s mission –Supporting the localization of production and development of modules, and systems –Improving the Hungarian owned suppliers ability to produce and develop high complexity systems and parts –Improving the ability of Hungarian research communities to be involved in automotive development projects Goals of PANAC –To increase the ability of the supplier companies to join the global supplier networks of the automotive industry –To help its partners to increase complexity of their products, thus being able to improve their position in the supply-chain –To foster the development of a nation-wide automotive strategy –To be a well accepted reference-provider on the partner companies (both to the government and domestic or international buyers) –Internationalization of the network

18. PANAC supplier development Dissemination of Industry Specific knowledge –PANAC role starts, where the role of the individual customers ends –Wide impact – Reaching high number of potential suppliers –Improving the general level of understanding of requirements Tools and activities –Providing access to industry news and information –Providing trainings, workshops, specialists events –Performing technology transfer services –Performing individual company assessment –Leading industry-wide benchmarking activity –Facilitating inter-company learning

19. PANAC Partners 78 Established: Dec. 2000 ------ PANAC – Core-area PANAC registered Service Providers (12) PANAC Cluster Core (8+4) PANAC Partner members (51) Győr Zalaegerszeg Veszprém Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged

20. The PANAC company network PANAC Statistics: Total number of employees: ~ 38 000 Total Turnover: ~ 5 billion € 70% of the members involved in production 27% of the members involved in R&D Healthy balance among the different size categories Level of quality readiness is well above industry average

21. Partners by activity Forming Technologies Győr Zalaegerszeg Veszprém Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 23 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

22. Partners by activity Turning and Machining Győr Zalaegerszeg Veszprém Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

23. Partners by activity S urface treatment Győr Zalaegerszeg Veszprém Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

24. Partners by activity Joining Technologies (welding, screwing, bonding, etc.) Győr Zalaegerszeg Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Veszprém

25. Partners by activity Injection, blow moulding Győr Zalaegerszeg Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 10 Veszprém

26. Partners by activity Casting Győr Zalaegerszeg Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 Veszprém

27. Partners by activity Electronic / assembly technologies Győr Zalaegerszeg Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 Veszprém

28. Partners by activity Engineering development, other services Győr Zalaegerszeg Budapest Kaposvár Békéscsaba Debrecen Eger Kecskemét Szeged 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Veszprém

29. Invigorating the Hungarian Parts Industry International Relations –Cluster to Cluster Cooperation Business Forums, One-on-one business meetings International Cluster Cooperation projects Single point access –Requests for quotations filtered and passed on to qualified suppliers –Co-operating partner of ITD-H, the Hungarian Trade-development organization –Company representation at Hungary Technical assistance –Project management services Identifying synergies; Initiating cooperation, projects –Involvement in EU co-operation projects Supporting Hungarian companies in joining international cooperation projects Improving the Automotive focus of partners in service, education and government

30. PANAC Coordination Office H-9027 Győr, Hédervári u. 25 Hungary Tel/Fax: +36-96-613-606 E-mail: rozsa.zoltan@panac.hu www.panac.hu (Hungarian only) Thank You for Your Attention!