Budapest, Hungary – Audi Hungary is about to cut more than 1,000 jobs in its factory in Győr, local media reported last week, citing sources from within the company.
After cutting some 300 jobs since April, Audi Hungaria, the biggest company in the country and jewel of its flagship automotive industry, is about to lay off 1,200 employees, or 10% of its workforce employed in the north-western city of Győr.
According to the car-maker’s management, the lay-offs should occur progressively by pushing senior employees into early retirement and not renewing part-time or fixed-term contracts.
As analysts point out, this is a worrying sign for the Hungarian economy, although still one of the fastest-growing in the EU, and one of the first tangible impacts of the slowdown of the German economy, Hungary’s main trading partner.
According to some estimates, the Hungarian car industry accounts for roughly a third of industrial output and one fifth of exports. Audi Hungary alone, which is believed to represent nearly 2% of national GDP by itself, is the backbone of Győr’s regional economy. Taking into account the Audi plant as well as affiliated businesses and subcontractors, some 30,000 in the city are estimated to work in the automobile industry – or roughly half of the working-age population.
These job cuts might also be a consequence of the industry’s shift to cleaner and low-emission vehicles, as the production of electric engines requires less personnel in the assembly line, some reports pointed out.
This announcement, which comes a few months after a rare strike at the Audi Hungaria plant in Győr that resulted in an unprecedented wage increase, will add more grist to the mill of commentators who argue that Hungary’s, and Central Europe as a whole, economic development model is running out of steam due, in part, to growing labour costs and the economic slowdown of its main economic partners in Western Europe.
The recent lay-offs at Audi Hungaria’s might signal a wider shift in the Volkswagen group’s strategy and footprint in Central Europe. Earlier this year, the German car-maker also announced job cuts in neighbouring Slovakia for the first time in a decade.