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Alcoa in Profile: Hungary
As the fifth largest investor, twelfth largest employer, and largest corporate donor in Hungary, Alcoa has played an instrumental role in the country's successful transition to a market-based economy.
Alcoa first entered Hungary in 1993 with the acquisition of a 50.1% stake in the state-owned Light Metal Works of Székesfehervár, renamed Alcoa-Köfém Kft. The remaining 49.9% ownership was acquired in 1996.
Alcoa spent heavily to modernize the plant's infrastructure and implement the Alcoa Business System, with total investments reaching more than US$1 billion. This makes Alcoa the second largest U.S. investor in Hungary (behind General Electric) and fifth largest among all investors.
"When looking to expand globally in the early 1990s, Alcoa recognized that Hungary had an existing aluminum industry and the proper combination of technical capabilities, work culture, and other local advantages," said Ferenc Furulyás, public relations manager for Alcoa-Köfém. "Since the acquisition, our sales have grown almost 400% and productivity has more than doubled. In addition, the number of severe accidents among employees has been reduced by more than 50% over the past five years alone."
Alcoa has five production facilities at four locations in Hungary that produce rolling ingots, flat rolled products, automotive structures, truck bodies, plastic closures, wire harnesses, and wheels. About 90% of the output is exported, with 80% going to European Union (EU) countries. These exports equal 75% of the country's total light metal exports.
Moving Forward
One of Alcoa-Köfém's key challenges is adjusting to the continuously changing economic and regulatory environment resulting from Hungary joining of the EU in May 2004.
"We now have a 6% import duty levied on our imported metal, which before did not have any duty imposed," said Furulyás
| By the Numbers: Alcoa in Hungary |
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5 production facilities at 4 locations
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5,600 direct jobs and 1,000 (approximate) indirect jobs
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205,000 metric tons of product produced annually
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US$800 million in annual revenues
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1.3% of Hungary's exports
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0.8% of Hungary's gross domestic product
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US$20 - $30 million in annual expenditures
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US$330,000 in community investments in 2004; total of US$3.1 million since 1993
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Helping offset these challenges is the availability of a well-educated and talented workforce. At the European Financial and Administrative Center-established at Alcoa-Köfém in 1993 and now part of Alcoa Global Business Services-some 150 experts conduct business in 16 languages.
"Another opportunity is to make use of government and EU subsidies available to investors in Hungary," said Furulyás. "The Hungarian government strives to attract foreign dollar investments and keep already established investors in the country. This creates a favorable environment to avail ourselves of state support for our further investments, labor training, environmental initiatives, and more."
In addition to economic investments, Alcoa has made significant philanthropic inroads in Hungary. Since 1993, Alcoa Foundation has approved grants totaling US$3.1 million to support some 200 projects in Hungarian education, research, public health, environmental protection, and culture. Alcoa is currently the largest corporate donor in the country.
External Acknowledgments
Alcoa's contributions to Hungary have not gone unnoticed. Following are highlights of the recognition Alcoa has received:
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2001 and 2002 Business World for the Environment National Award from the Hungarian Business Leaders Forum.
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Business Ethical Award from the Budapest Club in 2001.
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Healthy Workplace Award from the Hungarian American Chamber of Commerce in 2003 and 2004.
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Largest Corporate Donor awards from the Nonprofit Information and Education Center, the economic periodical FIGYEL?, and the Hungarian American Chamber of Commerce (all received in 2003).
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Theodor Karman Award from the Minister of Education in 2004 for support given to the Hungarian universities.
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