According to 24.hu, Lear Corporation Hungary Kft. announced on Wednesday, as part of a workers’ meeting, that it will close its factory in Gödöllő.
The supplier company Lear, with American roots, has been present in the Hungarian vehicle industry since 1992 and, among other things, deals with the production of electrical cable distribution units (cable whips).
We contacted him in connection with our notification Zsolt Kozma, the president of the Lear Employees’ Union, who said: on Wednesday, the company announced a collective downsizing of more than 800 people, which practically means the closure of the cable whip factory in Gödöllő. The reason for the factory closure is that the company probably considered that the labor costs of production in Hungary are already too high. The production of cable whips requires a technology with low added value and high labor demand, which cannot be robotized. The decline of the sector has already been experienced by the interest representatives in recent years: the company closed its 500-employee cable whip plant in Gyöngyös just five years ago, and several hundred employees were laid off at the Gödöllő unit as well.
The parent company has continuously opened plants in countries such as Serbia, Morocco and Tunisia where it can perform these work processes at significantly lower labor costs, and the company has transferred the production of certain products from Hungary to these sites as a group. So far, however, it has turned out that another one has been put in place to replace the discontinued work processes, but now no more production is coming to our country, because Lear can produce more cheaply and much more profitably in poorer countries – detailed Zsolt Kozma.
The workers were devastated by the news
Based on the information received by the trade union, the Gödöllő plant did not receive government support, nor does it have an obligation to maintain staff. The employees of the factory took note of the termination of their jobs in a sad but calm atmosphere, according to the president’s knowledge, nearly two-thirds of the workers had been employed by the factory for more than two decades, many of them are a few years before retirement, so it is not easy for them to process the current situation.
It is expected that the company will start the consultation in accordance with the legal regulations, observing the requirements of labor relations, and the trade union will also be actively involved in the negotiations. During these discussions with the works council, the schedule of the downsizing, the exact number of people involved, and the compensation package related to the downsizing will also be on the agenda. The employer emphasized in its information that it also tries to participate in labor market programs so that the laid-off workers find employment as soon as possible. The employees come to work from a total of three counties, but it is expected that not everyone will want to commute a lot in the future, so they will have to contact the local employment centers.
Lear Corporation Hungary Kft. closed the year with a sales revenue of HUF 276.2 billion, which reflected an increase of nearly 19 percent compared to 2021, while it produced a profit after tax of nearly HUF 6.3 billion, which represented a 24 percent decline. In addition to the unit in Gödöllő, the company also operates a car seat manufacturing plant in Győr, which is a supplier of Audi Hungaria Zrt. According to the president of the interest representation, there will be no downsizing at the Győr factory, because that plant is interested in a completely different business profile, the business there is stable and more predictable in the long term. The car seat factory is located two kilometers from the Audi unit, and its products are put into the cars in a just-in-time system, within 2 hours of delivery. Meanwhile, for cable whips, manufacturers usually keep enough buffer stock for 5-6 days, in their case the supplier does not have to be close to the car factory, so he can move his locations to distant countries.
According to Kozma, the cable whip sector is also gradually declining in other Hungarian vehicle industry companies. Vehicle production is in recession not only in Hungary, but also on the world market level: according to industry forecasts, 15 percent fewer cars with internal combustion engines will be produced this year compared to last year. However, the decrease in the volume of the car market is not related to the closure of the factory in Gödöllő, since this plant produces products for which there is customer demand, but they do not want to manufacture them here, but in countries where they bring more profit. In terms of these work processes, Romania and Ukraine are not cheap enough.