The government has stated several times in the past that, after the difficult economic period, it wants to work on growth and improving Hungary’s competitiveness. They want to achieve this through a high-pressure economic policy. The Minister of National Economy, Márton Nagy, recently highlighted four key points:
- The share of domestic “Tier 1 and 2” suppliers must be increased to 50 percent.
- The number of our national champions must reach forty.
- Behind them, 20,000 export-capable SMEs must provide real economic support.
- And the lack of profit balance must be overcome to zero.
Depending on this, the head of the ministry presented the cabinet’s new competitiveness strategy a few days ago. However, it is worth examining what exactly makes companies that guarantee the competitiveness of the national economy competitive.
According to Márk Petrik, managing director of Hepenix Kft., the cornerstone of competitiveness is cost-effective operation. What can be summed up in the shortest way is that the appropriate quality of the produced product or service is produced at minimal cost as a result of optimal operation. In market competition, it is crucial that the price of the product is better than that of competitors. In addition, in such a way that the operation of the company is also sustainable and developable in the medium and long term.
Competition also means that companies constantly develop their own operations and products in order to be able to offer better quality and more attractive products than their competitors in response to market demand at a better price. In other words, continuous development is another cornerstone of competitiveness. For industrial and service companies, the introduction of Industry 4.0 tools into both operating processes and products is essential to stand out in the competition.
– summed up Márk Petrik, managing director of Hepenix, to the Index, according to whom the third pillar is robust operation, i.e. resilience.
The pandemic showed the problem
During the pandemic, it became clear that companies are fundamentally unprepared for disruptions in the supply chain and the sudden disappearance of demand. The logistics systems and the production could not handle the permanent product shortage or the sudden positive or negative changes in demand volume. Thus, above all, to maintain competitiveness, flexible production is necessary, which simultaneously means the ability to change production volumes and products quickly and cost-effectively.
According to Márk Petrik, production processes must be restructured for this. A solution can be the production realized with a network of flexible production cells with a technology center, which also includes buffer formation and flexible production logistics. “Production modeling in virtual or cyberspace is crucial for robust production. The use of these not only provides data-centric decision support in the investment planning phase of the productive capacity of the devices, but also the effects of market changes can be simulated and analyzed, and on the basis of these, plans with appropriate efficiency can be prepared and decisions can be made,” he concluded, then highlighted:
If the pillars presented above are present in a company, and the company’s basic strategy is the continuous improvement of its processes, then it can be said that the company is competitive.
There is no quantifiable measure of competitiveness. At the same time, factors contributing to competitiveness can be measured and monitored. Thus, through these, it is possible to judge how competitive the company is, and how it improves or even worsens its position. It is clear that a company’s competitiveness also changes due to changes in the economic environment. Therefore, the appropriate national economic policy is crucial for maintaining the competitiveness of companies.
According to Márk Petrik, one of the most important steps that the government can take is to properly operate the application system – be it EU or governmental – this is the only way to effectively use the subsidies that come to companies. A good example of this is that when investing in assets, it is important to check whether the company has the conditions for fitting the assets into production.
An excellent example of this can be a move towards robotization or an investment in a CNC cutting machine, in which case a prerequisite is an established system of manufacturing and production processes, in which inter-production controls and documentation must be in place even before the start of the investment, and you must have suitable specialists to operate the automatic systems
– he summed up for the Index. The tender support system should not only serve to catch up, but should also aim to maintain and develop the competitiveness of companies already present on the international market. Companies that are already operating successfully and with sufficient efficiency also need support, in order to maintain their competitiveness and to be able to keep up with continuous technological development. Adequate provision of operational financing systems and loans can also be a major support.
Márk Petrik also touched on the fact that the functioning capital market can support the development and change of scale of companies on a market basis, so the creation of this is also an important tool in the hands of the state. Even within this, it would be worthwhile to prioritize the operation and support of the venture capital market. Making export subsidies available to the SME sector is an important step in order to increase the competitiveness of companies. A significant number of mainly domestically owned enterprises are present on the market.
There is a recipe, but you have to use it wisely
Creating and maintaining a predictable legal and macroeconomic environment is essential for all market participants. With these, they can plan their strategy more safely. Stabilization of energy prices and the tax environment can be of great help to efficient budgeting and thus to the timing of developments and investments. the managing director of Hepenix highlighted:
Predictable energy prices would make it possible to plan the operating costs of companies, especially manufacturing and production enterprises. The transformation of the tax system in such a way that it supports operation and development would also be an important factor in the life of Hungarian companies.
According to Márk Petrik, in addition to these, the balanced maintenance of the labor market, a stable exchange rate and inflationary economic policy, as well as a support system supporting energy and infrastructure investments can also contribute to increasing the competitiveness of companies. “If we look outside the Hungarian market, the factors listed above would overall make Hungary more attractive for investors, which could be another important step in increasing the competitiveness of domestic companies.”
One of the most important solutions for companies’ competitiveness can be Industry 4.0, which many people refer to as the fourth industrial revolution. The introduction and use of the tools found here clearly and decisively help improve the competitiveness of companies in the industrial and service sectors, but also in the field of agriculture.
According to Márk Petrik, within these, the application of artificial intelligence can result in an explosive increase in efficiency in many areas. In production, digitization, robotization, and the cooperation between machine and man, for example collaborative robot solutions, also result in a high level of efficiency increase and also improve the flexibility of production.
The introduction of additive manufacturing can lay the foundation for a production company to be able to flexibly and efficiently organize the production of a large number of product types at the same time. With the help of artificial intelligence, big data analyzes enable the predictive maintenance of production equipment and the production of error forecasts, which significantly increases production safety and at the same time reduces maintenance costs.
Cyberspace modeling is the proper monitoring and simulation of production, greatly improves and accelerates the efficiency of planning, and also results in a reduction of costs on the human resources side.
It is important to note: in order for companies to be developed through the above technologies, their operating processes, as well as the company’s operating culture and the employees’ attitude, must be at a certain level of development. If this does not exist, the first step is to create them. According to Márk Petrik
the biggest shortcomings of the Hungarian SME sector are in these areas.
The SME sector cannot rely on many decades of operational culture and practices, as they only appeared after the system change. According to the expert, for this reason, it is essential for company management and owners to actively acquire and continuously develop company management and management knowledge, as well as examine European company management culture and experiences. “SMEs whose management is prepared in this sense can successfully implement even a generational change, and can thus plan and develop their operations in the long term.”
(Cover photo: Márk Petrik. Photo: Szabolcs Németh)
