Amerikai Magyar Szó, 1992. január-június (46. évfolyam, 1-26. szám)

1992-06-04 / 23. szám

Thursday, June 4. 1992.

AMERIKAI MAGYAR SZÓ

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With its "goulash communism" Hungary was for years well in advance of its partners in the now-defunct Council for Mutual Economic Assistance (Comecon).

Even so, two years after the country's first truly democratic elections, the change on Budapest's streets is palpable. Three McDonald's restaurants do a booming business and the only line a reporter saw during a week-long visit to the Hungarian capital was outside the just-opened Pizza Hut.

The feeling of bustle is everywhere, from new hotel and business constructions in the center of Pest, to the brisk transactions being written in the lobby of the Thermal Hotel Aquincum on the Buda side of the Danube.

But the picture is far from entirely rosy. Like elsewhere in the former Communist countries, a wide disparity is opening up between the well-off and those at the bottom of the economic scale. Unemployment has become a new fact of life for many who are not yet used to the idea. More economic disruption is in the offing as the government tackles the privatization of heavy industry dinosaurs.

"The biggest problem in general is a very big drop in the domestic market" says Balázs Botos, undersecretary of state at the Ministry of Industry and Trade. "It is a problem of competitiveness and the general level of Hungarians' purchasing power" he says. "The majority of people cannot afford to buy what they did two years ago."

Hungary's gross domestic product dropped about 8% last year, while consumption fell 6 to 7%. Industrial output dropped 21.5%, but the volume of private firms and cooperatives rose 50%.

A NEW CHALLENGE

Unemployment is currently about 8%, or 500.000 people. "This is not too high relatively, but for Hungarian society, in which unemployment has been unknown, it is a social shock," Mr. Botos says. Government officials and Western diplomats agree that unemployment could rise to 12 or 13%*by the end of this year as the government continues to privatize state- run heavy industry or as some factories simply go belly up under a new bankruptcy law.

Mr. Botos is optimistic about the future, however. He predicts that inflation will fall from last year's level of 35% to the 20 to 25% range in 1992. In addition, a senior Western diplomat says there is a "reasonable change" that Hungary's economy will grow a bit in 1992.

Mr. Botos says that by 1993 there may be enough growth to begin reducing unemployment. "We have to have entrepreneurs and enterprises able to create new jobs", he says. That is the first priority. So far things appear to be going well. Registered private firms jumped 76% in 1991 to almost 52.000. More than 500.000 people work in the private sector.

The government's privatization program is another key element in Hungary's economic future.

The government's critics, here and in the West, charge that the State Property Agency (SPA) has proceeded too slowly in selling off state-run enterprises. After two years, 85% of the economy is still state-owned. The government is trying to give new impetus to the process. "A quick pace is natural in the first two years, when we could privatize the best enterprises" Botos says. "Now we must privatize the mediocre ones; there is not as much interest there."

Suzuki in Hungary: Team Spirit Sags

ESZTERGOM. In the place of arms-to-plow- shares, Hungary has embarked on a novel experiment in arms-to-Suzukis, but the abrupt transition from Communist to Japanese industrial culture is proving troublesom.

On the site' of a former Soviet Nj military testing vufc, area in northern Hungary, the

Suzuki Motor

Corp. is completing the largest CR0A^

Japanese investment so far in the former Soviet6 ***** *° bloc. The Magyar Suzuki factory is to

start producing subcompact Swift automobiles in October.

A portion of the $230 million that Suzuki has invested has gone into flying every Hungarian worker at the plant to the company's headquarters in Hamamatsu for instruction in the ways of Japan's industrial success. Brainwashing, some say. Enlightened management, others contend. In any event, dismay seems rampant among the somewhat punch-drunk Hungarian work force.

"Team spirit was the phrase I heard in every second sentence," muttered Tibor Ivanov, a production engineer who recently returned from Japan. "Team spirit, team spirit, team spirit. That was the thing they most wanted to impress on us: everybody together for the good of the company. But I am afraid such dedication is generally foreign to us. Young Hungarians are more individualistic."

Mr. Ivanov, a blond-haired man in his early 20's with a candid gaze and a wry smile, has worked for Suzuki since the project began in 1990 with a meticulous check of the plant area for vestigial Soviet mines. He has taken no vacation time so far, and he leaves home each day at 5.45 AM, to begin his 3-hour commuting trip, returning shortly before midnight.

"I haven't heard anyone say, Please go home yet" he said of his bosses.

By comparison, the Communist system was indulgent. László Pataki, the deputy

The government's goal is to reduce state ownership to below 50% by the end of 1994.Botos notes that foreign capital is essential to the process, since Hungary does not have enough domestic capital to privatize on its own. What Hungary does not want, he says, is to privatize without capital, as has been done elsewhere in Eastern Europe.

Success has not put an end to grumbling among average Hungarians. Observers, including some in the government itself, say that the government's popularity has plummeted. "While there are between

40.000 and 100.000 hard-currency millionaires in Hungary, the bottom 20% are below the poverty line" the senior Western diplomat says. "It is especially hard on pensioners..The government has had to impose a tight fiscal and monetary policy. It is not surprising that it's not loved."

Hungarians are notoriously pessimistic however, the diplomat notes. According to an old story, a Hungarian will say the world is ending in three months, but he will still be building a new house. "I doubt there is a threat of regression to totalitarianism", the diplomat says. "Democracy is not in trouble in Hungary."

Lawrence J. Goodrich Christian Science Monitor

manager for production and another Hamamatsu graduate, shook his head as he looked out over the gleaming white open-plan management offices with their lines of laminated tables. There are no walls, or even screen dividers. The president and vice president of Magyar Suzuki sit at the head of the room, like teachers before a class, distinguished from other employees only by their high-backed executive chairs.

"We had more of a hierarchy with Communism than we have now", Mr. Pataki observed. "Our Communist bosses had individual offices, expensive furniture, two or more secretaries and a fridge with vodka. I guess the majority of Hungarians would like to have more privacy than this arrangement. But for the Japanese, simple is good and cheap is also very good."

Much hinges on how the approximately

1.000 Hungarian workers at the plant eventually do adapt to Japanese methods.

István Lepsényi, the Hungarian president of Magyar Suzuki, said: "For Japan, Hungary is really the end of the world. The Japanese take a long time in deciding on investment, and they are very cautious. So what happens here is important."

Attila Tárkány Szüch, the deputy managing director of Hungary's State Property Agency, added: "This investment by Suzuki is vital to us. We know the Japanese do not come easily," The Hungarian Government has a 40 percent stake in the venture.

Magyar Suzuki plans to start with production of 16.000 cars in its first year, and aims to produce 50.000 cars a year in two shifts by 1994. The price of the Swift has not been decided, but Suzuki wants it to be cheap enough to become Eastern Europe's Model T - a car that puts ordinary people on the road. Because of the company's ambitious plans, harmonious labor relations and Japanese-style discipline are clearly important.

Hungarian workers at the new Magyar Suzuki factory were flown fo Hamamatsu, Japan to learn the ways of Japan's industrial success. On the picture: László Pataki,

deputy manager for production.

The excitement of the New Europe is prevalent in Budapest, busy re-establishing itself as one of Europe's leading centers of culture, fashion and commerce.

Accomodations in private houses are available throughout the country and can be as little as $25. for two per night. Rooms can be booked through local IBUSZ offices.