Apollo Tyres finds skills shortage in Hungary a challenge

India's second largest tyre maker's difficulty in finding staff for a 500 mn euro factory reflects a wider problem for foreign investors in Hungary

Apollo Tyres, which is building a half-a-billion-euro factory in eastern Hungary, says it is having difficulty finding staff, reflecting a wider problem for foreign investors in Hungary.

The country is seen as an attractive base in Europe for manufacturers because wages are relatively cheap. But a brain drain as skilled workers have left for more lucrative pay packets in other parts of the European Union or elsewhere has limited the pool of available labour.

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"The people with several years of experience that you could readily hire are just not there in the labour market for now," said Tibor Banyai, Head of Human Resources at Apollo Tyres Hungary.

India's second largest tyre maker has previously said that producing in Hungary will make it much more cost competitive to sell in the United States.

It also hopes to supply tyres to carmakers in Europe such as Volkswagen, Daimler and Suzuki Motor Corp that build cars close to the Hungary plant.

Banyai said he was optimistic the Hungarian plant could open on schedule next January with the help of "attractive" wages offered to workers, but did not disclose details.

While wages in Hungary remain low relative to countries in western Europe, they rose 4 percent in December from a year earlier, according to the latest official figures, reflecting the skills shortage.

Apollo is giving its workers extra training in both Hungary and India and is spending "billions" of forints to get its workforce up to speed to run the factory, said Banyai.

"There are certain jobs, which are difficult to fill," he said.

"It is very hard to find a product industrialisation expert with a background in tyre manufacturing," he said. "You can count these people on the fingers of your hands."

The company has been able to fill most technician jobs from the region around the eastern town of Gyongyos so far, but it has cast a wider net for engineers, looking to hire people from remote areas, Banyai said.

He said he would not poach from rival tyre makers Bridgestone and Hankook Tire, which also have plants in Hungary.

Apollo, which is making one of Hungary's biggest greenfield investments of recent years, has also received a 606 million forint ($2.2 million) training subsidy from Hungary's government.

While Viktor Orban's government has rattled banks and telecom companies with unorthodox new taxes, it is keen to attract manufacturers.

Hungary's economy is growing by nearly 3% this year, better than many other countries in Europe, but foreign direct investment fell to 1.4 billion euros last year, from nearly 1.7 billion euros in 2014, according to official figures.

Apollo's hiring problems highlight further risks to investment.

"The market has become more difficult. While last year it was easier to hire fresh graduate technicians, we can now hire fewer of them from the region," Banyai said.

"They have different plans than last year's class. Many want to learn different jobs, get a university degree and many students plan to go abroad."