Top Manager in Discussion: Thomas E. Beyer, CEO of Robert Bosch Kft.
Robert Bosch Kft. recently held the ground-breaking ceremony of its new head office in Budapest. The Budapest Times spoke to the company’s CEO, Thomas E. Beyer, about the background to the investment and about Hungary as a business location in general.
When will you be able to move into your new head office?
I assume that the move will take place in spring 2013. However, that will not yet mark the close of our building project. Even now it is foreseeable that our need for space will not be satisfied even then. In tandem with the construction of the first section we are also beginning to plan further stages of expansion. The first phase has been designed so that the resulting buildings can be expanded in modular form. Fortunately in the past years we managed to acquire a sufficiently large plot of land in the immediate vicinity of our existing head office. Together with the necessary park space we will only build on roughly a quarter of the site right now.
You must have been fairly confident that you would eventually need such a large piece of land.
It’s true that we don’t yet have approval, let alone a budget for the further expansion from our parent company. However, we have very good reasons for the expansion to continue and for our parent company to approve the construction of further buildings. Hungary and in particular Budapest continue to be very attractive to the Bosch Group. That was also why we received approval to acquire sufficient land so that we can build more in future than has been approved at present.
It took some time before the foundation stone could be laid for phase one of the construction work.
Yes, there were certain administrative challenges. We had to ensure that the ownership question of the new plot was fully clarified so that future decisions can be made without any obstacles. There were some unexpected delays but we were lucky that they coincided with the financial crisis. During that period Bosch naturally made its investment decisions very selectively and put a lot of projects on hold. When business activity in the automobile industry picked up again, it didn’t take long before demand for additional production and research capacity clearly made itself felt again. Under such circumstances it is naturally easier to make large investment decisions, like that to build our new head office. Of course I would have liked to have been able to have the ground-breaking ceremony six months ago but the delays have not changed our schedule significantly. Now I am hoping that the construction will make good progress and that we will have a mild winter. I am optimistic that we really will be able to move into the new head office in spring 2013.
Who exactly will move in?
The new buildings only cover our demand for new space resulting from our significant growth in development engineers. In addition those departments and fields will move in that until now we have had to house elsewhere. We will keep the properties which we have been renting up until now, and where our head office and our development centre are housed, after 2013 as well. Bosch-Rexroth will also move into the new building complex. At the moment this company is not optimally housed in Budapest. Instead of being able to concentrate fully on its business, at its current location it has to deal with a lot of additional logistical problems.
A construction deadline that would have removed the need for moving certain fields elsewhere entirely would surely have saved you a lot of expense.
Even without the delays because of administrative problems and the crisis, there would have been a transition period involving certain compromises and housing elsewhere would have been unavoidable. We have simply grown too quickly and offers made to our parent company have met with greater approval than expected. Until a few years ago it was possible to adjust our space smoothly to demand.
What makes your location so attractive?
The can-do attitude and creativity of the Hungarian engineers are valued. That applies to Budapest in particular. The geographical and cultural closeness to Germany also stands in Hungary’s favour. We will continue to offer all those advantages. We don’t intend to take things more slowly because of the delayed completion of our new buildings. We will find additional possibilities to bridge that period and to take on new employees. In any case it is now possible to foresee the day when all scattered fields will again be brought together under one roof.
And under a roof that is so close geographically. Did you look at alternatives even so?
Yes, we did look at alternatives before deciding on the nearby corner site but we rejected them all, mainly because they were not central enough or did not offer convenient public transport links. Our new and old location is perfect with its proximity to a metro stop. We are also relatively close to the city centre. Another point that should not be overlooked is that we are not far from the airport, which is important for our international contacts. That is why our decision to remain practically at the old location is an optimal solution, not a compromise solution.
What is your view of the government’s economic policy?
Unlike the banks and energy companies, for example, we have not had any bad experiences as a production company. We have not been directly affected by special taxes as yet. We still have to evaluate the compensation payments for low earners for the enterprise as a whole. It can be clearly sensed that the government greatly values companies that produce and research, regardless of whether they are Hungarian or foreign.
What do you feel could be improved?
It would certainly be beneficial if there were a flexible working-time model in Hungary. That would enable us to adjust better on the production side to seasonality on the demand side. I also think things could be improved in terms of administration. Certain things are still too complex and difficult. We have just had a taste of that when acquiring the permits for our new construction. Another point I would mention is the judiciary. It should work faster and more predictably. We feel that there is simply too much room for interpretation. Investors don’t like surprises. They like things to be as predictable as possible so that they can plan ahead. Good communication is related to that. The government has picked up on that and is making efforts to establish good dialogue with foreign investors.
At the opening of your new factory hall in Miskolc you experienced that first-hand.
Yes, we had an intensive meeting with Prime Minister Viktor Orbán, which lasted significantly longer than envisaged. I found him to be an open and pragmatic man who is very interested in cooperation with industry. He allowed us to set out in detail the problems that we have and listened attentively to our suggestions. He is very interested in ideas from the business sector, which his government can implement. Overall it was a very pleasant discussion, which gave me a much more nuanced impression of the prime minister than the one found in the German and Austrian media.
How important is the now much-criticised flat tax for an investor like Bosch?
It is a convincing model, which certainly contributes to Hungary’s attractiveness as a location. It is important to us for there to be a tax system that reduces illegal employment. In the field of engineering we repeatedly come across companies that pay their employees “under the table”. We cannot compete because we cannot provide net wages of that magnitude legally and economically. We therefore support all measures that lead to more companies paying taxes in this country. If the flat tax has such an effect, as is very likely, then we can only welcome it. However, we don’t necessarily need a flat tax per se but rather a tax system to which as many as possible contribute.
The ground-breaking ceremony was your last major official event as CEO of Robert Bosch Kft.
Yes, from 1 December I will take over responsibility for the automotive aftermarket as vice-president for the southeastern Europe region at Bosch. I will be responsible for 11 countries from the Adriatic to the Black Sea. Since the regional centre is Budapest, I will continue to be based here.
Why are you changing precisely at such an important stage, the beginning of the construction of the new head office?
I come from the field of sales originally. After spending five years working less closely with sales I was simply drawn back to that field. I had already extended my contract as CEO in Budapest once. Five years in one position is a long time these days. The company has developed enormously in that period. When I arrived in autumn 2006 we had around 300 employees in Budapest. Now there are almost 800. In retrospect one might think that such development was inevitable and the normal way of things but that is far from the case. Each stage of development and all jobs assigned by our parent company to Budapest were preceded by thorough preparations and a lot of convincing. We had to keep on proving our extra value, our competitiveness. Every small step took place against the background of international competition in the group. Thanks to our intensive efforts we have had good cards. I am confident that will remain so under my successor, Javier González Pareja, a Spaniard.
