Weekly newsletter

Electric Giant Tungsram in Danger, Wants Help from State

Ábrahám Vass 2022.04.14.

Due to the coronavirus pandemic’s effects, the explosion of energy prices and the Russian-Ukrainian war, iconic Hungarian electric giant Tungsram is in a very delicate situation. At the moment, five of its factories are almost completely closed down. According to the company, immediate state support would be badly needed.

Currently, Tungsram’s five factories (Budapest, Kisvárda, Hajdúböszörmény, Zalaegerszeg, and Nagykanizsa) are almost completely on hold, while affected employees were sent on leave, although four of the plants are planning a restart on April 22.

“We can’t get raw materials for the factories, energy prices are becoming more expensive and customers aren’t tolerating price increases,” head of the Independent Trade Union of Tungsram Employees said. Gábor Sallai claimed that the state’s support is their last hope.

Tungsram’s CEO also confirmed the gravity of the situation. In an interview with Index, Jörg Bauer explained that the pandemic, global supply difficulties, and the war in Ukraine have left the group facing an insurmountable challenge for now, and which only immediate governmental help would allow for “the continuation of the operation of the historic Hungarian brand, which contributes to the knowledge-based society and creates innovative value.” He said that the whole European industry was being threatened by spiralling energy prices, shortage and rising cost of raw materials, and transport difficulties.

He set out two potential ways for the state’s intervention:

  • the first is providing them with state and municipal mandates through various energy efficiency programs, a “win-win situation for everyone – lower consumption, better quality lighting, which is good for the environment and for the city’s residents.”
  • the other option would be the government’s direct financial support.

Fact

Tungsram was officially established in 1896 with its current name, Tungsram, having been registered in 1909. Actually, it is a word play using the English word TUNGSten and the German word WolfRAM (which is also a name for tungsten). The company became world famous by the 20s.

In the aftermath of the World War, the Soviet Red Army dismantled most of Tungsram’s production assets in 1945.  In the late 1940s, it was cut off from its Western partners and lost many of its investments abroad. The company eventually found a way to re-establish its competitive position in the lighting industry. In the 1980s, it had a 5-7% market share in the Western European lamp market.

In 1989, General Electric Lighting fully acquired Tungsram, which lasted until 2018 when Bauer acquired GE’s lighting business in Europe, the Middle East, Africa, and Turkey, as well as its global automotive lighting business. Tungsram employs some 3,000 people in Hungary, and besides the five aforementioned Hungarian cities, it is also additionally present in Győr, Kaposvár, and Vác.

Trade union leader Sallai drew attention to some other disturbing developments from the workers’ point of view. Although mass lay-offs did not happen, only natural fluctuation, the management unilaterally terminated three points of the collective agreement in February, which was valid until 2023, which contained provisions protecting employees and providing them with higher benefits in the event of notice periods, severance pay, and collective redundancies.

Hungary Records Highest Housing Price Increase in EU over Last 7 Years
Hungary Records Highest Housing Price Increase in EU over Last 7 Years

In the last quarter of last year, the average price paid for housing in Hungary was 2.1 times higher than in 2015, while the Czech Republic was in second place with a 2.0 price increase.Continue reading

The government appears to be open to finding a solution, however. In response to HVG, the Ministry for Innovation and Technology (ITM) said “all businesses that consider our country their home are important for the government, so it is examining how it can help Tungsram to ensure that the company’s operations remain secure.”

featured image: a worker in Tungsram; via Noémi Bruzák/MTI


Array
(
    [1536x1536] => Array
        (
            [width] => 1536
            [height] => 1536
            [crop] => 
        )

    [2048x2048] => Array
        (
            [width] => 2048
            [height] => 2048
            [crop] => 
        )

)