Rheinmetall’s Zalaegerszeg Plant Could in the Future Manufacture for Exports

Zoltán Balaicz, the mayor of Zalaegerszeg, said in an interview with honvedelem.hu that there has been a real need for a large investment in Zalaegerszeg in recent times, which would balance the local entrepreneurial relations. The Lynx plant, a HUF 60 billion (EUR 160 million) public investment by the Düsseldorf-based Rheinmetall corporation, will bring significant changes to the life of the city, but not only from a financial point of view.

The German Rheinmetall Group, which employs more than 25,000 people worldwide, will develop and manufacture tracked vehicles in Zalaegerszeg. The public inauguration of the company’s 2.5-hectare factory building and its 35-hectare off-road test track was held in the summer of 2021. Mayor Zoltán Balaicz has said that in 2014, when he became mayor, Zalaegerszeg had an unemployment rate of 7.5 percent and the local business tax revenue of the municipality was only HUF 3 billion (EUR 8 million). Over the past a decade, 4,400 new jobs have been created in the city, while local business tax revenue has increased by 75 percent to HUF 5.6 billion (EUR 14 million). The city is now increasingly seeing labor shortages, with the number of registered jobseekers falling to 2.6 per cent.

The construction of the ZalaZONE automotive test track played an important role in these good results. When the track was established on the 265-hectare site of the Northern Industrial Park with a public investment of HUF 45 billion (EUR 120 million), it was immediately clear that it would not only be beneficial for research and development, innovation and the related vocational training and university background, but would also attract new investment. This is how the AVL research center was set up next to the test track, creating 150 new jobs. A Bosch research and development center is currently under construction, which will create 200 new jobs, outlined the mayor.

It is perhaps no coincidence that the decision to take advantage of the existing synergies, the proximity of the test track and the remaining space available in the Northern Industrial Park was taken very quickly, following negotiations with the German defense giant Rheinmetall, which started in 2020. The company, founded in 1889, has built its new factory in Zalaegerszeg. So far, a 30,000 square meter factory has been built, which will create 350 new jobs directly, but with the associated developments, it is going to be roughly 500 new jobs. Preparations for the production of the Lynx infantry fighting vehicle have already started.

Mayor Balaicz added that any large company would look at where a potential manufacturing site is located, the logistics, the transport links, the proximity to the western border and would certainly look at the availability of labor. In case of the German manufacturer, Rheinmetall’s university-technical college background in Zalaegerszeg must also have been a factor, as with an investment of HUF 8 billion, a university and research center, the Science Park, has been built next to the test track, in a joint venture between three universities – Széchenyi István University in Győr, the Budapest University of Technology and Economics and the University of Pannonia, informed the mayor.

He also added that the original commitment by the Hungarian state, that is, the HUF 60 billion was an important factor in winning over the German manufacturer, as the city itself did not have to make any financial commitments in the investment. The Mayor of Zalaegerszeg also expressed his hope that the extra tax revenue will generate around HUF 500 million (EUR 1.3 million) revenue for the city. He also considered it extremely important that a large international company has appeared in Zalaegerszeg, with its German work culture and its involvement in local community life.

As to Rheinmetall Hungary Zrt., the mayor added that it is estimated that the company will employ 350 people in the first phase, but with the start of further production, the capacity of the factory will reach 500 jobs. Of the first 350 people, 200 are already available. A significant challenge is to provide skilled labor, specifically welders, and there is training for this at the Ganz Technical Center. However, it should also be seen that there are many large companies in Zalaegerszeg looking for similar workers. This explains the very serious shortage of labor, especially in this profession. That is why it is worth bringing labor from elsewhere to Zalaegerszeg.

Mayor Balaicz has recalled that Prime Minister Viktor Orbán handed over the factory building in March 2022, when the installation of the necessary equipment and production lines began. Rheinmetall’s experts have not yet finished, but if all goes well, the factory will be ready to start production by the beginning of the summer. After that, the production of 218 Lynx Infantry Fighting Vehicles for the Hungarian Defense Forces will start, but the continuous maintenance and repair of these combat vehicles will also be linked to the Zalaegerszeg plant. In addition, the mayor expressed his hopes that thanks to the company’s international contacts and the movement of the market, Zalaegerszeg will also be used for other purposes and for other countries in the future.

Via Honvédelem.hu, Photo: HMZrinyi.hu