The building is set in a wooded area. It is dozens of yards long and has one upper storey. The windows are bare, the plasterwork white. An inconspicuous factory, but for the two Viennese entrepreneurs Heinz Rabenseifner and Aurel Szirmay, it has become the hub of their lives. They go into the workshop in the early morning, and in the evening they turn off the light as they leave. They have chosen this building as the site of their company Navan Global—here on the outskirts of the small Hungarian town of Csorna.
'We have achieved more in two months in Hungary than we did in ten months in Austria'
In the future, one million 'passive markers' a month are to be manufactured here—reflective plastic beads one centimetre in diameter. Surgeons use them to be able to operate with greater precision. Navan Global wants to have its share of worldwide trade in the beads, but it’s no easy matter. To build the right machines for mass production the company needs five skilled workers—welders, metalworkers, mechanics. The two founders spent almost a year looking for suitable labour—in vain. They then cast their eyes eastward. In October they paid a visit to the town of Csorna—and now the company is up and running. 'We have achieved more in two months in Hungary than we did in ten months in Austria,' says Rabenseifner. He resents the fact that it was impossible to find the right personnel back home. The start-up company fell prey to the shortage of skilled labour which has plagued industry since last year. Back then Austria had a deficit of between 5, 000 and 10, 000 qualified personnel according to the association of manufacturers. Navan Global has now moved to Csorna in north-west Hungary—a small town with a population of 10, 000. So what has Csorna got that Vienna hasn’t?
Unlucky in the east
When junior partner Aurel Szirmay puts his foot down he can make it from the 23rd district of Vienna to his new workplace in Csorna in a good hour. The route is strewn with vacant border cottages, private dental clinics and tacky weekend homes. On closer inspection there are also a lot of foreign companies to be seen: an Austrian plastics firm, a German automotive company. Audi has a major plant in the town of Györ. In fact the road to Budapest also leads to a whole new eastern European reality: this is a place where Austrian and international companies can flourish—industrial growth which provides jobs for the local people.
The road to Budapest also leads to a whole new eastern European reality
International supermarket chains, commercial traffic, and abandoned warehouses: welcome to the outskirts of Csorna. It is just thirty kilometres from Györ. There are no foreign investors here. Aurel Szirmay puts on his indicator. If you don’t look carefully, you can easily miss the factory entrance. Two parked cars are the only indication that there are people working here. The factory is behind a metal entrance gate. Sparks fly: somebody is doing some welding. Heinz Rabenseifner talks to a worker in Hungarian. 'I learnt the language working on construction sites in Budapest,' says the 59-year-old. He has the characteristic charm of the Viennese, but he can get impatient, too. 'Come with me,' he says and leads the way through the factory. There isn’t much to see yet: an office, the workshop, two punching presses—and empty rooms. The brief tour gives an insight into Hungarian history, too. 'It used to be a sewing shop,' says Rabenseifner.
Eighty women once sat here sewing underwear. During the communist period, sewing shops were often set up in conjunction with agricultural production co-operatives. After the fall of the Iron Curtain, many of them were privatised. The textile company in Csorna has long moved on to cheaper countries. A calendar from the year 1999 hangs as a reminder of what a typical working day was once like here. On the first floor there are still tables where the seamstresses worked.
'We’re getting rid of those,' says Rabenseifner. He has ideas for the big hall on the first floor: the plan is to have thirty staff making the plastic beads. Two Hungarian women are already seated at the punch press on the ground floor. 'It’s very difficult to find work in Csorna,' says the older of the two. She used to work at the hot springs, but they cut jobs. Then she moved to the nearby garden centre. The same story there: layoffs.
Csorna has a population of 10, 000. If you drive from Eisenstadt to Budapest, you pass through the centre. There isn’t a great deal to see: the renovated Provost’s residence, a dilapidated outdoor swimming pool with hot springs. In the local tourist office there is a Neckermann catalogue gathering dust. 'There isn’t much to do in Csorna in winter,' says the lady behind the counter. 'You can go to Györ. There you’ll find a swimming pool, a cinema, shopping malls.' Between 20, 000 and 21, 000 cars thunder down the main road every day: a lot of heavy traffic goes from Slovakia to Croatia.
The endless through-traffic, the sheer boredom and more than anything the lack of jobs are what get to people here. 'A lot of foreign companies moved into Hungary when the communist period ended. But the big companies passed Csorna by,' says Alpár Gyopáros. The 29-year-old is far removed from the cliché of a small-town politician: he is smartly dressed and his general manner would be better suited to a company listed on the stock exchange than a beer tent. Gyopáros is a member of Fidesz, a right-wing party which won the absolute majority at the last local elections. The young politician is planning a rock festival for young people, a tourist association for the surrounding area and a large-scale industrial estate. But what he would like most is to attract more companies to the area.
'The deputy mayor helped us get a workforce and an operating licence,' says Aurel Szirmay. Navan Global could have set up in any number of Hungarian towns. But it was in Csorna that they found their low-cost premises and a highly motivated deputy mayor. He even assigned the Austrians their own clerk to help them deal with all the red tape.
An experienced welder earns at least 2, 000 euros in Austria; the Hungarian equivalent works for a fourth of the money
After all, Gyopáros is well aware that as far as his town is concerned, it’s all about sheer survival. Unemployment may be low, but almost everyone commutes and many are moving away. 'Ten years ago, people came here by the busload to work. Now they are leaving by the busload,' says the deputy mayor. Heinz Rabenseifner and Aurel Szirmay are making the most of this labour vacuum. But the resettlement has had financial benefits, too: Csorna is dirt cheap. In a local pub the business lunch costs two euros (£1.84). Rental costs are a fraction of what they were in Vienna. An experienced welder earns at least 2, 000 euros (£1, 832) in Austria, the Hungarian equivalent works for a fourth of the money. But that wasn’t the deciding factor, insist the two investors. 'If it was only labour costs we were worried about, we would be in Slovakia.' According to Szirmay it was a simply a matter of finding qualified workers. In Vienna, certified welders who turned up for interviews were unable to operate the machine; then there were skilled workers who wouldn’t work for less than 4, 000 euros (£3, 665). 'We had applications from warehouse workers, chauffeurs and bakers. I probably could have set up ten shipping companies. But a metalworker with welding skills was nowhere to be found.'
The other side of the story
The businessmen from Vienna paint a rosy picture of their new company’s location. But the situation is tough for entrepreneurs in Hungary, too—according to economist István Hamecz, who was formerly on the management board of the national bank and today runs Hungary’s largest trust fund. 'Our labour market has been shrinking for years,' says Hamecz. He points out that wages have gone up by 10% in the production sector in recent years, but companies have only grown by 4%. Austria has not seen a pay increase on this scale.
Navan Global has only found two skilled workers to date, both still on probation. One of them is the future workshop supervisor. The short man aged around fifty is standing at the workbench bending a piece of brass into shape. 'I like this type of precision work where you have to think,' says Ferenc—he doesn’t want to see his real name in the newspaper because he is still under contract with another employer, where he earns 400 euros (366) a month. In the Sopron-Csorna-Györ region the average monthly income is 170,000 forint, around 670 euros (£614). Hungary is cheap for Austrian tourists, but not for locals. 'It’s difficult for me to get by. The electricity bill and the house cost a lot of money,' says Ferenc.
Some Csorna residents commute to Austria for this very reason. But there’s no way Ferenc is going back to Vienna. After the fall of the Iron Curtain he worked in Austria for fifteen years. Companies didn’t want to give him a contract and he was exploited as an illicit worker. Ferenc has had enough of all that: 'I’d rather mess around at home and sleep in my own bed,' he says. Even though he had been earning three times as much in Austria.
If you talk to the workers, you find out about the other side of the so-called 'skilled labour shortage'. It is true that the economic upswing in Austria led to a deficit in certain sectors such as the metal industry. But that wasn’t the only reason. Local firms had been cutting back trainee vacancies for years—and they continued to do so when times started to get tough. 'We did a study on the development of employment in Upper Austria in 2004. Even back then we warned of a deficit of skilled metalworkers,' says Helmut Mahringer of the business research institute. When the shortage became reality, the industry asked for skilled workers from the new EU member states to be allowed to work in Austria. In fifty professions they now have free access. But the problem is that those who wanted to go left a long time ago for countries like Sweden or the UK. And the ones who stayed behind are earning more at home. Who wants to go to Austria—a foreign country where guest workers have had such problems?
Who wants to go to Austria—a foreign country where guest workers have had such problems?
The times when top eastern Europeans flooded into the country are long past. The more foreign investors move into the former eastern bloc countries, the higher the rates of pay there. Navan Global is a small company that wants to gain some benefit from the eastern expansion of the EU. The little town of Csorna has lost lots of jobs in recent years. Can thirty more really reverse the trend?
'That’s not the point,' says deputy mayor Gyopáros. 'Even if the firm isn’t successful, it can still have a positive impact. Because word will get around that Csorna supports companies.' That may sound naive, but the enthusiasm of the two entrepreneurs from Vienna has already led to an Upper Austrian steel company contacting a local metalworking firm: the two are now negotiating a joint venture in Csorna.
The resettlement of this Austrian start-up company is just one example of how macroeconomic developments can affect individuals—the entrepreneur who is forced to move, the skilled worker who wants to be able to pay his electricity bill without cursing and the local politician who is hoping his town gets a second chance.
The next day a new machine goes into operation—a punching press. The older Hungarian lady tries it out right away. In the future she will be joined by thirty colleagues making one centimetre thick beads with her. They will be exported to the US, Asia and Europe. Does Csorna have a future? 'That’s a tough question,' says the lady. 'Perhaps.'
This is a full translation of the original article by the winner of the European Young Journalist of Austria 2008. First published in Falter 03/08, 16 January 2008