KECSKEMET, Hungary—Freudenberg Sealing Technologies has completed its expansion in Kecskemet, doubling capacity for sealing products at the Hungary site.
The firm said in a July 1 news release that the building doubled its production space by about 64,500 square feet, representing a $14.4 million investment and creating 75 jobs, bringing the facility's total employment to 700.
About $4.45 million has been spent on the building, with the remainder designated to get the plant to full capacity by 2018. Once fully operational, the facility's capacity will increase to 9 million seals per month, up from its current output of 6 million per month.
Kecskemet produces radial shaft seal rings for transmission and drivetrain applications, including its Energy Saving Seal, which Freudenberg said contributes to a significant reduction in vehicle fuel consumption and emissions.
“We see growing demand in the automotive market in this region,” a company spokeswoman said. “We have a strategy that we are continuing to locate or expand our facilities in areas where we are close to our customers.”
She added that the investment is not just about growth, but about defending the firm's current market position. Freudenberg Sealing Technologies operates 50 facilities in Europe, including production, technical centers and sales offices.
“There is strong competition in the market—we know this,” she said. “It takes some effort to defend our market position.”
Automotive is a big industry for Hungary. The spokeswoman said the industry is growing at about 10 percent annually with Mercedes, Audi, Suzuki and GM making significant investments in the country. The spokeswoman added the country has about 600 enterprises, which combine to employ 100,000 people, producing about $16.6 billion in revenue with 92 percent of their products being exported.
“Hungary has a stable currency, good infrastructure, and it's very well accessible, which is key for logistics,” the spokeswoman said.
Freudenberg said the Hungarian government provides tailored programs to help foreign companies with investments in the region. The Hungarian Investment Promotion Agency, part of the Hungarian Ministry of Foreign Affairs and Trade, provides financial support to foreign investors, Freudenberg said. The country has additional assistance available in the areas of language training and special technical education.
Freudenberg said because of the high concentration of industry, there is nearly full employment in the region. The firm said to meet skilled labor demand in the future, Freudenberg Sealing Technology will intensify its internal employee training and become strongly involved in local education programs.
The spokeswoman said the firm is investigating with regard to its involvement with local education programs.
“Hungary offers outstanding conditions for auto makers as well as the supplier industry,” FST CEO Claus Mohlenkamp said in a statement. “Leading companies in the industry, including many of our customers, appreciate this and have built major facilities in Hungary.
“With our plant in Kecskemet, we can quickly supply our customers in the region with high quality sealing solutions.”
The expansion comes at a time when there is some uncertainty in the European market thanks to the U.K.'s recent decision to leave the European Union.
“We have paid very close attention to this decision,” the spokeswoman said. “At the moment, we continue to monitor the situation, but overall we feel the impact on our business will be manageable in the long term.”
Freudenberg said its Kecskemet facility has been producing seals since 1998, with operations steadily expanding since then. Freudenberg Sealing Technologies reported sales of about $2.55 billion in 2015 with more than 15,000 employees worldwide.