10:05 am CET
Sep 24, 2010


Audi, Opel to Expand in Hungary

    • Prime Minister Orban's expectation for Hungary's "GDP to receive a two percentage point annual boost from the Audi investment after completion in 2013" is most likely an error. Hungarian economist Vertes Andras in an interview on the Hungarian TV station ATV pointed out that it is expected that the Audi deal may result in a 6,000 increase in employment. If this results in a 2% GDP increase, that would mean that the entire GDP is generated by approximately 300,000 people, which is absurd.

    • Your simplistic logic is merely based on linear multiplication. We are not in grade school anymore (maybe you are). You forgot that different segments of society/economy can have a different economic weight, therefore their inputs can be disproportionate to their size. It is certainly possible that 6,000 workers in one industry (say a robotized factory) will outdo the economic output of say 600,000 waiters.

    • There is also a supply chain reaction - all kinds of contractors and subcontractors will work for a big car maker.

    • The actual number of jobs created by Audi is 1,800 (http://www.ibtimes.com/articles/65629/20100925/audi-gyor.htm). My assumption is that the 6,000 mentioned by Vertes includes the supply chain reaction (although lots of those additional jobs will disapear after the construction is completed).

      To the no name contributor about the grade school: instead of insults, I would appreciate some real arguments (possibly numbers) that demonstrate how the 2% GDP growth is achieved by adding 1,800 jobs and a factory construction.

    • To GDF
      I think I have an answer how a 2% GDP growth can be achieved by adding 1800 jobs and a factory: no way, it can not. Well the 2% growth can be achieved by the 6000 people, the factory and all the companies of the supply chain. It can be easily demonstrated how can that many people and companies do a 2% GDP growth. Well think about it how much an Audi luxus car cost. It's highly expensive. Now think about a factory that constantly churns out very expensive cars all around the clock day and night, even maybe on weekends too. There are a lot of them each day, in a year they make a horde of cars. It's called mass production for a reason. Now we get 2% GDP if all those car can be sold, and not one car remains in stock. Of course it doesn't need to be sold only in Hungary. They will be sold in the whole world. So the 2% is not a fix minimum growth from Audi, but a theoretically possible maximum growth. I cannot give you exact numbers, but I think you can imagine the magnitude of this simple equation: expensive car sold * very lot of them = GDP growth

    • The math is easy, except for GDF. If you sell 125,000 Audis for an average price of $40,000, then you make around $5 billion. If you keep about half of that money in Hungary, that is almost 2% of GDP. If you also add the revenue from the extra Opel production, then you certainly reach the 2% mark.

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