Hungarian employees tasked with training guest workers laid off from battery factory receiving billion-forint support for job creation – company issues explanatory statement

In December, about 60 employees with Hungarian citizenship were reported to have been laid off from the Salgótarján plant of South Korean company Bumchun Precision Hungary Ltd. The firm manufactures components for electric car batteries and has been operating in Hungary since 2020. The dismissed workers performed semi-skilled assembly line labour and were typically not directly employed by Bumchun, but rather through a temporary staffing agency. The downsizing took place after a significant number of Vietnamese guest workers had arrived at the plant at the end of last year. The pre-employment training of the Vietnamese labour force, for example in machine loading and operation, was done by the later fired Hungarian employees. Currently, the positions of the laid-off employees are filled by the Asian guest workers – as multiple sources have reported to 24.hu.

Initially, Bumchun seemed rather reluctant to clarify the situation – as demonstrated by the case of Sándor Berki, parliamentary representative of green party Párbeszéd-Zöldek (Dialogue-Greens), who decided to conduct a personal investigation when the case surfaced. Following initial reports, the MP visited the plant’s premises to address questions to the management, but despite a long wait, he was not received by the board in the end – all he was provided with was an email address for inquiries. Consequentially, he did not receive official confirmation on any of his questions regarding the number of either the newly arriving Vietnamese or the laid-off Hungarian workers, he told this newspaper. According to employee reports, however, the company’s own employees were also affected by the layoffs to a lesser extent, but Párbeszéd’s representative was unable to confirm this information, either. On the other hand, he went on to add that he had been contacted by numerous current and former employees; and based on their news, around 30 further Vietnamese guest workers arrived in early January. Berki, however, was not the only one intrigued by the incident: Bumchun’s case is currently being investigated by the Ministry for National Economy.

Farkas Norbert / 24.hu Sándor Berki

At first, all attempts to get an explanation seemed to be in vain. It turned out that the notification address provided by the South Korean company would correspond to the residence of a private individual, much like the accompanying phone number. As per Berki’s report, the apartment’s owner received numerous calls following the early reports, responding always that the number is wrong, and denying any connection to Bumchun. 24.hu also called the number, but the call was quickly hung up on the receiving end. Our newspaper also sent out emails to the provided address, to no avail.

But eventually, Bumchun would react: one day after 24.hu had reported on the issue, CEO Kim Ho Youn issued an official statement responding to the article’s contents.

“In order to meet the growing demand for labour, we have been employing workers from third countries as well through qualified staffing agencies since March 2023. Due to increased personnel requirements resulting from absences due to year-end vacations and illnesses, we experienced a higher demand for manpower, which was managed by involving employees from labour leasing agencies to maintain the necessary production volume. Additionally, the stagnation in the automotive industry has affected the demand for the products we manufacture. Similarly to other suppliers in the automotive sector, our sales have not increased, forcing us to temporarily reduce the workforce that was brought in during December. Among the employees who have left in recent weeks, all internal staff departed either voluntarily or through mutual agreement.”

Among the leased employees, the Korean management elected to retain the more reliable and better-performing workers to continue operation. Among the leased employees who were let go, individuals from Hungary, Vietnam, Kyrgyzstan, and Ukraine were included

– stated Bumchun.

“The fulfillment of commitments undertaken for the investment incentive support provided by HIPA (Hungarian Investment Promotion Agency) is not in jeopardy by any means. Our current workforce consists of 742 employees, with the majority being Hungarian, residing in Salgótarján or the surrounding area. We significantly exceed our commitment to the Hungarian government in terms of employment. Our company is planning additional investments in the already purchased neighbouring property, which will create additional job opportunities” – the CEO added.

The reaction in original
Megindokolta a salgótarjáni akkuipari cég, miért rúgták ki a dolgozókat
Közleményükben azt is írják, az elküldött dolgozók között magyar, vietnámi, kirgiz, ukrán munkatárs egyaránt szerepel.

The firm’s reply seemingly aims to discredit the narrative of Hungarians being sacked for the sake of employing Asian guest workers, listing a wide range of nationalities among those laid off, as well as stating that the company has been employing non-Hungarian guest workers since March 2023.  Attempting to justify the Korean leadership’s choices, the statement cites a drop in demand for the firm’s products – a seemingly reasonable explanation – but the reply makes no mention of the Vietnamese guest workers arriving to fill up the emptied positions.

The statement also seeks to present the incident in a more peaceful light, suggesting consensus between management and the employees leaving the firm. However, the cleverly-worded reply only makes this suggestion regarding internal employees, while the vast majority of those affected were not in this category, as they were leased through staffing agencies.  As for these workers, Bumchun’s response implies issues of reliability and performance, which is in contrast with reports made by former employees, and once again ignoring the issue of foreign workers being brought in to take their places.  Furthermore, the South Korean company’s future job creation commitments offer little consolation to the laid-off labourers, who are now finding themselves in a very difficult situation.

Sacked without explanation

This newspaper has managed to get in touch with one of the dismissed employees, who had been working at the plant as a machine operator since last June. To his knowledge, the laid-off workers, himself included, were indeed leased labour, and as such they were the first targets of the downsizing. Bumchun has contracts with several staffing agencies – we have identified four such companies so far –, and several other external companies have sent employees to the factory.

The Vietnamese guest workers had been arriving at the factory since December 2023, and it was us who were tasked with training them to work in the assembly department. Initially, we had no knowledge of them coming to fill our positions; however, we still suspected it, as the department had no need for so many people. Although back in December, the management would still deny that anyone was going to be let go. Therefore, we didn’t expect to be fired right at the beginning of January, when it’s very difficult to find employment elsewhere due to plant shutdowns

– explained the former employee.

It should once again be pointed out that while the response points to market downturns resulting in the need to dismiss labourers, our source’s report makes it clear that the Vietnamese workers had arrived well before the dismissal had taken place. Furthermore, no specific reasoning was provided by the staffing agency as it called them in to inform them of their dismissal – they only stated the fact of the downsizing. Among those let go, there was one worker on sick pay due to a previous workplace accident, but the rest would typically outperform the norm. According to the schedule, workers at the assembly lines had four consecutive 12-hour workdays followed by four days off. The company offered ample opportunity for overtime on days off, something the leased labourers were eager to take advantage of for financial reasons. Accordingly, they were called in to work even during Christmas and on New Year’s Eve. The reports are consistent in claiming that no prior complaint had been made about their work. This information also seems to contradict Bumchun’s statement, which implies issues of reliability and performance.

Initially, every affected employee was offered the option of mutually agreed resignation. Some accepted the offer; our source, however, did not, so it’s likely that he would ultimately have to face unilateral termination by the employer.

But so far I have received no documents regarding termination. They said the papers would only arrive next week, as it takes until then to prepare them

– he said.

More government support than initially promised

In 2019, Bumchun announced a 13.3 billion forint investment to build its first plant outside of South Korea in Hungary. At that time, Minister of Foreign Affairs and Trade Péter Szijjártó stated that the government would support the investment with 2.65 billion forints as the new plant, being a primary automotive supplier, would mean 200 new jobs. However, according to Bumchun Hungary’s financial statements regarding the past few years,

the company has received a total of 3.32 billion forints in support from the Hungarian Investment Promotion Agency (HIPA) in 2021 and 2022.

Apart from HIPA support, another sum of 257 million forints in budgetary support is listed as other revenue for 2021/2022. The reports do not specify whether this budgetary support constituted HIPA support or if it is to be understood as a separate item. Previous financial statements reveal that the company has been receiving investment support since 2020.

According to the 2020 report, the firm received the state’s funding as wage subsidies, with total wages and personnel-related costs amounting to 362 million 438 thousand forints over the year.
The 2021 statements note that the government support received by the enterprise came in the form of wage subsidies as well as HIPA funding. In 2021, wages and personnel-related costs increased to HUF 909 million 669 thousand.

None of the pre-2022 reports provide detailed information on the exact proportion of HIPA and wage support within the total amounts. Moreover, the documents reveal no indication regarding any conditions on which the funding was provided by the ministry, for example whether there were quantified employment obligations and any potential regulations that would apply thereto. We have contacted the Ministry of Foreign Affairs and Trade with these latter inquiries, so far to no avail.

Since 2020, Bumchun Hungary has managed to increase revenues by leaps and bounds each year: according to the latest information from 2022, the Korean plant closed the year with a turnover of nearly 6.7 billion forints, representing a 35% growth compared to the previous year. However, Bumchun’s subsidiary company generated hundred-million losses year after year between 2019 and 2021. 2022’s net loss was as high as 1.38 billion forints, a result underperforming 2021’s results by 141% – all while Bumchun was obligated to a mere HUF 13,4 million in taxes.

Despite the financial challenges, employee headcount increased at a steady pace. While 2022 had begun with 130 labourers, the workforce grew to 400 by the end of 2023.  It’s important to note that leased labour is not represented in official headcount figures, so the actual number of workers in a manufacturing company could exceed official employee count by several hundreds. The firm’s recent response mentions a total workforce of 742 employees.

Both employment and dismissal of leased labour is much simpler than the processes for regular employees; although general regulations still require the employer to justify terminating leased employment, which did not happen in the case of our source. When it comes to unilateral termination of leased labour, a minimum notice period of fifteen days is also an obligation of the employer, provided the three-month probation period is over. This was also not given to the employee in question.

KOVÁCS ATTILA / MTI Ri Ki Jeon, President of South Korean Bumchun Precision Co. Ltd., speaks at the press conference on the investment of Bumchun Precision Hungary Ltd. at the Ministry of Foreign Affairs and Trade on July 24, 2019.

We contacted the managing director of LZ-Transwork Ltd., the staffing agency through which our source was employed. MD Zoltán Nagy stated that LZ-Transwork was responsible for the leasing of about 20 semi-skilled workers out of the 60 laid off in the incident, while the others were supplied by different companies. However, they are still leasing about 65 further employees to Bumchun’s battery plant. He also understands that, according to rumours, the arrival of guest workers was indeed the reason for the downsizing – this also contradicts the client firm’s later statement.

It is the clients that determine how many labourers we are to provide or call back, although neither downsizing nor workforce expansion is usually reasoned for by the companies. On our end, the termination processes were all in accordance with rules and regulations, as far as I know, all the employees involved were still in their probation period

– explained the director.

Contrary to the information provided by the staffing agency, our source claims that the majority of those laid off had already completed their probationary period, including himself, as he had been working at the plant for half a year. “I still even have my locker key, access card, and working clothes. They didn’t even call to ask me to return them” – he told us. “Operating the machines requires a strong mental presence, as lots of accidents happen to those not paying attention. We were given no more than a month to train the guest workers, and were promptly let go afterwards. As for the training itself, they did not understand basic English words, let alone Hungarian. These conditions made the process very difficult, and it would have required several months” – he added. In light of this, it seems indeed questionable whether these workers will constitute the “more reliable and better-performing” part of the workforce, mentioned in the Korean company’s response.

Foreigners brought to Nógrád despite striking unemployment

According to the worker interviewed by our newspaper, neither Bumchun nor the staffing agency has offered them reemployment opportunities, forcing him to apply for unemployment benefits.

The main issue is that workers replaced right now have nowhere to go. The leased workers are from around the town of Salgótarján, they do not come from Hungary’s distant corners. Finding a job in the city and the county in general is very difficult, especially if one is after decent pay. The construction industry is also full of shutdowns right now, so many don’t know what to do next” – he explained. Bumchun’s claims of outperforming their employment commitments to the Hungarian state, or their intention to expand their operations in a future plant on the neighbouring property are probably of little solace to the dismissed labourers.

As per the announcement of the Nógrád County Government Office last year,

Nógrád still has the highest unemployment rate among all Hungarian counties.

The office measured the county’s unemployment rate at around 10%, while the Central Statistical Office (KSH) reported 8.5% in 2022, still significantly exceeding the national average of 3.6%.

Regarding professions there’s a shortage of, or for example in Western Hungary, where it’s difficult to find semi-skilled labour, it would be understandable if companies were to bring in foreign labour with state support.

But someone please explain to me why guest workers are needed in north-eastern Hungary, especially Nógrád of all places?!

asks Párbeszéd MP Sándor Berki, adding that as employing foreigners has become common practice in the city, such a wave of downsizing is a serious blow to Salgótarján workers.

The current incident may also go against the laws regulating the employment of guest workers, modified just last December. Among others, the regulations state that

the number of guest workers arriving in the country cannot exceed the number of unfilled positions,
for each individual position there has to be an examination regarding whether there’s a Hungarian worker to fill it,
and guest workers may only be hired if no prospective domestic employee applies for the job.

Machine translation revised, edited and annotated by Frigyes Harmath.

The post Hungarian employees tasked with training guest workers laid off from battery factory receiving billion-forint support for job creation – company issues explanatory statement first appeared on 24.hu.

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