Hungarian SMEs See Their Future in Development

Most of the companies desire and plan technological developments, viewing digitalization as crucial for increasing competitiveness, but the prevalence of automation and Industry 4.0 solutions remains low. that is according to a recent study, commissioned by Siemens Hungary Plc., that surveyed decision-makers of Hungarian small and medium-sized manufacturing enterprises (SMEs) about their development plans.

Almost all decision-makers participating in the survey (94%) consider technological innovations important to some degree, with every second company viewing them as particularly crucial for maintaining competitiveness. They primarily see their role in increasing efficiency (61%), while every second respondent considers them important for achieving good quality, cost optimization, and speed.

Although most companies place themselves at the same technological level as their competitors, - except for companies with revenue above HUF 500 million, - more companies feel their position is weaker compared to their competitors. This subjective assessment is confirmed by the fact that only 14% of respondents stated their manufacturing processes are fully or well automated. Half of the companies assessed themselves as weak in this aspect, with one-third of these, and 40% of companies with annual revenue below HUF 300 million, having no automation in production at all.

Thus, the implementation of Industry 4.0 solutions shows a limited picture: 67% of respondents don't use such technology at all. Those who do primarily automate production or use IoT devices and industrial robots. Companies with revenue above HUF 500 million reported significantly better results in this area. Half of these companies already use Industry 4.0 solutions, mainly in automation and robotization.

Most surveyed SMEs (86%) plan some form of technological development in the next 3-5 years. Another 12% desire developments but don't plan to implement such innovations in the coming years due to resource constraints.

The plans and desires mostly align regarding development goals: technology modernization with capacity expansion and workforce skill improvement lead the way, with 44% and 34% of respondents marking these as planned options. 42% of companies would like to implement energy-related developments (e.g., energy efficiency improvement, renewable energy production, fleet electrification), however, only 32% stated they plan these for the next 3-5 years.

Companies expect quick returns on developments: 50% want to break even within 3 years, and only 10% would accept a payback period longer than 5 years. This aligns with their predictions that technological innovations will lead to increased performance/efficiency (61%), revenue growth (60%), cost reduction (54%), and strengthened market position (51%).

However, respondents consider technological developments important not just for their financial consequences: workforce retention (53%), creating new jobs (37%), and increasing employee motivation (37%) were also mentioned among the benefits of investments. 40% of respondents mentioned they expect existing workforce retraining or further training will be necessary. This number was significantly lower (13%) among companies with revenue above HUF 500 million.

The biggest obstacle to technological development among survey participants is primarily internal resource shortage: capital shortage is the main barrier for more than half of the companies, while labor shortage is also a problem for many (40%). Additionally, 48% of respondents listed access to external financial resources among the difficulties, with nearly a third of companies being hindered by the lack of grant opportunities.

In contrast, lack of knowledge or expertise is considered a deterrent at only one in ten companies, and generational conflicts arose at only 7%. However, external environmental factors such as market outlook, regulatory environment, macroeconomic stability, or lack of demand make 29% of respondents more cautious.

The survey was conducted in April 2025 on behalf of Siemens Hungary Plc., polling 100 decision-makers from Hungarian manufacturing SMEs. Data collection was done by phone, with the research aimed at mapping technological development intentions, obstacles and opportunities.