Coping with Changes and Challenges

Tungsram, an internationally renowned multinational company headquartered in Budapest, offers lighting and intelligent lighting-based services, smart solutions for buildings and cities, as well as tailor-made ‘greentech’ solutions. The company looks back at a history of over 125 years. Its President & CEO Joerg Bauer tells Diplomacy&Trade about how Tungsram reacts to market changes and opens to new areas as the skills, knowledge and experience built up at the firm over the past decades in Hungary and worldwide can be translated into different industries.

As a result of market changes, Tungsram is undergoing a restructuring process. As Joerg Bauer explains, “there are many manufacturing export companies in Hungary today that have been ravaged by the global economic crisis following the COVID-19 pandemic. The sharp rise in energy prices, the increase in the price of raw materials, the global problems of logistics, transport, and the shortage of chips, and most recently the devastating war in Ukraine with the uncertainties around Europe’s energy supplies have created an uncertain and unpredictable situation that has not been seen in recent decades. Tungsram has also been severely affected by these developments. In addition to all this, governments and municipalities around the world have suspended a number of large-scale investment projects, construction projects and tenders for the renovation of entire neighborhoods in anticipation of the end of the epidemic – and the company supplying lighting and smart technology services based a big chunk of its business plans on them in 2021. Meanwhile, demand for traditional lighting products, which are Tungsram's strength, is also declining. We have to make some serious decisions as we are facing serious challenges. The solution would be a nationwide campaign to buy Hungarian products and innovation, including ours, of course, and also energy efficient investments as win-win situations.”

Into manufacturing aircraft engine parts
In December 2021, a new company, Tungsram Aero Space Power Ltd., was established within the Tungsram Group with a share capital of HUF 2 billion. The firm is engaged in the repair and maintenance of aircraft engine parts and is about to enter a USD 100 billion market worldwide.
According to the President & CEO, “Aero Space Power is a great example of how our knowledge, innovation and experience in the lighting industry can be translated into different industries. We have produced and repaired components for 125 years for the lighting factories. Therefore, Tungsram offers first class quality solutions and engine repair services to the largest turbine manufacturers and MRO (that is, maintenance, repair and overhaul) service providers.” MRO in the aircraft industry represents a USD 100 billion turnover globally, with a continuous further growing potential according to the unanimous judgement of the industry players. Two other areas accompany this field: parts production for energy industry and renewables. The company aiming at those markets employs 125 people in the production hall of the Tungsram factory in Kisvárda in northeastern Hungary (mainly experienced engineers and qualified specialists). Tungsram Aero Space Power is currently the single aircraft engine part manufacturer in the region holding the certificates of both the European and American Aviation Authorities (EASA and FFA). The Kisvárda plant is a regional center of excellence in the field of welding.

Offering a solution for food autonomy
In May 2021, Tungsram's Budapest site saw the creation of the region's first commercial-scale research and demonstration vertical farm with controlled climate conditions. As a sign of the company's commitment, it later signed a cooperation agreement with the Hungarian University of Agricultural and Life Sciences (MATE) to establish a joint research institute and a temporary chair. As to what this means for the future of agricultural innovation in Hungary, Joerg Bauer highlights that this is one of the tools by which Hungary may claim back its original position in the five biggest agricultural research countries based on its knowledge. “This technology that can be one of the solutions for the global food security problem is the opportunity of our generation. One of the factors of growth is that in ten years – because of climate change, urbanization and population increase – the world will need to provide 50% more food than now. All while arable lands are drastically decreasing. For this reason, indoor farming can serve as an alternative for the food security of the world, however, huge development is necessary to be able to mass produce grains, rice, corn this way. This is also a first step towards food autonomy that has become a key concept in the turmoil of global food security enhanced by the looming crop crisis because of the war in Ukraine. Food autonomy is essential, for example, in the Middle East where growing plants is impossible externally, you need high-tech indoor farming solutions to eliminate the need for huge food imports,” he explains.