Hungary – Case study 2: Tiszaújváros

History

Tiszaújváros (15.000 inhabitants) is situated in Northeast Hungary, a rural region, that has been marginalized since the change of the regime in 1989. A map available here.

Tiszaújváros was established as ‘Leninváros’ as a second-generation socialist new town in 1970 near a small village (Tiszaszederkény) at the river Tisza.  The local economy rested on (i) chemical industry – ’Tisza Chemicals’ (TVK) was the largest chemical industry plant in Hungary that time, including a petroleum refinery, and holding monopoly in the production of substantial materials (e.g. PVC), and (ii) the energy sector (‘Tisza’ Power Plant).  Local industry rested completely on crude oil imported from the Soviet Union – thus, the town as a whole embodied the external dependence of the country under state socialism. Industrialization induced a substantial immigration: a sixfold increase (from about 3.000 up slightly over 18.000) occurred btw. 1970 and 1991 that left the old village intact and enhanced only the population of the growing housing estates adjacent to the industrial area (see figure 1).  The chemical company dominated local labour market until 1989 (4.500-5.000 employees).

Figure 1: Population trends in Tiszaújváros (Source: Hungarian Central Statistical Office)
Figure 1: Population trends in Tiszaújváros (Source: Hungarian Central Statistical Office)

The emergence of a corporate town: agencies and structural conditions

Tiszaújváros emerged as a typical corporate town. The reorganization and privatization of Tisza Chemicals was a milestone in its post-socialist history. The firm was one of the (not many) firms targeted by national industrial policy; thus, state ownership remained high until the late 1990s and substantial capital injections, specialization and downscaling (in terms of capacities and employment) made the company competitive and enhanced its market (capitalized) value. The firm was privatized step by step; the majority was sold to Mol Co (a Hungary-based regional multinational corporation involved mostly in chemical industry and oil trade) in the late 1990s, and Chinese capital also entered in the early 2000s. Although, the employment decreased from 4.500 to 3.000/3.200, the company has stability and remained a tier of the local economy.

Along with the reorganization of Tisza Chemicals (TVK) , a new industrial park was developed in the city – relying on the infrastructure capacities such as the energy plant and good transportation connections developed in the socialist era – that attracted new activities. The new key agent of the local economy was the Jabil Circuit (incl. in World TOP5 electronic firms) that established its Hungarian headquarter here in 2000. It grew embedded in automotive, ICT and engineering Global Production Networks (GPNs) and emerged as the largest employer (about 5.000 employees) in the Tiszaújváros LAU1 region. Although, SMEs (in metallurgy, machinery, textile, and construction industry) also entered the town, electronics (mostly, with labour intensive activities) and the recovered chemical industry (focused on more capital-intensive activities) dominate the local economy now. The area also has a growing tourism industry that rests of the vicinity of a major resort for wildlife protection at the River Tisza.

Recent processes: economic growth and social change

Yet due to its economic structure, the rapid recovery and growth put Tiszaújváros on a very different track compared to other cities in Northeast Hungary. Tiszaújváros is in a good position compared to the wider region and the average of small towns in Hungary, even though the town was hit by outward migration (the population declined from 18,7 to 15,6 thousand btw. 1990/2017, see Figure 1.) and the population is ageing. Household incomes, indices of quality of life (social and health care; housing conditions), high economic activity rate, low unemployment, moreover, the ratio of residents having diploma make the overall picture of the whole LAU1 area similar to the dynamic and well-off areas NW Hungary. This similarity is supported also by the high value gross industrial output/capita and export activity.