József transferred from the world of railway infrastructure and transport, Miklós came from the automotive industry and the military vehicles business. With such a background, what lured you to the EU-Fire Group on the production of medical equipment, energy and agriculture?
József Kerékgyártó (K.J.) – Actually, it’s not about railroad, it’s more about the managerial knowledge I gained at Corvinus and Harvard on how to build an efficient, sustainable, customer-facing company. The principles are essentially the same everywhere– even if you apply this TNC-based-knowledge to a public company. And now I’m doing my job with a family-run company that does a cool thing: it helps make the future livable.
Miklós Juhász (J.M.) – It was also crucial for me when I chose the EU-Fire Group that its two most important business lines serve a good purpose: it supplies green energy to housing, schools, institutions and helps to preserve the health of the country. I couldn’t find a challenge in the automotive industry anymore, but here I did: we started in Mátészalka a robotic high-tech plant, producing medical devices, grew out of the forest in a year. By the way, the task was the same in my case as in my previous works, a professionally functioning production system had to be built. Only now at the end of the production line is not a car “falling off”, but gloves.
K.J. – I do not dispute that the details of the organization of work are different and the network of contacts of different industries is different, but the basic processes are the same. If you have a good team and the hammer is always in the same place, it’s a semi-success.
– “The hammer?”
K.J. – Yes. It is a symbol of the rule of order and transparency in the interior. Having a separate hammer for each major in a company is a waste and a mess. Five of these tools are enough for everything – the main thing is that the five hammers are always in the same place, the workers know where to reach even when they wake up from their sleep. If there is order in spaces and processes, it will be so in the minds. Then you can just go for the rest, like creativity.
– Let me wonder: what is the need for creativity at the Mátészalka plant that manufactures nitrile gloves?” From China, the production lines arrive, they are put in place and production can start.
J.M. – That’s how it would sound in a fairy tale. But in reality, we can adapt such a machine to domestic conditions by partially – and sometimes in whole – rebuilding it. Even if something meets the Chinese or American health industry regulations, the Hungarian technological and quality protection regulations differ, as do the EU requirements. And then yet, we did not talk about labor protection.
– If there are so many variable factors, wouldn’t it be easier to develop such a production line from scratch?
J.M. – No. There is no such production line in Hungary, not even in Europe. Just to see how such a nitrile glove factory works, you need to travel to India or the Far East. It is much simpler to buy an existing technology and shape it in our own image. So there is a great need for this creativity.
– Speaking of the ability to change: EU-Fire started as a kind of real estate company. Now the company’s profile is drawn by green energy and health equipment production. It looks like a pretty swirling orbital arc. By the way, has the group arrived, or will its profile continue to be formed in the future?
K.J. – Actually, it’s more of a straight line. The exploitation of geothermal energy is almost a tradition at this family company, as a result of successful projects, such systems heat the district heating homes in Mátészalka or Csorna, and soon our group of companies will provide the heat in thousands of apartments in Mosonmagyaróvár. And the production of medical supplies is due to the fact that the government has realized that if it does not build a self-sufficient domestic health industry with meaningful subsidies, hospitals and clinics can be left without basic equipment in the middle of a global epidemic. The EU-Fire Group applied with good pace and brought to fruition a highly automated “plant of the future”. Just to understand each other: if a customer picks up the phone that he needs a truckload of nitrile gloves, injection needles or even various surgical instruments, then after a day and a half, the track will have been filled, even with sterilized products.
J.M. – By the way, a future plant was also built in Kocsord – the point here is not mass production, but innovation. If a potential customer comes in with a sample, we essentially scan with our CNC milling machines in minutes, program them, and start production.
“So, then the group of companies has arrived?”
K.J. It is still on his way, but it knows exactly where it’s going. The EU-Fire Group should be conceived as a kind of portfolio manager, managing agricultural, health, metalworking and energy enterprises at the same time. As such, it has well-established production units, which in turn can be peaked if they do not stand on their own, but work as a part of a group. For example, we are building a gene-preserving pig farm in Kisfüzes. It’s a good story. We are breeding a dominant Hungarian breed, the Hungarian great white from Keszthely – if you like, we take over part of the state task. We also send high-quality meat to the market – if we can sell the piglet. The risk is not small. However, it is already more manageable to build a complete production chain, that is, the pig farm is able to produce food for itself and has a meat processing plant. And, of course, the profit is also heftier. In a word, we strive to optimize the market environment for all our portfolio elements. In the case of the health industry factory in Mátészalka, this means, among other things, mapping foreign markets.
– Some of the medical supplies are actually seasonal supplies, such as nitrile gloves and syringes, which are needed in huge quantities only in desperate times – and hospitals are served centrally sourced. Is it possible to make meaningful profits on such a fixed trajectory?
J.M. – As József mentioned, we are in the process of exploring potential foreign markets for medical supplies. Of course, we don’t just focus on the health industry. On the one hand, we have designed our plant in Mátészalka so that external partners can also use our high-tech equipment: for example, the heat treatment furnace or our sterilization equipment. In addition, we can produce on our press machines for the military or the automotive industry if necessary. On the other hand, nitrile gloves are used not only by healthcare: they can be used in the beauty industry, hospitality, automotive, cleaning business.
– And why would anyone buy EU-Fire nitrile gloves when competition from the Far East is cheaper?
J.M. – We are trying to create competitive prices, and the difference in quality is not in question – and let me stress: it is a domestic product. I may be wrong, but I trust patriotism. In that if a reliable Hungarian product is only slightly more expensive than a similar Chinese or Indian product, then people choose domestic quality.
K.J. – Seasonality is an important issue. If you want a well-functioning health industry, then it is worth paying attention to duality for the government, that in an epidemic the domestic health industry is in high need, while in peacetime the globalist logic is getting the attention, and the far eastern multinationals are still in the lurch. In this economic environment, a European plant can do no more than compensate for cheap Asian labor with maximum robotization and concentrate on quality. But even with mandatory business diligence, there is still a need for a supportive framework to help firms weather periods of downturn — if only because it’s important for the state to have enough capacity in an emergency. As far as the Mátészalka plant is concerned, I think that overall we have put together a sustainable factory.
– When you talk about a supportive framework, do you mean financial assistance?
K.J. – There are other aspects to the subject. For example, it would be useful to set quality requirements in the various tenders. This is because now most of the gloves available on the market are so thin and their nitrile content is so low that they have to be thrown away by the dozens. I think it’s terribly annoying, demotivating to have to work through a day as a doctor or nurse in nitrile gloves. And let’s add, cheapness is an illusion when 40 percentage to be thrown out. Fortunately, in retail, hairdressers, auto mechanics, cooks are willing to pay for this quality.
– As a health industry player, the global market is causing difficulties, but as a player in the energy sector, the EU-Fire Group is forced to thrive in an over-regulated terrain, where the government price is also present. Is it possible to thrive as a market player in this field?
K.J. – With such gas prices, it is definitely worth building geothermal systems. There is only one risky part of the process: drilling, this is a batch of hundreds of millions. That is, if a company drills on its own, it can also fall into a failed attempt. While proportionally, 80 out of 100 attempts are successful. If the state were to get in at this one point, for example, to create a drilling company or a venture fund, the potential of thermal water energy could be exploited much more effectively. And in the end, the state would benefit, for example, most of the approximately 650 thousand district heat-heated homes could be connected to geothermal systems, and in the end, it would not be the government that would have to bail out 700 billion to the municipalities that own local district heating companies, which are simply unable to manage the brutal gas prices. One gigajoule of thermal energy can be produced from 50 thousand forints, while the district heating company is forced to sell it for 5 thousand forints. While with gas, the supply risk is quite large. I don’t think there’s any question.
– Geothermal solutions are basically considered in the case of residential systems such as district heating…
K.J. – Let me insert a comment. In Mátészalka, in the industrial park, the companies indicated to us that they would be strongly interested in a geothermal system. This is a project worth a few hundred million, businesses could get energy for a fifth to a sixth of their current costs, while we are already talking about market prices. So yes, it’s worth it on a market basis as well. Just because a thermal water well produces for forty years after it has been drilled, at essentially the same cost level.
– I don’t know if you have a fortune sphere, but do you look into it, or the long-term business plans, how do you see EU-Fire?
J.M. – If everyone is heading in the same direction, we will be a group of companies building the dominant geothermal systems in Central and Eastern Europe. My prediction from the health industry sounds like I hope that the plant in Mátészalka will be Hungary’s number one manufacturer, and we will be ranked high in the region as well.
K.J. – I would put it this way: it will be a holding company that generates decent profits and has not only business lines, but also serious social utility. By building a knowledge base with Hungarian products, the work of Hungarian people and communities, and domestic research institutes, we make our future more livable. And as a former railroadman, I can say: it’s on track.