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November 13, 2018

József Máthé was one of the driving forces when Müller-Guttenbrunn gained a foothold in Hungary over a quarter of a century ago. As the first managing director of Mü-Gu Kft. he went to his limit. In an in-depth interview, the 71-year-old talks about coincidences, pitted laws, divided plots of land and the company’s current success.

Mr. Máthé, over 25 years ago the Hungarian MGG subsidiary Mü-Gu Kft. started operations in Budapest. You were the first managing director at that time. What were the beginnings like?

József Máthé: The history of Mü-Gu Kft. begins already in 1989. The Iron Curtain had just fallen when Herbert Müller-Guttenbrunn founded the company. However, it only existed on paper – there was not even a company site. So my first task was to look for one, which was not easy after the fall of communism in Hungary. In the end we found and bought the present site – a former slag heap of a foundry. In the summer of 1991 we started to build the necessary infrastructure. At the end of the year I also had to put together a workforce before we could start in February 1992 with 22 employees.

How did you even get on board this very daring project?

József Máthé: That’s a long story – but in the end it was a coincidence. Herbert Müller-Guttenbrunn had travelled to Hungary several times in the 1980s to buy scrap metal. In the process he often had to deal with Livia Herold. Now one must know that she was the wife of my colleague at that time. When Müller-Guttenbrunn founded the company, he asked her if anyone knew her for the job of managing director. She must have recommended me.

You certainly had perfect prerequisites: You worked as a designer in an engineering office and you spoke German. How did they learn our language?

József Máthé: I had my first contact with the German language at school. From 1970 to 72. I also worked in the GDR, more precisely in Dresden, in a printing press factory. After that I always did translations in the evening while working in the engineering office. I didn’t know many words, but with the dictionary I picked them out and learned them bit by bit. After all, I also spent four years in Austria. I worked for our office in Linz at VOEST, where we developed a turnkey steelworks built in Russia.

During this time you were already a guest at the former Mü-Gu scrap recycling company, today’s MGG Metrec, in Amstetten. Is that true?

József Máthé: Exactly. We looked at various scrap yards so that we could optimally plan one for the steelworks. So we spent half a day at Mü-Gu. I remembered coming to Amstetten in February 1990 on the invitation of Herbert Müller-Guttenbrunn.

But you stayed there longer afterwards…

József Máthé: Indeed, that’s right. While I was always looking for a suitable area in Hungary in between, Müller-Guttenbrunn offered me to look at everything for a year. That was also important, because for me it was really one of the most far-reaching decisions in my life: before that I drew plans for some 23 years – now it was from the drawing board to the scrap yard.

Scrap yard is a good catchword. What was the work like at the scrap yard of Mü-Gu Kft. in the early 1990s?

József Máthé: We started production with an old scrap shear from Amstetten and a small mill. We became well known in the trade relatively quickly. We achieved good results in the early 90s. On the one hand with the small scrap dealers, for whom we exported scrap abroad on our behalf – not an easy matter at that time. On the other hand, due to the fact that we took over the dismantling of the old 2-stroke cars – for example Trabi and Wartburg – after a tender. There were only two to three thousand cars that were professionally scrapped each year, but the newspapers reported about it.

Exactly in this time there was also a big fire…

József Máthé: Yes, unfortunately our little mill burned down one Saturday night in 1994. Afterwards it turned out that a glowing part ignited everything very slowly. We were insured, but there was still a considerable loss. The mill was finally replaced a few years later by a large shredder.

What changes did this bring?

József Máthé: The shredder was put into operation in September 1998. At that time, we thought that the larger plant would enable us to work more economically, just as we did in Amstetten. However, the Hungarian market could not be compared with the Austrian market. At that time, the steelworks in Hungary still took over the scrap that had been compressed into packages. So the traders could also sell a lot of waste while we separated everything. As a result, the purchase prices for the shredder pre-material were much too high for us at that time.

That is, you had economic problems?

József Máthé: Yes, we then wrote deep red figures. There were other reasons for this besides the high purchase prices. One of them was the flourishing corruption. As a subsidiary of a foreign company, we could not and did not want to participate in this. However, this meant a clear disadvantage in the market, for example in tenders. Another very decisive point was the loopy laws that ultimately cost us millions in non-refundable VAT.

How was that possible?

József Máthé: The reason was that at that time the entire price including VAT was paid out to the suppliers. However, many of the companies that were active on the market at that time disappeared from the scene after a few months without having paid VAT to the tax office. We were therefore not allowed to deduct VAT, because according to the tax office we should have checked this better. We fought for this money in court for 16 years, but we lost the case. Here we really must say that the Müller-Guttenbrunn Group has shown a great deal of patience. Others would certainly have thrown in the towel. Herbert Müller-Guttenbrunn already predicted at the time: “It will take a few years for everything to settle”….and fortunately it did turn out like that. Meanwhile there is a new value added tax law, so that the VAT is no longer paid out, but is only issued as a credit note. Five years ago a new metal law came into force in Hungary, so that now all companies dealing with metals and scrap have to register. So it can no longer happen that the companies suddenly disappear.

So disputes were the order of the day?

József Máthé: Yes, there were problems time and again. For example, after the construction of the shredder, when we suddenly no longer knew where to dispose of the waste from the shredder. It is important to know that there were hardly any safe landfills in Hungary at that time. So we did not find a proper and suitable landfill and the newspapers already wrote that we delivered hazardous waste to the landfills. That was a serious battle with the Ministry of the Environment. We had to temporarily store around 3,000 to 4,000 MT’s of waste on our own premises. Fortunately, particularly foreign companies invested and built suitable landfills so that we could dispose of our waste properly eventually.

This means that you always had to struggle with extraordinary challenges as managing director?

József Máthé: Definitely more often than I would have liked. Another anecdote, for example, kept our company busy for 14 years. It was about our land, which we acquired from the foundry. A part of it actually belonged to another property. When the foundry went bankrupt, the administrator of the estate was very subtle and we had to wait 14 years before everything was clarified. Since the second property was then sold, there were suddenly six different partial owners of this one property, which was registered under a property number in the land register. In concrete terms, this meant for us that we had to obtain the consent of all the other five property owners for each permit. In 2013, for example, our environmental permit expired. Four neighbors have already signed for the new permit, but one neighbor was totally unwilling to sign. Fortunately, we finally succeeded in obtaining our own property number from the land registry office. This means that the neighbours are of course consulted during the approval procedures, but we no longer need a signature that one can so easily refuse.

That was certainly not an easy situation…

József Máthé: It wasn’t that before either….. We also had problems with the power station before, because the electricity was switched off. The reason: The electricity came to us via a transformer house that belonged to the foundry. Although we paid our electricity to the foundry, it did not transfer any money to the electricity supplier. So we all had our electricity cut off – that meant no lighting, no functioning office equipment and no running machines! We had to bring three diesel generators from MGG Metran in Kematen to Budapest. With these we then supplied ourselves with electricity for almost half a year.

These many problems must have been a tremendous burden for you, right?

József Máthé: It was. In 2003 I had a heart attack – certainly because I had been smoking until then. And I was someone who couldn’t leave his problems behind when he left the company, but I dragged them home with me. I spent ten days in intensive care – at least I never smoked a cigarette again afterwards. But now I train several hours a week on the ergometer. Fortunately, Mr Herbert Müller-Guttenbrunn arranged for a specialist in Austria so that I could have my blood vessels examined and do rehabilitation. I am very grateful for this to this day.

After that you handed over the management of the company…

József Máthé: Yes, I did. I did not want to and could not go on like this. That’s what I told the owner family. In addition to all the challenges that had to be mastered all the time, I had one problem above all: I couldn’t lay-off anyone, but unfortunately I had to do it more than once. That was really bad for me.

But you’re still working for the company. So you took on another job?

József Máthé: In addition to Mü-Gu Kft., there was also the trading company Metfer, which belonged to the Müller-Guttenbrunn Group. The managing director – the aforementioned Livia Herold, closing the circle – retired. Herbert Müller-Guttenbrunn was generous to me and offered me this position. Although Metfer had his own office, I was still constantly at the scrap yard of Mü-Gu Kft.

At the age of 71, you have already retired. Nevertheless, you are still active in the company…

József Máthé: I retired in 2007. Since then I have been working as a freelance consultant for Mü-Gu Kft. – but in reality I do everything that is needed at the moment. I simply enjoy it here. With the young team around Nándor Hoffmann, things have been going really uphill in recent years. The owners’ patience has paid off. Now things are going really well and we can make the necessary investments. We have already installed a new wet dedusting system in our shredder and next year a new cyclone filter will follow. The office building is to be extended and I hope that we will soon be able to afford a new hydraulic scrap shear. It is also very important for Mü-Gu Kft. that we are currently working on developing a new plot of land as our future non-ferrous metal site and this plot is located a few kilometres away from our current scrap yard. So, you can see that a lot is happening right now. I am particularly pleased about these developments after having around from the very beginning.

And you intend to remain active?

József Máthé: Apparently people are satisfied with my work. Mr. Michael Kimmeswenger just asked me again whether I would like to extend my contract for next year. I still have to get permission from my wife (laughs), but I assume that this will not be a problem.

Then we wish you every success for 2019 and lots of fun with your work!