by Bob Carlo, Executive Vice President and Chief Financial Officer, Eagle Ottawa, LLC
The American company Eagle Ottawa, LLC is the world’s largest supplier of premium leather exclusively for the automotive industry. Approximately five years ago, as automotive manufacturing increasingly moved to Eastern Europe, Eagle Ottawa recognised that the company needed to have a more competitive manufacturing presence that was closer to its customers’ manufacturing plants. Consequently, the company made the decision to establish an operation in Hungary and to relocate their operations from the UK. Initially, the Hungarian operation was of a relatively small scale; however, the facility has grown rapidly and has now become the hub of European production.
Business challenges
Building substantial operations in Hungary brought a variety of opportunities, as well as a range of challenges that had to be overcome. Although Hungary is a member of the European Union, it is not EUR-based, which therefore posed issues in cash, treasury and FX management. In addition to the Hungarian operation, Eagle Ottawa also maintains sales offices in the UK and Germany. This footprint created exposures in HUF, GBP and EUR. In addition, a change in raw material sourcing further complicated the situation by adding exposures to USD.
Today Hungary generates revenues in EUR and incurs manufacturing costs in HUF. The operation also needed to fund sales offices in EUR and GBP, as well as paying for raw materials in USD. The company approached K&H Bank with a view towards implementing a cash pool solution across all four currencies to support its business in Europe.
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