Eastern Europe Learns to Do Business without Americans

September 04, 1994|By LAURA CHAPPEL-BROWN

BUDAPEST — Budapest. -- It was 1990, the Berlin Wall had fallen, Eastern markets had opened to the West, and America set about exporting democracy. Eager to spread the word and seize the day, hordes of young Americans poured into Budapest, many fresh from college or their first job.

"People got off the plane with an American flag in one hand and a copy of the Constitution in the other," said Alex Simonson, a Vienna-based consultant in Central European employment trends. "Simply by virtue of nationality, they were getting great jobs -- it was incredible."

But for young American expatriates, the party in Eastern Europe is dying down.

In a swift reversal of the 4-year-old trend, the job market for young American expatriates is evaporating like steam. Hungary's maturing market economy has narrowed the once-huge gap between required and available skills.

At the same rate that Hungarians have acquired Western business savoir-faire, expatriate employees have come to be regarded as prohibitively expensive.

They are not only losing out on new positions, but are suffering a wave of layoffs as companies stabilize.

Companies say the transition from pricey American managers to their more reasonable Hungarian deputies was in the original blueprints. Once the start-up phase wound down, officials said, the plan was to become entirely Hungarian as soon as possible.

"We're coming along right according to plan," said Steve Smith, managing director of HBO Hungary. "We just got rid of all our $75,000 Americans, except two."

But for stranded expatriates, getting the ax was not in the plan at all.

"We were supposed to train the Hungarians," said a newly unemployed auditor, formerly of Arthur Anderson, a Big Six accounting firm. "But they ended up training us -- we learned all about expendability and expedience."

The post-1989 exodus to the newly liberated East carried much trendy appeal. In 1991, New York magazine ran a short piece heralding that year's putative "man shortage," in which young women lamented that marriageable young men were `/ absconding en masse to adventure in Eastern Europe.

No wonder. Compared to the recession-blighted United States, the scale of opportunity was vast. And however wet behind the ears, Americans were perceived as the Know-How, Can-Do Kings of Capitalism.

Some even regarded themselves that way, an arrogance lampooned by a local English-language newspaper column called "Dave the Dude."

"Hungary needs help. And I need money. That's why I'm here," the column began. "I'm Dave Devoran, also known as Dave the Dude. America's free-market ambassador to Hungary. When I graduated college, I knew I belonged there. Besides, American companies didn't understand what I could do for them. The job search was a major disappointment."

In the Mickey Mouse climate of Hungary's early transition, 25-year-olds became directors of corporate finance and editors-in-chief and creative directors.

Those days have gone the way of the American bison. Salaries tell the story: In 1990, a Western manager in Hungary could expect to earn some $130,000, while his native colleagues earned $30,000. Today, the growing pool of internationally trained locals has meant that while top local managers' wages have tripled, expatriate earnings have risen only slightly.

There are no exact figures on the extent of layoffs, but Budapest bars resound with war stories. One woman recalled that she and a group of her colleagues were laid off from a multinational advertising agency in one fell swoop. The next day, as she scanned the want ads for a new job, she was surprised to find that the vacated positions were now available for Hungarian candidates.

At the American Chamber of Commerce job bank, roughly 900 resumes gather dust in file folders, about 60 percent of them from young Americans who are "not very likely" to get an offer, chamber officials said. Head-hunting firms and employment agencies report a dramatic shift from Western to local recruiting over the past two years.

Sacking the expatriates, however painful on the personal level, is a healthy sign of growth, local analysts said.

"The trade-off between technical sophistication and local ignorance is increasingly unnecessary," said Steven Kopits, an independent financial consultant. "Plus, there's a certain disillusionment with American managers because you realize they don't know what's going on."

Many companies said that they were reluctant to hire expatriates because the species' nomadic nature creates high turnover and works against stability.

"Expats are expensive and temporary," said Christopher Mattheisen, deputy director of marketing at Westel 900, a mobile telephone company jointly owned by US West and MATAV, the Hungarian telecommunications company. "We're looking for long-term staffing."

Some Western managers greet the prospect of shifting the burden to locals with relief.

"It's healthy," said Jeff McLellan, managing director of Pannonia Fusion, the company that owns the Burger King franchise in Hungary. "We aspire to that stage, because we're still in up to our necks." Demand for experienced Westerners in hot fields such as finance, marketing or general management will likely continue, analysts said. But the boom is over.

"Everyone who wants to be here is here," said Mr. Kopits. "It's not a free-for-all anymore; there's a higher barrier to entry."

Many expect that the American presence in Hungary will thin out as market reforms take root and the expatriates who managed the transition cede corporate control to locals and go home.

"The people left will be the same ones who came in the first place," said Mr. Simonson. "The ones who left the States to get away from their parents, love affairs gone wrong or the IRS."

Laura Chappel-Brown is a free-lance journalist.

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