Viva España! A look at manufacturing in Spain

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Viva España! A look at manufacturing in Spain

The Spanish saying “a grandes males, grandes remedios” is the equivalent of “desperate times call for desperate measures.”

Even as the recession was taking a heavy toll on the fourth largest economy in the Eurozone, the Spaniards remained optimistic. And it seems their hard work and energy is finally starting to pay off, because Spanish manufacturing has significantly picked up in recent months.

European Automation provides industrial automation spare parts to many Spanish companies from across industry sectors. In recent years, we have seen a dip in demand from Iberia, but the good news is that since the middle of last year, the number of orders from Spain has been on the rise. Regions like Catalonia and the Basque Country and industries like automotive and metal processing, have taken the lead in this slow, but steady recovery process.

Let’s talk economics

The fact that Spain’s gross domestic product (GDP) fell by 1.2% in 2013 is not particularly encouraging. However, this year’s predictions show a rise of one per cent. While it’s hardly an impressive figure, it is good news, especially in the context of falling labour costs and increased private investment in capital equipment across industries.

Historically, Spain is one of Europe’s largest manufacturers. It is still the second largest auto manufacturer in Europe, a leader in the production of canned goods and fourth in the production and exports of machinery and tools. 

In February 2014, manufacturing production in Spain increased by 4.3% compared to February 2013. In March 2014, the good news flow continued, as manufacturing activity in the country of the great Miguel de Cervantes expanded at its fastest pace since April 2010.

According to the Markit research group, the purchasing managers’ index (PMI) of Spain has grown again in March, from 52.5 in February, to 52.8. Any score above 50 on the PMI index suggests that the industry is expanding, which is excellent news, because it reflects a slow, but stable strengthening of business conditions.

Spain’s gross domestic product (GDP) fell by 1.2% in 2013
Spain’s gross domestic product (GDP) fell by 1.2% in 2013

Industry heroes

Although the Spanish market is extremely varied and – some might say – painfully fragmented, certain regions and sectors are showing obvious signs of recovery. Madrid, Catalonia and the Basque Country in particular, have had excellent trajectories. 

Catalonia is the most important region in the Spanish economy, providing around 20% of the country’s GDP. Its most prolific sectors are life sciences, with biotechnology and research and development projects leading the industry, alongside the automotive, chemical and food and beverage industries. International trade shows like the Mobile World Congress, the Smart City World Congress and the third largest food show in Europe – Alimentaria – attract powerful investors to the region, confirming it as a vibrant hub for manufacturing.

Much like Catalonia, the Basque Country is a very different entity from the rest of Spain, both culturally and economically. The number of technical clusters in an area the size of Scotland is truly impressive, with the main priorities being renewable energy, advanced engineering, life sciences and ICT.

Strong Spanish growth estimates are just one of the many indicators that the struggling Eurozone state is finally stepping away from the recession. However, it’s not quite time to “para baillar la bamba,” just yet. Now is the moment for strategic investments and solutions – a time to seize growth opportunities and leave the recession behind.

AFP

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