Spain's auto sector helps drive recovery

GMT 10:45 2015 Wednesday ,16 December

Arab Today, arab today Spain's auto sector helps drive recovery

Spain's total motor vehicle production rose 11.1%
Vigo - AFP

Spain's automobile sector has emerged a key driver of the country's economic recovery, as investments in research and development combined with labour flexibility boosted its competitiveness.

Prime Minister Mariano Rajoy points to the auto revival as proof that his conservative government's reforms are working as he fights to hold onto power in a general election on Sunday.

"Even in the worst moments of the crisis, the auto sector managed to overcome difficulties and be a sign of hope and growth for all," Rajoy has said.

Spain's total motor vehicle production rose 11.1 percent in 2014, outpacing gains of 3.3 percent in Germany and 4.4 percent in France.

With 14 car plants, Spain is the world's ninth biggest automobile producer country in a ranking headed by China, the United States, Japan and Germany.

The country has no nationally-owned carmaker but many major manufacturers including Renault, Nissan, Volkswagen and Ford are present.

And when it comes to making auto parts, Spain is a dominant player ranking sixth in the world in terms of turnover.
The entire auto sector, which accounts for 10 percent of Spain's economic output, suffered its worst moment in 2008-09 as the global credit crunch hurt demand for new cars across Europe.

But production has picked up and it is now one of the motors of the nation's economic recovery along with the tourism and agriculture and food.

Spain posted its first full year of economic growth in 2014 since a property bubble burst in 2008, throwing millions of people out of work.

- Flexibility -

The government has forecast economic growth of 3.3 percent this year after expanding 1.4 percent in 2014.

"We are seeing a certain recovery, to levels close to before the crisis," said Fernando Macias, the director for southern Europe of global Spanish auto parts supplier Gestamp.

The automotive components sector posted sales of 29.7 billion euros ($32.6 billion) last year, up from 22.9 billion euros in 2009, according to the Spanish association of auto parts manufacturers Sernauto.
It predicts sales will rise by around 7.0 percent this year to nearly 32 billion euros, close to the level in 2007 before the start of the crisis.

The sector lost 80,000 jobs between 2007 and 2009. Auto firms negotiated concessions from unions to help them restructure and limit job cuts.

"Above all what was negotiated is flexibility, a wage freeze, lower salaries for new workers, some with the promise that they will be raised in the future, early retirement and in some extreme cases layoffs," said Isabel Fernandez of Spain's largest union CCOO.

At a Grupo Copo plant in Mos near the port of Vigo, Galicia's most populous city, workers in grey coats busily fill molds with foam to make car seats.

The company also makes arm rests and door panels, and posted losses in 2011 and 2012 but returned to profit in 2013 following a restructuring.

"We see the present and future with moderate optimism," said Grupo Copo chief executive Jose Antonio Rodriguez Estevez.

The medium-sized company with 770 employees around the world predicts its sales will grow five percent this year, he added.

To give it a competitive edge, the auto parts industry is also betting on innovation.

Gestamp says it has become a global leader in hot stamping technology, a state-of-the-art process that makes sheet metal become lighter but harder, which improves passenger safety in case of a crash.

This year, German auto giant Volkswagen included the company in a list of its 26 most innovative and reliable suppliers.

"Research and development is the key of our positioning," said Macias.

Gestamp, which employs 32,000 people in 20 nations, saw its turnover more than triple between 2009 and 2014 to 6.3 billion euros. It predicts its sales will surpass 7.0 billion euros this year.

Grupo Copo recently bought back its subsidiary dedicated to innovation, which it had partially sold in 2012.

"There's been a strong rebound in research and development projects, especially those involving lower costs", or the reduction in greenhouse gas emissions, said Chantal Millet of the Galicia Automobile Centre which is charged with promoting research and development in the sector.


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