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International News From the Field: Europe

The fourth-largest economy of the European Union (sixth in Europe overall), Spain, with a nominal GDP of about $1.5 trillion, was particularly affected by the pandemic. The recovery has been slow. However, the forecast for the year is for 5% growth.
Jul 12, 2021

This week, we focus on Spain, the sixth-largest economy of Europe and fourth within the EU. Famous as a tourist destination, it has a sound industrial base as well. Railway rolling stock and equipment, automotive, energy, and manufacturing in general are the driving sectors for Spanish industry and manufacturing. The manufacturing purchasing manager’s index (PMI) is above 60. Although locally produced machine tools are available, many sectors are served mainly by imports creating opportunities for foreign suppliers. Elsewhere, there is good news from the European aerospace and automotive sectors. For more industry intel and other tidbits, read on.

  • The fourth-largest economy of the European Union (sixth in Europe overall), Spain, with a nominal GDP of about $1.5 trillion, was particularly affected by the pandemic. The recovery has been slow, with the Q1 GDP worse than in 2020. However, the forecast for the year is for 5% growth, and industrial production in March surged to nearly 13% YOY, with an even better tempo in Q2. Manufacturing PMI is at a healthy 60.4. Of course, the COVID bailout has its price – an increase of the government debt-to-GDP ratio to nearly 120% in 2020.

  • The country’s main earner is tourism, supported by manufacturing, food production, and the fashion industry. Pre-pandemic, Spain was the second-largest tourist destination in the world. Second to tourism, manufacturing accounts for 11% of the GDP (even without automotive, which is separate), and includes railroad vehicles and equipment, shipbuilding, textile machines, energy industries, and chemicals. 

  • Spain has over 1,800 miles of high-speed railways and thousands of miles of standard rail. The manufacture of rolling stock and railway equipment represents close to $2 billion annually. This sector continues to expand and modernize, offering opportunities to foreign manufacturing technology suppliers.

  • Alstom, the French multinational rolling stock manufacturer, will have hydrogen-powered trains in Spain in less than three years. Alstom already has a hydrogen model operating in Germany and Austria, known as the Coradia iLint. To this end, Alstom is making major upgrade investments in its Barcelona plant.

  • In 2020, Spain’s multinational energy company Iberdrola completed the first green electrolytic hydrogen project in Europe. Located in Ciudad Real, the photovoltaic solar plant with lithium-ion battery storage has a capacity of 20 megawatt-hours. It has dramatically reduced the natural gas requirements of the huge Fertiberia ammonia plant nearby and has become a testing ground for large-scale green ammonia generation.

  • Spain is Europe's second-largest car-producing nation behind Germany, with the automotive sector accounting for 10% of its economy. With the momentum moving away from ICE vehicles to EVs, Spain is using billions of euros from EU pandemic relief funds and its own stimulus money to attract new battery and electric-vehicle plants. The shift to EVs represents the biggest technology transformation in a century. Spain is presently negotiating with Ford, Daimler, Renault, and Volkswagen to further invest in Spanish factories.

  • Spain has already succeeded in creating a public-private consortium with VW’s Spanish unit SEAT and Iberdrola to build the country’s first factory for EV batteries. This new project will be housed in an expansion of the SEAT factory near Barcelona.

  • Overall, Spain is an exporting country. Some 50% of exports are made by foreign multinationals located in Spain. American investors hold significant shares in some of Spain’s largest companies, particularly automobiles, chemicals, and industrial machinery. This enhances access to opportunities for U.S. manufacturing technology suppliers. 

  • Elsewhere in Europe, decarbonation, R&D, and post-pandemic recovery were at the top of the agenda of various round-table sessions of many industries. French aerospace company Safran was visibly active with new projects and co-hosted the 8th Paris Air Forum on June 21 (virtual) where numerous aerospace opportunities and future strategies were presented.

  • One of the highlights of the Paris Air Forum was the first public flight of German urban air mobility company Volocopter’s electric vertical takeoff and landing aircraft (eVTOL). The successful remote-controlled flight lasted three minutes and reinforced the idea of air taxis becoming a reality. 

  • In automotive, the European Council for Automotive R&D (EUCAR) is forming partnerships for advancing technologies and solutions for zero-emission road transport (2ZERO). All the main Europe-based auto manufacturers are participating but also Toyota, Honda, Huyndai, Ford, Stellantis (Chrysler), and the EU Commission.

  • In Europe, hybrid electric powertrains are gaining ground with the lower-priced “B” segment of the market. Toyota is producing them at their French and Czech plants this year, and starting in 2022, most Yaris models will have a hybrid electric transmission. The Toyota Yaris is No. 1 in sales in many European countries.

  • In order to address the microchip shortage and supply chain dependence on just a few Asian suppliers, Europe, like most of the world, is working hard on establishing local production. Infineon Technologies will begin production this summer in Villach, Austria, and already has an operational plant in Dresden, Germany. Robert Bosch is set to open a factory in Dresden and another near Stuttgart also this summer.

For more information, please contact Hubert Sawicki at hsawicki@AMTonline.org.

Hubert Sawicki
Head of AMT European Office
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