SPAIN: Auto industry to invest €7 billion by 2006

By just-auto.com editorial team | 23 November 2004

Spain, Europe's third-biggest car making country, will receive investments totalling €7 billion by 2006 as foreign companies continue to rely on its "highly efficient" manufacturing facilities, industry minister Jose Montilla has said.

However, the industry faces long-term challenges amid low profitability rates and growing competition from Eastern Europe and China, he warned.

Speaking at an industry conference at the IESE business school in Barcelona, Montilla called for the industry to make labour more flexible and boost innovation to stay competitive and keep manufacturers in Spain.

The government intends to support the industry, Montilla added, by creating an automobile forum and bolstering foreign investment. It also plans to raise industrial research and development spending by 25% next year.

A part of those funds is expected to go to the auto industry, which accounts for 6% of Spain's gross domestic product and 25% of exports.

David Barrientos, a spokesman for Spanish automobile association Anfac, said the sector is doing well and that a stable social and economic environment has helped it obtain a slew of new car contracts this year.

"There's a healthy level of sales and exports," Barrientos said. However, "this does not mean that we should relax and become complacent."

"We must continue increasing profitability and lowering costs," especially those involving labour and logistics (transportation), he said.

R&D investments must also rise sharply. Spain, which exports the majority of its car output, would benefit from strong innovation in its components industry, Barrientos added.

Ivan Castano