THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY SPAIN Fact Pack

1
THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT
INDUSTRY SPAINFact Pack

• Swedish Trade Council in Spain
• 2006

2
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Spanish Construction Equipment Industry
• Recommendations
• References

3
THE MANUFACTURING SECTOR IN SPAIN IS 3 TIMES AS
LARGE AS ITS SWEDISH COUNTERPART- the automotive
industry is traditionally strong in Spain

• The total turnover of the Spanish manufacturing
  industry is 423 923 million
• the Swedish manufacturing industrys turnover is
  146 285 million
• There are approximately 220,000 companies within
  the manufacturing sector in Spain
• 2.6 million employees
• The automotive and food industries are
  traditionally strong
• The average wage for an industry worker in Spain
  is 13.75 per effective hour

5 largest manufacturing industries in Spain
Million
The automotive industry makes up 11 of the total
manufacturing industry
Sources INE, Eurostat
4
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Spanish Construction Equipment Industry
• Recommendations
• References

5
THE PRODUCTION OF CARS AND COMMERCIAL VEHICLES IN
SPAIN DROPPED BY NEARLY 9 IN 2005
Production of cars and commercial vehicles in
Spain
Turn-over of by area
Units
Components and accessories 28,793 million
Vehicles and engines 38,177 million
Trailers and containers 15,068 million
Sluggish exports have led to reduced production
Sources ANFAC, Eurostat
6
2.8 MILLION VEHICLES ARE PRODUCED IN SPAIN- 2.2
million passenger cars and almost 600,000 heavy
vehicles
VEHICLE MANUFACTURERS (2,752,494 vehicles)
COMMERCIAL VEHICLES (570,324 vehicles)
LIGHT TRUCKS (494,987 vehicles)
BUSSES (1,262 vehicles)
HEAVY TRUCKS (74,081 vehicles)
PASSENGER CARS (2,182,170 vehicles)

• (Weight lt 6 t)
• 6 manufacturers
• DaimlerChrysler
• Iveco (Fiat)
• Renault
• Opel (GM)
• Peugeot Citroën
• Nissan

• (Weight gt 6 t)
• 3 manufacturers
• Iveco (Fiat)
• Renault V.I.
• Nissan

• 1 manufacturer
• Iveco (Fiat)

• 9 manufacturers
• Renault
• Ford
• Opel (GM)
• Peugeot Citroën
• Seat (Volkswagen)
• Volkswagen
• Santana Motor (Suzuki)
• Mercedes (DM)
• Nissan

Source ANFAC
7
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Spanish Construction Equipment Industry
• Recommendations
• References

8
THE PASSENGER CAR PRODUCTION IN SPAIN DROPPED BY
NEARLY 13 IN 2005
Passenger Car production in Spain
Development over the last 5 years

• Following a number of years of steady growth, the
  production of passenger cars experienced a sharp
  drop in 2005
• Sluggish demand in foreign markets has hit Spain
  particularly hard as the vast majority of
  production is exported to other countries
• Spain has also faced fierce competition from the
  emerging economies of Central Europe
• Some of the models traditionally manufactured in
  Spain, such as Citroëns Xsara Picasso, are at
  the end of their life cycles
• Cross-country vehicles proved to be an exception
  to the trend and experienced a rise in production
  of more than 80
• This was chiefly due to the sales success of
  newly launched models

Vehicles (thousands)
Source ANFAC
9
THE MAJORITY OF PURCHASE DECISIONS ARE MADE IN
THE HOME COUNTRIES OF EACH MANUFACTURER
Passenger Cars
Source ANFAC
10
THERE ARE 11 CAR MANUFACTURING PLANTS IN SPAIN-
Renault, GM and Seat produce the most cars in
Spain
Vitoria
Pamplona
Vigo
Martorell
Palencia
Barcelona
Valladolid
Madrid
Zaragoza
Valencia
Linares
Sources Anuario El Pais 2006, ANFAC
11
DOMESTIC DEMAND AND NEW EXPORT MARKETS REPRESENT
THE MAIN GROWTH OPPORTUNITIES- Reduced demand in
the traditional destinations of exports were the
chief culprits for the drop in production
Trends within the Spanish passenger car industry

• Production is moving east
• The new Central European members of the EU have
  lower labor costs
• These countries also benefit from strategic
  locations close to the main export markets

Globalization

• Around 85 of the vehicles manufactured in Spain
  are exported
• A slump in the sale of new cars in France and
  Germany has had a profound negative impact on
  Spanish production
• New emerging markets for Spanish exports are
  Eastern Europe and Asia

Dependency on exports

• The demand for new vehicles remains strong in
  Spain
• The average age of the vehicles used in Spain is
  above the EU average
• 1,7 million vehicles are registered each year in
  Spain

Domestic demand
Source STC, ANFAC
12
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Spanish Construction Equipment Industry
• Recommendations
• References

13
SPAIN IS THE NUMBER ONE PRODUCER OF INDUSTRIAL
VEHICLES IN THE EUROPEAN UNION
Commercial Vehicle Production in Spain
Development the last 5 years

• Different segments of the commercial vehicle
  industry have experienced mixed fortunes in
  recent years
• The production of lighter commercial vehicles
  experienced a slight drop by around 3.6 during
  the course of 2005
• The manufacture of buses and coaches has been
  negligible during the past five years and
  suffered a further decline during the past year
• On the other hand, the production of vans enjoyed
  a spectacular growth of more than 13
• Furthermore, the production of both light and
  heavy trucks improved by 3 from the previous
  year

Vehicles (thousands)
Source ANFAC
14
NONE OF THE COMMERCIAL VEHICLE MANUFACTURERS MAKE
THEIR PURCHASE DECISIONS IN SPAIN
Commercial vehicles
Source ANFAC
15
THE COMMERCIAL VEHICLE INDUSTRY IS CONCENTRATED
IN CENTRAL AND NORTHERN SPAIN
Vigo
Ávila
Madrid
Source ANFAC
16
THE COMMERCIAL VEHICLE INDUSTRY IS DOMINATED BY
FOREIGN ENTERPRISES
Trends within the Spanish commercial vehicle
industry

• All production of commercial vehicles in Spain is
  carried out by foreign companies
• High-level decisions, including ones related to
  procurement, are taken in the home countries of
  the manufacturers, primarily in France and
  Germany

Globalization

• The models produced in Spain are strongly favored
  by buyers
• The demand for vehicles produced in Spain went up
  by a full 44.8 in 2005, while the rise for
  foreign-produced alternatives was a considerably
  more moderate 3

Domestic production

• The positive growth of the industry has been
  spurred on by buoyant domestic demand
• The surge in demand has been backed-up by the
  positive growth of the Spanish economy

Success factors
Source ANFAC
17
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Spanish Construction Equipment Industry
• Recommendations
• References

18
THE HIGHEST CONCENTRATION OF AUTOMOTIVE SUPPLIERS
CAN BE FOUND IN THE NORTHEAST OF SPAIN
The percentage of automotive suppliers that are
located in each of Spains regions
Spanish automotive suppliers

• In total there are around 1000 automotive
  suppliers in Spain
• More than 40 of the automotive suppliers are
  located in the states of Catalonia and Aragón, in
  the northeastern part of the country
• Around a quarter of the suppliers are located in
  the northern region comprised of the Basque
  Country, Navarra and Cantabria
• The South, Northwest and Eastern parts of the
  country have a negligible number of suppliers
• The production of components for car bodies,
  chassis and electronic equipment represent more
  than 70 of the sector's turnover in Spain

- Cantabria
- Galicia
- Aragón
- Asturias
- Basque Country
- Navarra
- La Rioja
- Catalonia
- Castilla y León
- Valencia
- Extremadura
- Murcia
- Andalucia
- Castilla La Mancha
- Madrid
3
26.5
40.6
22.1
4.9
3
Source SERNAUTO
19
THE T1 SUPPLIERS ARE TYPICALLY MEDIUM-SIZED
COMPANIES- 68 have more than 200 employees
TIER 1 SUPPLIERS
Electrical systems
Interior equipment
Propulsion
Body
Running gear

• Cables, sensors, semi conductors, control units
  etc.
• Top 7 manufacturers
• Ficosa
• Bosch
• Valeo
• Mondragón
• Delphi
• TRW
• Siemens VDO Automotive

• Power train, exhaust systems, engines
• Top 3 manufacturers
• Valeo
• Bosch
• Delphi

• Cockpit, seats, dash-board, air conditioning
• Top 4 manufacturers
• Cie
• Bosch
• Faurecia
• Dana

• Body, roof, glass, doors, lighting etc.
• Top 7 manufacturers
• Gestamp
• Ficosa
• Antolín-Irausa
• Valeo
• Faurecia
• Siemens VDO Automotive
• Doga

• Suspension, brakes, axles, steering, tires
• Top 4 manufacturers
• Bosch
• Continental
• Cie
• Dana

Source SERNAUTO
20
THE MAJORITY OF PURCHASE DECISIONS ARE MADE IN
SPAIN
T1 Suppliers
Source SERNAUTO, Kompass
21
SUPPLIERS OF CHASSIS AND ELECTRICAL SYSTEMS TEND
TO BE LOCATED PARTICULARLY CLOSE TO VEHICLE OEMs
- Abrera
Slide 22
- Burgos
- Rubì
- Pontevedra
- Zaragoza
- Soria
- Palencia
- Valladolid
- Lleida
- Barcelona
- Madrid
- Valencia
- Toledo
- Jaen
- Cádiz
Source SERNAUTO
22
THERE IS A CLUSTER OF SUPPLIERS IN NORTHERN
SPAIN-Particularly in the Basque Country and
Navarra
Basque Country Navarra
- Guipúzcoa
- Vizcaya
- Mondragón
- Pamplona
- Álava
Source SERNAUTO
23
MOST SPANISH T2 SUPPLIERS ARE SMALL COMPANIES-
36 have less than 100 employees
TIER 2 SUPPLIERS
Electrical systems
Interior equipment
Propulsion
Body
Running gear

• Cables, sensors, semi conductors, control units
  etc.
• Top 3 manufacturers
• Guilera
• Nagares
• Sadeca

• Power train, exhaust systems, engines
• Top 4 manufacturers
• Cie
• Arran
• AS
• Industrias Ochoa

• Cockpit, seats, dash-board, air conditioning
• Top 3 manufacturers
• CTR Group
• Grammer
• Industrias Alegre

• Body, roof, glass, doors, lighting etc.
• Top 3 manufacturers
• Comforsa
• Doga
• FPK

• Suspension, brakes, axles, steering, tires
• Top 5 manufacturers
• Infun
• Ajusa
• Ames
• Jesus Oñate
• Wat

Source SERNAUTO
24
ALMOST ALL PURCHASE DECISIONS ARE MADE IN SPAIN
(1/2)
T2 Suppliers
Source SERNAUTO, Kompass
25
ALMOST ALL PURCHASE DECISIONS ARE MADE IN SPAIN
(2/2)
T2 Suppliers
Source SERNAUTO, Kompass
26
THE T2 SUPPLIERS ARE MAINLY CONCENTRATED IN
CATALONIA AND THE BASQUE COUNTRY
- Abrera
- Pamplona
- Bilbao
- Durango
- Mallabia
- Sentmenat
- Barcelona
- Sant Felíu de Llobregat
- Madrid
- Olèrdola
- Fuenlabrada
- Valencia
- Albacete
Source SERNAUTO
27
HIGHER INVESTMENTS IN RD REPRESENT THE KEY TO
IMPROVING THE COMPETITIVNESS OF SPANISH
SUPPLIERS- This is vital to compensate for
higher logistical expenses that result from
Spains geographical location
Trends within the Spanish automotive supplier
industry

• Production is moving east
• Tier 1 suppliers move to accommodate the eastward
  movements of OEMs, and tier 2 suppliers
  subsequently switch locations in order to be
  close to the T1s

Globalization

• It is no longer considered cheap to produce
  automotive components in Spain
• More than 70 of production is exported and
  Spain's geographical position implies high
  logistical costs

Costs of production

• The small size of the Spanish suppliers
  complicates substantial investments in RD
• However, an increasing number of suppliers now
  conduct their own RD
• Spain has a highly qualified labor force in
  comparison to its new competitors in Central
  Europe, which provides it with better
  opportunities to conduct sophisticated research

Investment in RD
Source SERNAUTO
28
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Spanish Construction Equipment Industry
• Manufacturers
• Suppliers
• Recommendations
• References

29
THE TURNOVER OF THE CONSTRUCTION EQUIPMENT SECTOR
TOTALS 1,312 MILLION-Turnover grew by nearly
29 in 2004
Turnover of the construction equipment sector in
Spain
Size of the manufacturers
Million
Small firms 44
Large firms 9
Medium-sized firms 47
Around one-third of the construction equipment
manufactured in Spain is exported
Source ANMOPYC
30
THERE ARE 104 MANUFACTURERS OF CONSTRUCTION
EQUIPMENT IN SPAIN- 91 are small and
medium-sized enterprises
Sources SERCOBE, ANMOPYC
31
THE VAST MAJORITY OF PURCHASE DECISIONS ARE TAKEN
IN SPAIN (1/2)


Source ANMOPYC
32
THE VAST MAJORITY OF PURCHASE DECISIONS ARE TAKEN
IN SPAIN (2/2)


Source ANMOPYC
33
AROUND 80 OF THE MANUFACTURERS OF CONSTRUCTION
EQUIPMENT ARE LOCATED IN THE NORTHEAST OF SPAIN
- Beasain
-Huarte
- Vitoria-Gasteiz
- Idiazábal
- Pamplona
- Huesca
- Rubì
- La Coruña
- Barcelona
- Madrid
- Zaragoza
Sources ANMOPYC, Kompass
34
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive Industry
• Spanish Construction Equipment Industry
• Manufacturers
• Suppliers
• Recommendations
• References

35
LOCAL COMPANIES MAKE UP THE BULK OF SUPPLIERS OF
CONSTRUCTION EQUIPMENT
SUPPLIERS
Acessories
Electrical systems
Propulsion and running gear
Steel construction
Hydraulics

• Undercarriage and body
• Top 9 manufacturers
• Comforsa
• Fundiciones Caetano
• Jimeca
• MTG
• Krafft
• Alba
• Etesa
• AETSA (Saprisa)
• Byg

• Cables, sensors, semi conductors, control units
• Top 9 manufacturers
• Ficosa
• Cautex
• Cigüeñales Sanz
• FAE
• Siemens VDO Automotive
• Gala Gar
• Gesan
• Nagares
• Industrias Galarza

• Power train, engines, exhaust systems, axles
• Top 6 manufacturers
• Ajusa
• Ersa-Parts
• Doga
• Agrymin
• Carod
• Ogei

• All kind of hydraulic cylinders
• Top 8 manufacturers
• Miju
• Capresa
• Sercore
• Seinsa-Autofren
• Ames
• Wat
• Gosan
• Korota

• Tires, glass, lighting, attachment, etc
• Top 5 manufacturers
• Egro
• Ficosa
• Dima
• Krafft
• Venair

Source ANMOPYC
36
NEARLY ALL PURCHASE DECISIONS ARE MADE IN SPAIN
(1/2)
Suppliers
Source ANMOPYC
37
NEARLY ALL PURCHASE DECISIONS ARE MADE IN SPAIN
(2/2)
Suppliers
Source ANMOPYC
38
THERE ARE CLUSTERS OF SUPPLIERS IN BARCELONA,
ZARAGOZA AND THE BASQUE COUNTRY
- Abadiño
- La Llagosta
- Ortuella
- Lleida
- Mallabia
- Bilbao
- Abrera
- Zaragoza
- Zumarraga
- Andoain
- lHospitalet de Llobregat
- Madrid
- Eugi
- Barcelona
- Beasain
- Valencia
-Albacete
-Seville
- Arahal
Source ANMOPYC
39
THE CONSTRUCTION EQUIPMENT INDUSTRY IS BOOMING-
Spanish OEMs overwhelmingly use local suppliers
Trends within the Spanish vehicle transportation
industry

• The construction sector in Spain is currently in
  the middle of a boom that has lasted since 1995
• The business cycle of the construction equipment
  industry is highly correlated with that of the
  construction sector as a whole

Construction sector

• Exports of construction equipment are growing at
  a rapid pace
• The European Union represents the main export
  market and is the destination of 65 of Spains
  exports
• Diversification of exports has mitigated the
  adverse effects of a strong Euro

Exports

• A rise in RD spending has led to improved levels
  of efficiency
• A higher level of automatization of the
  production process in Spain has saved substantial
  costs and has contributed to an improvement in
  the quality of the end products

Advances in RD
Source ANMOPYC
40
CONTENT

• Overview Spanish Manufacturing Industry
• Spanish Automotive industry
• Spanish Construction Equipment Industry
• Recommendations
• References

41
RECOMMENDATIONS FOR DOING BUSINESS WITH THE
SPANISH AUTOMOTIVE AND CONSTRUCTION EQUIPMENT
INDUSTRY- Local presence necessary to reap the
benefits of the Spanish construction bonanza
42
CONTENT

• Overview Spanish industry
• Spanish Automotive industry
• Recommendations
• References

43
STC SPAIN SUPPORTS COMPANIES THROUGHOUT THE
BUSINESS DEVELOPMENT PROCESS
Country specific
Market Check
Analysis of potential clients and competitors as
well as trends on the market
Distribution search
STC identifies the most suitable distribution
channels on the Spanish market
Recruitment
Assistance in selecting employees in line with
the needs of Swedish companies
Pre Acquisition analysis
STC selects appropriate companies for Swedish
corporations to acquire
Supplier search
Identification of companies with the potential to
provide their Swedish counterparts with key inputs
Company establishment
STC advises and supports companies that want to
establish a subsidiary in Spain
BSO
STC helps companies to kick-start their
activities in Spain by acting as their local
sales representatives
44
STC HAS HELPED NUMEROUS SWEDISH COMPANIES TO DO
BUSINESS WITH THE SPANISH AUTOMOTIVE INDUSTRY
45
STC CARRIED OUT A MARKET ANALYSIS AND IDENTIFIED
SUITABLE DISTRIBUTORS FOR ANTIPHON
Goal
Outline of project
The main objective of the project was to
consolidate Antiphons position on the Spanish
market

Step1 Market analysis
STC role and contribution
Kick-Off
Completed

• Customer analysis

• Evaluate the market potential and recommend key
  segments and companies with which business
  discussions could begin
• Analysis of the potential for the product on the
  car-, railway- and household markets
• Identification of where the automotive
  manufacturers present in Spain take their
  purchase decisions
• Carrying out of business meetings with potential
  partners

Step 2 Identification of
distributor
Completed

• In-depth business discussionswith suitable
  distributors within the key market segments
  identified in Step 1

Results

• At the end of Step 2, the Swedish Trade Council
  singled out the most suitable distributor for
  Antiphons products on the automotive- and
  railway markets in Spain

• Antiphon should focus on the automotive and
  railway sectors
• A suitable distributor to these industries was
  identified

46
STC SINGLED OUT KEY CUSTOMERS FOR TEXLA ON THE
SPANISH MARKET
Goal
Outline of project
The main objective of the project was to support
Texla in the process of initiating sales on the
Spanish market

Step1 Market analysis
STC role and contribution
Completed
Kick-Off

• Customer analysis
• Market potential

• A market analysis regarding the Spanish car
  manufacturers demand for textile products
• Identification of where purchase decisions are
  made by the automotive manufacturers
• Evaluation of the market potential and
  recommendations of interesting segments and
  companies with which further business discussions
  could be held
• In-depth leads generation within recommended
  segments

Step 2 In-depth customer identification

Completed

• Business discussions with selected
  
  customers from Step 1
• Sales and marketing support

Results

• Following the conclusion of Step 2, STC
  identified the most appropriate customers for
  Texla and assisted the latter in forging business
  relationships with them

• 20 of 50 contacted companies showed an initial
  interest for Texla
• Potential customers were subsequently approached
  for further discussions