Business Thrives In Barcelona

Dec. 21, 2004
The Catalonian capital has a critical mass of industry and an enviable quality of life.

When he stepped off the plane at Barcelona's international airport, Norman Lovell had a bit of a culture shock awaiting him. He had flown to the capital of Catalonia, Spain's most important industrial region, to take the post of manufacturing director for the Spanish operations of Svenska Cellulosa AB (SCA), the Swedish paper company. He knew all about manufacturing, but he wasn't aware that the region surrounding Barcelona has a language all its own. "Like most Englishmen," says the native of Newcastle upon Tyne, "I thought Catalan was an accent. But I've since discovered that it's very much a living language." Lovell, who moved to the Catalonian city of Tarragona, about 60 miles southwest of Barcelona, roughly 17 months ago, offers that anecdote as one of the few negative experiences he has had doing business in the region surrounding Barcelona. Just about every other aspect of his time there has been positive, says Lovell, particularly the weather. "I was home in England at the weekend," he says with a laugh, "and the temperature was something like minus 5 degrees [centigrade, or about 25 F]. But here, it was 18 or 19 [64 F to 66 F] degrees. Every morning, you wake up and the sun is shining. And for an Englishman who's used to gray skies, it does lift the spirits." In reality, weather is only a fringe benefit of setting up shop in Barcelona and environs, say Lovell and other executives. For one thing, Catalonia, of which Barcelona has long been the commercial hub, has a tradition of commerce. For example, around the time of Christopher Columbus, when Queen Isabella and King Ferdinand were trying to take back much of the Iberian peninsula from the Moors, the people of Catalonia were sending ships into the Mediterranean Sea to trade with far-flung ports. "While the rest of Spain was fighting battles," explains one executive from a town just outside Barcelona proper, "we Catalans were making money." The Barcelona region is, unlike the rest of Spain, quite diverse in its strengths. It still trades extensively in wine, the commodity that made it important in Roman days, and plays host to Spain's largest exporter of wine, Bodegas Miguel Torres SA. But it also boasts a host of other industries, from the heaviest and lowest tech to the lightest and highest tech. The region's geographic placement on the Mediterranean and in the northeast corner of Spain continues to be very important, according to Juan Vels, general manager of Spanish operations for Swedish auto-parts maker Haldex AB, which has based its logistics operation in Barcelona. "Our company's [distribution center] is right near the main highway going to France," says Vels. "The same highway goes directly to Madrid, Zaragoza, Valencia, Bilbao. This is the industrial corner of Spain." Indeed, that highway, the A-7, puts Haldex in close proximity to its customers at automotive assembly plants that are concentrated in and around Barcelona, and also to customers in northern Europe. "We are the northernmost people of Spain," says Vels, "and that makes it easy for us to reach north into the rest of Europe." "Of course, it's well located," says Jos Luis Faura, who runs Spanish operations for Swedish pharmaceutical manufacturer Novartis AG, which has a tablet factory in Barcelona. "There's the very good international airport. There's a great train network." And, notes SCA's Lovell, when trains are supposed to run, they do -- something that is quite a contrast to his native Britain, where the rail network has been in chaos for much of the last year. Indeed, "the total infrastructure is very, very good here," he adds. What also helps Barcelona in particular and Catalonia in general attract and keep industry is the critical mass the region has gathered in several important sectors. It is the automotive hub of southern Europe, proof of which exists in the presence of such major players in the sector as Volkswagen AG, Adam Opel AG, Seat SA, Renault SA, and Lear Corp. That kind of critical mass is repeated in other sectors, notes Novartis' Faura, who says that Barcelona boasts more than 55% of the pharmaceutical industry in Spain, with such other giants as Bayer AG in residence. The region also stands out in electronics and telecommunications, playing host to the likes of Nortel Networks Corp., Sony Corp., and Hewlett-Packard Co. Another key ingredient in the region's success, say corporate decision makers, is the attitude of the regional government. Although Catalonia, as one of the wealthiest regions in Spain, cannot offer much in the way of investment incentives, the government goes out of its way to be helpful, they say. On a day-to-day level, that help comes from the very strong industrial development authority Centre d'Innovaci i Desenvolupament Empresarial (CIDEM), but it also extends to the very top of Catalonia's government. Lovell says he discovered evidence of governmental attentiveness to the needs of manufacturers when Catalonia's president, Jordi Pujol, paid a visit to Lovell's operations in Tarragona a few weeks ago to take a look at SCA's plans for expansion. "One negative about Spain is that energy costs are very high, and for a paper mill, energy is very important," says Lovell. "Mr. Pujol was very knowledgeable about what we are doing and very sympathetic to our plight. He understood immediately and was looking to try and do something to help." Strong Work Ethic Lovell also singles out the attitude of the region's workers as a crucial ingredient in the Barcelona area's success. "There's a very strong work ethic here," he says. "People expect to work very hard and very long and really want to do a good job. I had the impression that I'd run into lots of maana, maana ('tomorrow, tomorrow'), but that just isn't the case here. "A strong work ethic, says Vels, himself a native of Barcelona, is bred into the people of Catalonia. And there's also a strong tradition of using education to get ahead, thanks to the historically large middle class in the region. "Take the example of my father," he suggests. "He was from the working class, but he wanted me to do more with my life, so he pushed me to study hard." Upper-level education is particularly strong in the region, says Novartis' Faura, who notes that there are more than 10 public universities, as well as several private universities and business schools. "That's a good thing if you need to hire high-level people," Faura says. If there's a gap, Lovell believes, it is in higher-skilled trades. "I find difficulty obtaining people of the right caliber in those areas," he says. Another minor negative, in his view, is the low unemployment level, which makes growth something of a problem. "We want to expand," Lovell explains, "and we have a small difficulty getting labor." Faura says quality of life is another important part of Catalonia's appeal, particularly to multinationals whose operations are concentrated in colder parts of the world. "It's the weather. It's the quality of life. We have skiing nearby. There are all the restaurants and bars. The wine, the food. That's why, if you give people a choice, they will probably choose Catalonia." On the downside, though, is the fact that Barcelona -- though arguably the least-Spanish business center on the Iberian peninsula -- retains one Spanish custom that is anathema to Lovell. "Everything shuts down between two and four in the afternoon," the Englishman laughs. "As a northern European, that really disturbs me."

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