Map of Local Industrial Production Systems in Catalonia Joan Miquel Hernández Gascón Jordi Fontrodona Francolí Alberto Pezzi

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Map of Local Industrial Production Systems in Catalonia BIBLIOTECA DE CATALUNYA. DADES CIP:

Hernández Gascón, Joan Miquel

Map of local industrial production systems in Catalonia. Bibliografia ISBN 84-393-6906-9 I. Fontrodona Francolí, Jordi II. Pezzi, Alberto III. Catalunya. Secretaria d’Indústria IV. Títol 1. Sistemes productius locals_Catalunya 2. Zones industrials_Catalunya 338.45(467.1)

Published by: Ministry of Employment and Industry of the Autonomous Government of Catalonia Department of Industry

First published: Barcelona, October 2005 Print run: 500

Publishing coordination: Neus Bassi

Translation: TRADTEC, S.L. http.//www.gencat.net/treballiindustria/publicacions/sie/index.html

Cover design and layout: Joaquim Trias i Associats

Printed by: Grup 3, SL

D. leg.: B30481-05 ISBN: 84-393-6906-9

The Ministry of Employment and Industry does not necessarily share the opinions expressed in this document. The opinions expressed the- rein remain the sole responsibility of the autors.

Note: The maps of Catalan comarques (counties) in this publication are based on information provided by the Catalan Institute of Cartography. Map of Local Industrial Production Systems in Catalonia

Joan Miquel Hernández Gascón Jordi Fontrodona Francolí Alberto Pezzi

Índex

Foreword by Maria Teresa Costa i Campí 6

Preface de Marco Bellandi 7

Acknowledgements 10

1. Introduction 13 1.1. About industrial districts 14 1.2. About clusters systems 16 1.3. Industrial districts, clusters and regional industrial policy 18 1.4. Goal and justification of the study 20

2. Local industrial production systems in Catalan industry 23 2.1. Identification methods 24 2.2. Local industrial production systems (LPS) in Catalan industry: 29 2.2.1. LPS in the food and drink industry 29 2.2.2. LPS in the textile, clothing and leather industry 44 2.2.3. LPS in the wood, furniture and cork industry 68 2.2.4. LPS in the paper, publishing and graphic-arts industry 82 2.2.5. LPS in the chemical industry 92 2.2.6. LPS in the plastics industry 104 2.2.7. LPS in the metallurgy and metal-products industry 114 2.2.8. LPS in the machinery and mechanical-equipment industry 123 2.2.9. LPS in the electrical-and electronic-equipment industry 145 2.2.10. LPS in the transportation-equipment industry 157 2.2.11. LPS in other manufacturing industries 174

3. Overview 183

4. Bibliography 193 Foreword

For some time now, the work of renowned economists in the fields of industrial localization, economic growth and analysis of external economies has shown the industrial district to be a valid unit of analysis. A theoretical framework has been developed based on this concept, defining a regional industrial policy that promotes external economies, takes manufacturing and its relationship with the corresponding territory into account, fosters intercompany relationships and common support services and coordinates public and private action to design objectives and tools.

It was consequently decided to identify local production systems (industrial districts or clusters) in Catalonia and describe their most significant features, with the aim of providing a clearer picture of the grounds on which their economic realities are based, while at the same time following the recommendations of the European Union with regard to the implementation of maps of local industrial production systems. Of no less importance, however, was the desire to make an initial contribution towards defining industrial policies with a regional scope.

The research carried out by economists Joan Miquel Hernández, Jordi Fontrodona and Alberto Pezzi responds to this task. The authors all work in the Catalan government's Secretariat for Industry and Energy and have devoted many years to studying Catalan industry and local production systems.

The mission of this study, the Catalan version of which is included in the Papers d’Eco- nomia Industrial collection, is to contribute towards increasing people's awareness of the production sector in Catalonia and the factors that can help us understand the different behaviour observed. The map of local industrial production systems fits perfectly within this mission and is essential for the future of an economy such as that of Catalonia, a region with a long industrial tradition where business clusters have existed in certain areas for many years, some dating back as far as the Middle Ages. The externalities and knowledge transfer that take place within local industrial production systems are sources of competitive advantages that should be fully exploited for the wellbeing of society

Maria Teresa Costa i Campí Secretary for Industry and Energy

6 Preface

The current resurgence of the concept of the industrial district can be explained by the need to understand the original tracts of industrialization processes that acquired special significance in some Italian regions in the late 1960s. Development in Italy was concentrated in specific areas, where groups of small and medium-sized companies were growing in number and expanding their fields of specialization. Business processes were per- formed by an increasing number of internally connected local firms that gravitated around special manufacturing sectors specific to each location, where business owners, labour and pro-industry institutional action were firmly rooted. These facts caused some surprise when they were compared with the traditional vision of industrialization based on the central, determining role of a large company. The inability to apply a simplistic interpretation to the vitality of groups of companies going through such an industrialization process, solely as a result of strategies to decentralize production implemented by large companies as part of their own restructuring processes, marked the beginning of a new era of studies. These studies spanned not only the fields of economics and industrial policy, but also geography, sociology and history of industry. Studies carried out in Italy on industrial districts appeared at the same time as other lines of research in and outside Europe. Some of these lines in the past twenty years have included flexible specialization and craft-like production, the competitive advantage of nations and clusters, new regional worlds of industry and the new economic geography, innovative milieux, proximity in industrial organizations, entrepreneurial networks, social capital and local development.

One of the countries that embraced the notion of industrial districts was Spain, particularly Catalonia. It is of interest to note that Maria Teresa Costa and Joan Trullén have held intense intellectual exchanges with Giacomo Becattini since the 1980s. The extensive work done in Catalonia to apply a related concept (the cluster as proposed by Michael Porter) should also be taken into account. This research project, A Map of Local Indus- trial Production Systems in Catalonia, carried out by a team from the Catalan government's Ministry of Employment and Industry, fits perfectly into such general context.

The work is presented as a census of the local drivers of Catalan industry. It does not attempt to address all of Catalan industry. Instead, it only focuses on the segment that includes local forces similar to districts that play an important and sometimes decisive role. Companies and local units, workers and turnover are not distributed simply by statistical sector, but are divided into two large aggregates: local industrial production systems open to foreign competition, and other industries, such as systems not open to foreign competition, isolated locations populated by large companies, groups of small companies working in different industries and with different organizational structures. The study focuses on the first kind of production systems and provides descriptive details

7 on them, with brief summaries of how they are currently organized and how they developed over time, links in terms of competition and cooperation within the system and the local roots of the production system.

As explained in the introduction to this work, the basic subject of the research project is what we refer to as a local (industrial) production system. I would like to mention an experience I had on this topic in the early 1990s when I formed part of a group made up of district specialists from Florence led by Giacomo Becattini and the group of district specialists from Modena led by Sebastiano Brusco. The group was created to define some of the tools for understanding the mechanisms of change in industrial districts. After a number of meetings, we realized there were ideas that each group understood differently when it came to defining the subject of the study, namely, the industrial district. When Becattini spoke of the industrial district, he understood one kind of place (i.e. a local system): a locality characterized in terms of the economic and social structure by the concentration of specialized companies and group and public organizations with partially complementary products and services. On the other hand, Brusco understood an industrial district to be something like what Michael Porter defined and christened as an (industrial) cluster, i.e. specialized companies and complementary organizations. In the end, we agreed that an industrial district was a locality with certain characteristics and that we would refer to the systems of companies and complementary organizations as local production systems or localized industry.

With regard to Porter’s terminology, the local production system of the district is a cluster of a particular kind: it is characterized by many specialized companies and has features of systems that arise from the history of the companies in the social relations of a local society. These characteristics may also arise under conditions not strictly related to an industrial district, i.e. within metropolitan areas and/or with a significant presence of a certain number of large local company units. In any case, a rather significant role, in defining the the industrial organization and the possibilities of development, is assumed to be played by local socioeconomic and institutional forces.

This census is based on the unit of analysis referred to as the local industrial production system and is aimed at unveiling this driver of Catalan industry and making more visible the territorial-industrial hubs where industries seem to be more dynamic and efficient.

This objective also has considerable practical value in support of local and regional policies. To realize all their potential (external economies), local industrial production systems need suitable infrastructure and the right kind of public assets. Policies should contribute to the construction, maintenance and renovation of this infrastructure. Otherwise, the potential will be lost and will never manifest itself. Putting the focus on local industrial production systems also contributes to placing industrial policies in a more complex but softer frame (as Becattini would say) of public and group interventions. For example, even policies involving social services may have industrial consequences. However, with complex policy objectives, public and collective action should be conceived in terms of co-evolutionary and multilevel processes instead of the application of top-down schemes orchestrated by far-off administrators.

Finally, it is necessary to consider the current context of Catalonia. First of all, the design and implementation of major European Union programmes is related to the idea of support for systemic factors of organization and industrial development, including those with important territorial features. Secondly, many European local industrial production

8 systems are critically exposed to the challenges of new industries on the international scene, such as those that have found an important base in some regions of China. A response to these challenges calls for a major leap forward in innovation by private entre- preneurs and advances in the quality of the infrastructure of public assets dedicated to existing and potentially emerging local industrial production systems.

Marco Bellandi Economic Sciences Department University of Florence

9 Acknowledgements

We would like to express our gratitude to all of the people who helped make this study possible.

First, we would like to thank Núria Cristóbal and José Rofes for actively participating in documentation tasks and selecting the data we worked with.

Second, we'd like to thank all of the professionals and businesspeople who, by sharing their opinions, helped us to better understand local industrial production systems.

• Benet Armengol, of Gremi de Fabricants de Sabadell • Josep Ballbé, of Unió d’Adobadors de Catalunya • Gemma Bercial, of SELCI • Núria Blancher,of Ajuntament de la Garriga • Emilio Bonilla, of Railgrup • Javier Bort, of Associació Empresarial Química de Tarragona • Joan Brat, of Fibracolor, SA • Josep Brugarola, of MDC • Sergi Carrascón, of Agrupació de Fabricants de Ciment de Catalunya • Antoni Castillo Buil, of Jofer Mobles • Màrius Catalán i Font, of Fira del Moble de la Garriga • Pilar Chiva, of Agència de Residus de Catalunya • Josep Collado, of Federació Catalana d’Indústries de la Carn • Ricard Creus, of Associació de Confeccionistes de la Província de Lleida • Raúl Cristófol, of ASEGEMA • José Maria de Simón, of Asociación Española de Manutención • Eloy de Sola, of Clima Roca York • José Luis Díez Guio, of Asociación Española de Fabricantes de Pinturas y Tintas de Imprimir • Neus Díez, of Ajuntament de la Garriga • Xavier Domingo, of Asociación Española de Productores de Sustancias para Aplicaciones Tensioactivas • Enric Elías, of Agència de Residus de Catalunya • Víctor Fabregat, of Centro de Información Textil y de la Confección • Josep Font, of Associació Catalana d’Empreses de Motlles i Matrius • David García, of FAGEPI • Joan Gil Sánchez, of UVIPE • Eduard Gisbert, of Asociación Multisectorial de Empresas • Àngel Hermosilla, of Centre d’Estudis i Assessorament Metal·lúrgic • Carles Juan, of J Juan • Mª Teresa Lara, of Associació Catalana d’Envasadors d’Aigua • Julián Lázaro, of Gremi d’Indústries de la Confecció

10 • Juan Manuel Lecue, of Barcelona Aeronàutica i de l’Espai • Miquel Àngel Lleixà, of Asociación de Empresas de Electrónica, Tecnologías de la Información y Telecomunicaciones de España • Òscar López, of Drassanes d'Arenys • Salvador Maluquer, of Asociación Industrial Textil del Proceso Algodonero • Pere Mateo Ferrer, of Olis de Catalunya • Juan José Meca Saavedra, of Federación Empresarial Catalana del Sector Químico • Ignasi Mier, of Circutor • Tomàs Moré, of Ajuntament d'Arbúcies • Maite Navarro, of Gremi Provincial de Torners i Indústries Diverses de la Fusta • David Pardo, of As Dara Mobiliari • Enric Pedrós, of Associació de Fabricants Exportadors de Maquinària Agrícola de Catalunya • Joan Peña, of Centro Español de Plásticos • Òscar Puig, of AEFEMAC/AFESPAN • Joan J. Puig, of Institut Català del Suro • Josep Maria Pujol, of Sernauto • Enrique Ribot, of North Wind Yard • Diana Roig, of Asociación Española de Fabricantes de Caramelos y Chicles • Rafael Romero, of Cambra Oficial de Contractistes d'Obres de Catalunya • Agustí Roqué, of Asociación de Industrias de la Alimentación y Bebidas de Cataluña • Mònica Ros Batlle, of Associació Catalana de Fabricants de Pinsos • Xavier Ruestes, of Col·legi Oficial de Joiers, d'Orferbres, de Rellotgers i de Gemmòlegs • Antonio Ruiz Cerveró, of Asociación Española de Fabricantes de Máquina Herramienta • Ricard Sànchez i Llevot, of Gremi d'Indústries Gràfiques de Catalunya • J.A. Schell, of Associació de Fabricants de Material Elèctric • J.M. Sanuy, of Gremi del Vidre Pla • Josep Antoni Sellès, of Letona • Victorià Serra Puigdemont, of Hilaturas Victoriano Puigdemont • Jesús Sevil, of Asociación Española de Fabricantes de Pequeños Electrodomésticos • Carlos Sisternas Suris, of Federación Española de Empresas de Tecnología Sanitaria • Joaquim Sisto, of CQS Servicios Técnicos Comerciales • Jordi Soler, of Ramon Soler • Francesc Talarn, of BYETSA • Emili Valero, of Associació Catalana de Fabricants de Pasta, Paper i Cartró • Xavier Vergés i Guinart, of M. Guinart, SA • Jeroni Xampeny Baró, of Asociación Española de Manutención

Finally, we would also like to thank Maria Teresa Costa, Agustí Segarra, José García Quevedo and Elisabet Viladecans for their comments and contributions. Naturally, the authors assume exclusive responsibility for any errors that this document may contain.

11 We shall find that some of the advantages of division of labour can be obtained only in very large factories, but that many of them, more than at first sight appears, can be secu- red by small factories and workshops, provided there are a very great number of them in the same trade.

A. and M.P. Marshall The Economics of Industry (1879)

12 1

Introduction 1.1 About industrial districts

In the late 19th century, Marshall (1890) introduced the concept of external economies1 and established that, in certain manufacturing industries, the advantages of mass production could be achieved by assembling a large number of small producers in a single district, provided that the production process can be subdivided into different phases and each of these phases can be carried out with maximum economy at a small establishment. The proximity of a large number of small establishments specialized in carrying out a particular phase of the production process encourages investments, makes it easier to train skilled workers and causes ideas to circulate more quickly.

A century later, the perception that certain industrial regions, characterized by the pre- dominance of small and medium-sized businesses, were very good at reacting to economic crises and had highly flexible production, brought the concept of the Marshallian industrial district into the centre of the debate on endogenous economic development and the localization of industrial activity (Trullén, 1990). This return to Marshallian thin- king was indisputably the work of the Italian professor Giacomo Becattini, who initiated a line of research on the industrialization process that revolutionized the body of economic literature on external economies and economic growth. The basic idea is that the size of a company can be misleading because, in many industries, competitiveness is determined not by the size of the company but by the quality of the environment, and that the emphasis should therefore be shifted from internal economies of scale to localized external economies. This means that geography is of fundamental importance and, under certain conditions, a set of small and medium-sized businesses that compete with each other can be more efficient than one large, vertically integrated company (Soler, 2004).

The existence of a large number of companies working in competition with each other explains the persistence of output growth in industry. However, because industrial districts are social and territorial units that simultaneously host a series of companies and a community of people, they also have certain characteristics that are not strictly economic. “The population's identification with the district goes beyond sharing collective historical or cultural symbols of identity. The industrial district has an industrial atmosphere, which not only encourages professional training, the transmission of innovations and the rapid communication of changes in price or demand, but also includes a certain number of unwritten rules that govern production-related relationships” (Trullén, 1990).

The key moment in the recovery of the concept of industrial districts was professor Becat- tini's 1979 publication of an article in Revista di Economia e Política Industriale entitled “Dal ‘settore’ industriale al ‘distretto’ industriale. Alcune considerazioni sull’unità di inda-

14 gine dell’economia industriale”. This article strongly influenced not only theoretical and applied analysis of economic development, but also industrial policy.

In his historic article, Becattini explained that the definitions of industry that had always been the most successful in studies of industrial economics were those based on technological similarity, that is, those which grouped production processes that were similar in some respect. Naturally, for the purposes of analysis, the great weakness of these classifications was that technology was an aspect of the evolution of production that was subject to very rapid changes. Therefore, it was better to consider sociological definitions, i.e. definitions based on the subjects' awareness of belonging to a certain industry. For Becattini, the fact that sociological definitions incorporated elements from specific cour- ses of history made them very appropriate for studying individual industrial development processes. Becattini was interested in Marshall's idea that the glue that held industrial groups together was the sense of belonging, which included objective components related to common interests and subjective components related to historical and cultural aspects.

Becattini pointed out that Marshall's unit of analysis was not the industry, as defined technologically, but rather the industrial district. In such areas, the population density, the availability of infrastructure and the industrial atmosphere are both the cause and effect of the output growth that cannot be explained by internal economies of scale. The companies that make up an industrial district are held together by a complex network of external economies and diseconomies and by the compound nature of the district, which makes it more stable than other units.

This geographical interpretation of industrial development processes, introduced by Becattini's publications, has become so important that it has indisputably influenced modern regional industrial policy. This fact has played a very significant role in the large body of economic literature2 generated on the concept of the Marshallian industrial district. Economists from Italian and Spanish universities, including Fabio Sforzi, Marco Bellandi, Alberto Guenzi, Gabi Dei Ottati, Luciana Lazzeretti, Joan Trullén, Maria Teresa Costa and Vicent Soler, among others have played a central role in generating this body of work.

1 Scitovsky (1954) furthered the conceptualization of external economies by distinguishing between pecuniary and technological external economies. External economies are a fundamental analytical element of new endogenous-growth theories (Romer, 1986; Lucas, 1988), the so-called new economic geography (Krugman, 1991) and in discussions of business organization and competitive strategy (Porter, 1990).

2 An overview of this literature can be found in three books published by the Spanish Ministry of Labour and Social Security under the title Los distritos industriales y las pequeñas empresas in 1991 and 1992, in the labour economics and sociology collection, no. 55, 56 and 68. Likewise, in the literature on Spain, the concept of the industrial district was introduced for the analysis of geographical business organization and its efficiency in Costa (1988) and Costa et al. (1993).

15 1.2 About clusters systems

Just over ten years after professor Giacomo Becattini's seminal article was published, as a result of the documented success achieved by regions3 that were home to highly dynamic local production systems, the term cluster became popular. The publications of the American professor Michael Porter played a central role in popularizing this term. In his book The Competitive Advantage of Nations (Porter, 1990), he explained that economies can be structured in groups of companies that gather around sources of competitive advantage and proposed an analysis of these clusters through a system of determinants of competitiveness, which he organized in four major categories: factor conditions (human resources, capital, infrastructure, etc.), demand conditions (especially customers' sophistication and ability to discern), related and supporting industries (suppliers, specialized services, etc.), and finally, the structure of the industry and the strategy and rivalry of the companies.

A cluster is a geographically delimited concentration of a set of interdependent companies (European Commission, 2002). This definition requires the presence of active channels for commercial transactions, dialogue and communication. However, Porter favours a broader concept, which defines a cluster as the geographical concentration not only of interconnected companies but also institutions that work in a particular field (Porter, 1998). In fact, the website of the Institute for Strategy and Competitiveness of Harvard University,4 where Porter works, states that clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions.

This interrelationship forms the basis for the greater efficiency of economies structured in clusters, which results from three basic causes: increased productivity, increased ability to innovate and the incentive to create new companies (Porter, 2003).

Clusters increase productivity because:

1) They provide better access to the production factors and skilled workers that the companies located in the cluster need. 2) They encourage contextual knowledge, i.e. the collective know-how that develops in all production processes. 3) They ensure the presence of specialized suppliers. 4) They favour access to technology through the presence of technology centres, supporting institutions, etc. 5) They provide incentives for creating specialized infrastructure.

16 They improve the ability to innovate because:

1) The proximity of competitors is an incentive to innovate. 2) The rapid circulation of information causes technology to spread. 3) The very existence of the cluster causes opportunities for innovation to be rapidly per- ceived. 4) The presence of different companies in the value chain of the industry increases the ability to meet clients' needs. 5) The coexistence of competition and cooperation is also an incentive to innovate.

They encourage the creation of new companies because:

1) The very existence of the cluster favours the perception of business opportunities and therefore encourages spin-offs (the creation of companies using the employees of the parent company). 2) The presence of suppliers, skilled workers, supporting institutions, etc., reduces barriers to entry. 3) The ease with which information circulates makes businesses more dynamic and increases opportunities.

3 While the model of Italian industrial districts was being developed, other authors, such as Scott (1986) and Storper (1989), began analysing the case of the North American economy and demonstrated the geographical concentration of certain industrial activities. This agglomeration allows for flexible organization of production, which reduces costs, increases efficiency and makes production units more competitive.

4 Institute for Strategy and Competitiveness. Harvard Business School. http://www.isc.edu

17 1.3 Industrial districts, clusters and regional industrial policy

The works of Becattini and the economists who have developed his ideas – together with new theoretical contributions in the fields of growth, localization of industry and analysis of external economies – have demonstrated the validity of the industrial district as a unit of analysis and as a theoretical framework for defining a regional industrial policy with four main elements (Costa, 2004):

1) The promotion of external economies and, in particular, technological spillovers. 2) Geographical and production-based delimitation, since public action should take into account every local reality and because the multiplying effect is greater when govern- mental action is directed at correlated activities. 3) The promotion and improvement of relations between businesses and the establishment of community structures to support industrial activity, since companies' competitiveness is determined by the simultaneous use of their internal resources and the resources available in the vicinity. 4) Coordination between the public and private sectors and jointly agreed strategies for designing goals and instruments.

This policy is based on decentralization, bringing intervention and the receiving agents closer together, geographical and production-based specificity, the cohesion of the environment and the size of the local market. The policy seeks to provide regions with competitive advantages for companies in terms of costs and the ability to innovate5.

At the same time, particularly as a result of the impact of Michael Porter's work in institutional circles, the regional policy of a growing number of countries has given greater importance to what might be vaguely defined as local industrial production systems policy, which is progressively shaping a new system of industrial policy (OECD, 2001). However, cluster policy lacks precise rules and a wide range of different actions are taken under the umbrella of this name. Possibly for this reason, in spring of 2002 the Europe- an Commission, interested in the usefulness of local industrial production systems policy in favouring regional economic development, began a project on local industrial production systems and networks of companies (European Commission, 2003). In the project's final report, a group of experts declared that a local industrial production systems policy should encourage dialogue and cooperation among companies and between companies and institutions, technology centres and training services, thereby limiting the public sector’s role to that of a catalyst.

This recommendation came after the European Commission, following a study of cluster policies carried out in 17 European countries (European Commission, 2002), recognized that these initiatives, each with different activities and terminology, shared the major goal

18 of strengthening cooperation between business and networking and had a series of key characteristics in common, including the following:

• They are considered instruments to promote economic development and structural change;

• They emphasize the link between companies and the regional technological infrastructure;

• They insist on the role of public organizations as intermediaries and promoters of business networks and joint projects;

• They highlight the need to improve companies' ability to innovate and manage through an interactive relationship with their environment.

• They concentrate on the need to encourage the creation of knowledge.

Despite the fact that districts and clusters are the same thing to many people and that the regional industrial policies derived from them are very similar, the discussion of the similarities and differences between them remains open. This is especially true in the academic world, where studies on districts often fall into the category of industrial economics, while studies on clusters are more closely related to management.

Porter's work has obviously helped increase the importance of the geographical aspect in industrial-economics studies. It has also played a very significant role in spreading the idea, developed in the literature on districts, that the existence of positive externalities in a region improves the competitiveness of the businesses. Yet it is equally true that “in districts, the process of localizing industry involves specialized manufacturers being over- lapped in a social process of reproducing a motivational and cognitive nexus” (Bellandi, 2003) and that this idea is, for many people, the basis of the differences between the two concepts: districts emphasize community dynamics while local industrial production systems emphasize business strategy.

However, in this study we will not join this interesting debate on the differences between industrial districts and clusters. Rather, we understand that not only can the two conceptual categories coexist perfectly, but also, for all practical purposes, they are different names for the same phenomenon: the fact that companies from a given industry or strategic segment tend to concentrate in a limited geographical space, creating links of cooperation and competition with each other therefore. In this study, we will use the term “local industrial production system” to describe the socioeconomic phenomena we wish to identify.6

5 Empirical evidence (Sigorini, 1994; Costa and Viladecans, 1999a) has demonstrated the existence of a district effect, understood as the competitive advantages derived from the geographical agglomeration of an activity.

6 The following are definitions of these similar conceptual categories. - “A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementaries.” Michael Porter, On Competition, 1998. - “Il distretto industriale è definible come un’ entità socio-territoriale caratterizzata dalla compresenza attiva in un’ area territoriale circoscritta, naturalisticamente e storicamente determinata, di una comunità di persone e di una popolaziones di imprese industriali.” Giacomo Becattini, 1989. - “Un SPL est une organisation productive particulière localisée sur un territoire correspondant généralment à un bassin d’emploi. Cette organisation fonctionne comme un réseau d’interdépendances constituées d’unités pro- ductives ayant des activités similaires ou complementaires qui se divisent le travail.” Datar, Les systèmes productifs locaux, 2002.

19 1.4 Goal and justification of the study

The goal of this study is to identify the traded local industrial production systems in Cata- lan industry and describe the most important characteristics of each one.

The methodological conventions used in this study are specified later. However, we wish to clarify right away that a local industrial production system is considered traded if its companies compete with companies from local industrial production systems in other countries. A local industrial production system, on the other hand, is one whose companies are geographically concentrated and have a high degree of regional specialization but do not carry out their activity in competition with companies from other local industrial production systems.

In the process of defining the methodology for this research study, we chose to limit the object of our study to local industrial production systems whose companies compete with companies from foreign clusters. The reason for this decision can be found in Por- ter's recent work (Porter, 2003), in which he defines traded clusters as those which are strategically important to an economy due to their productivity and innovation. Porter uses data from 2001 to show that traded clusters in the United States account for only 32% of employment, as opposed to local clusters, which account for 68%. However, traded clusters have a much higher average salary than local clusters ($44,956 and $28,288, respectively), their relative productivity is also much higher ($144.10/worker and $79,30/worker, respectively) and the difference in the result of their innovations, measu- red in the number of patents per 10,000 employees, is enormous (21.7 and 1.3, respectively).

The map derived from this study not only determines the geographical location of the traded local industrial production systems of Catalan industry but also includes the most important characteristics of each one: a description of its activity; brief comments on its origins and development; a list of the main agents that make it up, especially companies and institutions; and quantitative information essential for getting an idea of the size of the local industrial production system, such as its companies' turnover and number of employees.

Local industrial production system mapping is not an unprecedented exercise. In fact, studies of this sort have been carried out recently in several European countries. However, their results are not comparable because they do not use the same terminology (some refer to regional clusters, others industrial districts or local production systems) and they use different methods and criteria to identify the local industrial production systems7 . So disparate are the methods used that the European Union recognized (European Com- mission, 2002) that the methods used to discuss the existence of a local industrial production system in these economic maps were often so imprecise that they failed to inclu-

20 de districts that are certainly true local industrial production systems. According to the European Union (European Commission, 2002 and 2003), local industrial production system and cluster mapping has been carried out in the following European countries, among others: Austria, Belgium, Denmark, Slovenia, Spain, Estonia, Finland, France, the Netherlands, Hungary, Italy, Latvia, Norway, Poland, Portugal.

Why are we mapping the local industrial production systems in Catalan industry? First, because when a government provides society with more information about the basics of its economic reality – as we are doing in this study – it is providing a public service. Second, because by publishing this study, the Catalan Autonomous Government is following the instructions of the European Union, which declared that local industrial production system mapping is a part of defining and implementing a local industrial production systems policy and encouraged European countries to carry out studies of this type (European Commission, 2003). Third, because professor Becattini's recovery of the idea of industrial districts helped create a framework for designing and executing regional industrial policies, and because by mapping the local industrial production systems in Catalonia we are contributing to the definition of this policy.

Before concluding this introduction, we would like to clarify three points. First, we created this local industrial production system map of Catalan industry by applying the methodological conventions specified below. The map would be different if we had used other criteria. Therefore, even without taking into account any mistakes that may have been made, this map is not the only possible one.

Second, this study is a map of the local industrial production systems in Catalan industry. It therefore includes only a part of the industrial sector of Catalonia. This does not mean that the part of the industrial sector that is not included is better or worse than the part that is included. Furthermore, companies that form a part of a local industrial production system have no guarantee and may face competition just like any other company if they find themselves in unfavourable circumstances.

Third, the companies that make up the local industrial production systems included in this study are not to be considered more important to Catalonia than those that are not. The economic history of Catalonia demonstrates both the importance of local industrial production systems in our industrial development and the importance of companies that have not participated in local industrial production systems.

Finally, we'd like to mention that an optimal local industrial production system support programme requires an individualized design adapted to the particular needs of each local industrial production system. If this study helps public policymakers define actions to be taken for this type of industrial policy, it will have served its purpose. Policymakers are therefore the prime target of this applied economic research study, but they are not the only target. Our aim is to create a document that is both rigorous and informational. We want to reach everyone who is interested in the Catalan economy, in particular those who believe that a company's environment can improve economic competitiveness and increase social welfare. Obviously, this study is not intended as the final word in research on local industrial production systems. We invite scholars to continue researching this phenomenon, for there is still much more to be learned.

7 Sforzi (1990) made the first attempt to determine the qualitative importance of industrial districts in his analysis of Italian industrial districts.

21 22 2

Local industrial production systems in Catalan industry PORTADELLA CAPITOL 2

(FREEHAND MX)

23 2.1 Identification methods

As mentioned above, the goal of this study is to identify the traded local industrial production systems in Catalan industry and describe the most important characteristics of each one. For our purposes, a local industrial production system is an agglomeration of companies from a certain strategic industry or segment in a limited geographical space that create links of cooperation and competition with each other and where specialized suppliers, service providers or associated institutions are also present. A local industrial production system is considered traded if the companies that make it up compete with companies from other countries.

According to the specialized literature on this subject (Soler, 2004), we can deduce from this introductory clarification that the agglomeration of companies from a single industry is a necessary condition for the existence of an industrial district, cluster or local production system, but is by itself not enough. These conceptual realities are dynamic systems consisting of companies that interact with each other and exist in a context that increases their competitive efficiency. For this reason, and because this study focuses on traded local industrial production systems, which are strategically more important to an economy due to their productivity and ability to innovate (see Chapter 1), in order to create the map presented in this study we had to:

1) Identify the agglomerations of industrial companies dedicated to a specific business in a limited geographical area; 2) Find out if these companies not only compete but also cooperate (Bellandi, 2003) and if, in the area where they are located, externalities occur that allow the companies to reduce their production and transaction costs; 3) Find out if they compete locally or globally.

The first decisions we had to make were deciding how we wanted to classify industries and what geographical unit of analysis we wanted to consider. For the former, in order to achieve the most expressive possible knowledge about industrial reality, we opted not to classify industries broadly but rather to focus on specific lines of businesses or strategic segments (Conejos and Hernández, 1999) because this is where true competition takes place and where companies located in a given geographical area share the same problems and look for solutions. Under this type of classification, for example, we would not discuss the textile, clothing and leather industry, which is the usual classification in aggregated statistics. Instead, we would consider the business segments within this industry such as cotton spinning, knitted fabrics, clothing, bovine leather, sheepskin and others.

In this study, local industrial production systems have generally been defined according to market criteria, i.e. the companies that form a local industrial production system compete in the same business segment. However, in four cases we have defined local indus-

24 trial production systems according to technological criteria, i.e. the companies that make up these local industrial production systems share a series of skills for treating a material (metal, plastic and wood) or for a process (graphic arts). In these cases, there tends to be a high concentration of companies that carry out different phases of a production process (for metal, for example, they would be smelting, forging, stamping, pressing, etc.). They complement each other but make products that can be used in very different industries (construction, automotive, electronics, machinery, etc.).

The matter of choosing the best geographical unit of analysis for achieving the proposed goal has been dealt with at length in the economic literature. According to Viladecans (2001), choosing the geographical unit of analysis for studies of the spatial distribution of industrial companies is very important because the results may vary considerably depending on the size of the unit selected. The available evidence indicates that, in Spain, administrative municipal limits do not specifically address effective local economic areas and, therefore, it seemed reasonable to consider a unit of analysis somewhere between municipality and province. Giner and Santamaria (2003) also furthered this idea. We have adopted this approach for this study and have used the county as our normal unit of analysis. However, we should point out that in some cases we expanded this unit to two or more neighbouring counties when the evidence showed that the local industrial production system went beyond the county line.

As mentioned above, the local industrial production system map of Catalan industry was created in two phases. In the first phase, we identified important concentrations of companies in the same segment in a single area, normally a county. In the second phase, we selected data from this group to weed out the concentrations of businesses that cannot be considered traded local industrial production systems. We complemented this second phase by obtaining economic data for the identified local industrial production systems.

The first phase of research – the detection of a significant concentration of a certain industrial activity in a county – was carried out using information found in the Register of Industrial Establishments of the Ministry of Employment and Industry of the Catalan Autonomous Government. This register records the industrial establishments located in every Catalan town and specifies information such as the number of employees. It is important to note that the register's information regarding the existence of an establishment in a certain location is more reliable than its information about the number of people it employs, as the latter is sometimes obsolete. For this reason, and also because a local industrial production system cannot exist without the presence of a significant number of production units in the area, the variable we used in our analysis was the existence of an industrial establishment and not the number of people employed. Obviously this option has the disadvantage of giving similar weight to large and small companies. However, if we considered the number of people employed, it could have the opposite effect: we could detect a large number of people employed in a certain region without knowing how many companies there are. We chose to use the data provided by the Register of Industrial Establishments rather than Social Security registration data, because the latter has the disadvantage of attributing a company's entire staff to its registered office.

We began working with the data provided by the Register of Industrial Establishments by determining how many establishments were located in each county and how many people were employed in the different businesses within each industrial activity. In order to carry out this task, we obviously needed to identify these different businesses before- hand with the help of industry experts. We used the five-digit industry classification

25 2. Local industrial production systems in Catalan industry

codes of the Catalan Classification of Economic Activities (CCAE). This allowed us to identify industrial establishments at the level of, for example, producing cotton and cotton-blend fabrics, manufacturing rugs and carpets, or preparing, tanning and finishing leather.

Through interviews with industry experts, we then determined in which cases the geographical unit of analysis should be the county and in which cases the operation of a local industrial production system required us to consider a larger area, almost always defined as two or more neighbouring counties.

Once we had obtained a preliminary list of geographical concentrations of companies in the same business in a single area, normally a county, we filtered the list to eliminate the groups of companies that did not have a significant level of geographically specific business specialization and whose market did not reach a minimum size requirement. To do this, we calculated the companies' specialization indices and two measurements of their relative weight.

The specialization index compares the weight of an economic activity in a given region with the same activity's weight nationwide. The higher the value, the greater the relative specialization of the selected region in the activity in question, and vice versa (Costa and Viladecans, 1999b). For this study, we have calculated the specialization of production of the regions considered (normally counties) with respect to Catalonia as a whole using the following equation:

Iij = (Eij/Ej)/ (Ei/E)

where Iij is the specialization index of industry i in region j; Eij is the number of industrial establishments in industry i in region j; Ej is the total number of industrial establishments in region j; Ei is the number of industrial establishments in industry i in Catalonia and, finally, E is the total number of industrial establishments in Catalonia. Although many authors consider that a local industrial production system exists when the specialization index is greater than 1, in this study we have chosen to use a stricter criterion. We have required that this index be greater than 1.25, as recommended, for example, in the document Business Clusters in the UK, prepared for the British government by Trends Business Research (2001)8 .

In order to guarantee that the local industrial production systems we detected met a minimum size requirement, we calculated the weight of the production establishments that make up each local industrial production system with respect to all of the industrial establishments of the same business in Catalonia as a whole. Considering the difficulty of obtaining information about the latter when a business does not correspond exactly with a CCAE classification code (for example, the production of narrow fabrics), we also calculated the weight of the production establishments that make up each local industrial production system with respect to all industrial establishments in Catalonia. In order to make sure that a given concentration of companies from the same activity was capable of constituting a local industrial production system, we required it to have at least 15% of all the industrial establishments for that sector in Catalonia or 0.1% of all industrial establishments in Catalonia.

8 Viladecans (2003) used a similar methodological approach to determine the Spanish local industrial production systems in the mid-1990s.

26 In short, the first phase of the study consisted of the following stages:

1. After meeting with industry experts, we used the five-digit CCAE industry classification code to classify industrial activities in lines of business or strategic segments.9

2. We detected groups of companies from the same segment located in regions of Cata- lonia, normally counties, using the information provided by the Register of Industrial Establishments of Catalonia (REIC).

3. We filtered this information by calculating relative specialization indices and estimating the weight of the local industrial production system with respect to the segment as a whole in Catalonia and with respect to all industry in Catalonia. We considered that we may have detected a local industrial production system when:

3.1. Its specialization index was greater than 1.25 3.2. Its weight was at least 15% of its sector in Catalonia or 0.1% of all industry in Cata- lonia.10

When we arrived at the second phase of the research, we selected data from this preliminary set in order to weed out concentrations of companies from a single segment located in Catalonia that did not constitute traded local industrial production systems. These concentrations were eliminated on the grounds that no cooperation was detected among the companies or because externalities that increase competitive efficiency were not detected in the area. Obviously, this data selection was the most difficult part of the study and was only made possible by conducting many personal interviews with industry experts and agents from the different concentrations of companies detected in the first phase of the study. These individuals also provided the information we needed to get a preliminary view of the local industrial production systems identified.

The result of this study is a map of the traded local industrial production systems in Cata- lan industry. We have created a file on each local industrial production system summari- zing basic information such as the local industrial production system's segment, its geographical demarcation, the number of industrial establishments that make it up and the number of people it employs, according to the Register of Industrial Establishments, as well as an estimate of the size of the local industrial production system's market based on its turnover. The quantitative data always refer to the companies involved in the main segment (in particular the establishments whose activity has a CCAE code that corres- ponds with the local industrial production system's market segment) and not other elements of the local industrial production system, such as suppliers and clients. We have also created a list of the main companies in each local industrial production system – sor-

9 In some cases, the CCAE classification codes did not allow us to accurately identify a segment. One example was the electronics local industrial production system, where there are consumer-electronics companies that have the CCAE code for professional electronics and vice versa. In that case, rather than identifying one local industrial production system for each segment, we decided to group them together. Publishing companies presented a similar problem, because they are not required to register with the Register of Industrial Establishments. Therefore, we were unable to identify a publishing local industrial production system (which does exist) and instead had to include it in the graphic-arts local industrial production system. Similar cases include motorcycles, railway equipment, aerospace equipment, automotive manufacturing and handling and storage equipment.

10 We were unable to calculate these indices for the aerospace-equipment local industrial production system because the companies that form this local industrial production system usually have CCAE codes different from 35300 (aeronautics and space construction). However, we were able to identify this local industrial production system because the Barcelona Aeronautics and Space Association provided us with enough information.

27 2. Local industrial production systems in Catalan industry

ted by the number of employees according to the Register of Industrial Establishments – and specifying the town or city where each is located.11 Finally, we have added a short description of the history of each local industrial production system and its roots in the region,12 some brief comments about its value chain, particularly with respect to its supplier-client structure, and a list of the most important agents that interact with its companies, such as industry associations (IND), technology centres (TEC), training centres (TRA) and others (OTH). These agents are normally located within the geographical area of the local industrial production system. In some cases they are located elsewhere but maintain a close relationship with the companies in the local industrial production system.

The files have been grouped by industry for this presentation. We have provided a description of the main characteristics of each industry and its presence in Catalonia. We have also created a physical map indicating the location of each of the local industrial production systems identified and a diagram showing the main agents that act in the local industrial production system and a simplified representation of the local industrial production system's value chain.

11 It is important to note that we selected these companies in mid-2004 and changes may have occurred since then (closures, mergers, etc.) that are not reflected in the lists.

12According to Becattini (1989), the region where an industrial district is located is essential to understanding the process by which it was formed..

28 2.2 Local industrial production systems in Catalan industry

2.2.1 Local industrial production systems in the food and drink industry

Basic characteristics of the food and drink industry in Catalonia

LThe food and drink industry is made up of a set of quite disparate activities involved in the different preparation and transformation processes carried out on plant- and animal- based raw materials for consumption mainly by humans but also by livestock and pets. Therefore, it includes a broad, heterogeneous range of sectors that make up the different production processes and incorporate notably different levels of complexity and technological requirements. Generally speaking, most of the activities included in this industry can be considered highly mature. However, some lines of production, especially in second-stage food processing, include a very high level of innovation. More mature industries, which face difficulties in increasing demand, introduce innovations because this is the only strategy that can give positive results.

This industry can be subdivided into two major sectors: food production and drink production. The food-production sector can be further broken down into two major blocks: first-stage processing and second-stage processing. First-stage food processing includes companies that carry out the initial processes to prepare and adapt raw materials supplied by the agricultural, livestock and fishing industries mainly for human consumption. Second-stage food processing involves a greater degree of processing and added value for products obtained from the first stage of processing. Logically, these two sectors are highly interrelated because the inputs used by the second-stage-processing companies are usually the outputs of the first-stage production processes. The drink-production sector can be subdivided into two segments: alcoholic beverages and non-alcoholic beverages. Various types of processes exist within each of these two segments.

First-stage food processing mainly includes the production of: juices and tinned goods from all sorts of fruits and vegetables; processed and prepared fish and shellfish; milk and other dairy products; eggs and egg-based processed foods; processed foods based on meats, rice, cereals, and all sorts of flours; sugar; oils and other fats; feed and other animal foods, etc. Second-stage food processing includes a broad range of more highly processed products, such as: bread, cakes, pastries and cookies (fresh or long-lasting); confectionery, chocolate and similar items; pre-cooked dishes and other prepared foods (soups, stews, broths, etc.); spices; sauces and condiments; baby food and dietary sup- plements; nuts, dried fruits and snacks; coffees, teas and infusions; etc.

Because the goods produced by this sector are meant to satisfy the most basic consumption needs, their behaviour on the market is quite stable in high-income countries.

29 2. Local industrial production systems in Catalan industry

This is because once a certain degree of coverage is achieved, it is unlikely that demand will increase or decrease significantly. This situation results from the fact that the income elasticity of most food products is relatively low. That is, when income goes up, the increase in consumption of food products is less than proportional. Therefore, upswings in the economic cycle have a comparatively small impact on the industry. In fact, only a small part of the demand is for higher-priced food products, which have higher income elasticity. Therefore, these are the products that may be significantly affected by economic growth or recession.

As a result, practically the only way companies in the industry can expand their market in industrialized countries is by introducing more sophisticated products with a greater added value – for example, lines of “healthy” products are currently being emphasized – and by adding innovations to more commonplace consumer products, which increases their unit price. In contrast to the difficulties in increasing demand, economic recessions tend to have a more moderate effect on the food industry than on industrial activities that supply products that consumers can more easily do without. It is also interesting to note that, at similar income levels, families in southern European countries spend a greater proportion of their budget on food than families in other regions of the world – especially the United States – due to the greater importance placed on food in this cultural environment.

The notable diversity of products offered by the food and drink industry and the dispari- ties in consumption habits at a regional level – or even local level – make it possible for small companies to survive in the market. In fact, the number of companies that operate in this industry is remarkably high not only in Catalonia and Spain but in all European countries. Even so, the tendency toward concentration that affects most processing-related industrial activities has also become evident in this industry. One factor that contributes to this trend is the fact that, although economies of scale are often not very important in production processes, they have become very important in logistics, distribution and marketing. This is because a company's ability to enter large markets is determined by whether it can operate with extensive marketing networks and spend a large amount of money on advertising.

Another element that causes a similar effect is the remarkable negotiating power of major distribution chains. These chains help products with good brand image and distributor brands (house brands) penetrate the market while tending to marginalize brands that are less well-known to consumers due to the limitations they face in developing a broad-based advertising strategy. Under these conditions, it is very hard for a small company to gain access to these marketing channels – essential to reaching a large number of consumers – and if they do gain access, they do so under conditions that put considerable pressure on their retail prices. Because of these factors, smaller companies clearly have trouble reaching beyond local or regional markets without being absorbed by larger firms. In fact, the dynamics perceptible in Catalonia in recent years are heading toward a reduction in the total number of production units in the industry, while production units with 20 or more workers are tending to grow. As a result, the average number of employees per company is increasing, although very moderately.

The food and drink industry stands out as one of the main specializations of Catalan production. Its relative weight in industry as a whole varies depending on the aspect being considered. Because different industries have different intensities of labour and capital, their shares of total turnover, gross value added and total employment may show signi-

30 ficant differences. Still, the food and drink industry always appears as one of the three most important industries in Catalonia. In terms of turnover, the food and drink industry is Catalonia's most important industry, with a specific weight of close to 15% overall. With a share of 11%, the food and drink industry is second only to the chemical industry in terms of gross value added for all industry in Catalonia. Finally, the food and drink industry ranks third in employment in Catalan industry as a whole, with a share of nearly 11.5%.

The importance of this industry within the Catalan processing industry translates into very high relative weight for Catalan producers nationwide. In fact, Catalonia accounts for nearly 23% of all food production in Spain and a slightly higher proportion of gross value added while employing approximately 20% of Spain's workers. The business structure of this industry in Catalonia presents some other significant differences with respect to the rest of Spain, especially in the size of the production units, which is considerably higher in Catalonia. This is due to the comparatively greater presence of large companies, some of which are multinationals and some of which are based on local capital.

Food is by far the biggest sector of the food and drink industry. It represents 81% of the overall value of production and approximately 77% of the total gross value added. Food- related activities account for an even higher proportion of overall employment in the industry. The drink industry provides jobs for just under 14% of all salaried employees in the industry as a whole, due to the fact that these activities require a relatively lower proportion of labour.

Within the food industry, first-stage-processing companies have quite a high specific weight – more than two thirds of production, including items used for making animal food. The first- and second-stage-processing segments are more balanced when it comes to employment. The former provides approximately 55% of the jobs in the industry while the latter provides 45%. Second-stage-processing activities have greater relative weight in employment than in production because some specialities have high requirements for labour and certain processes are not easily mechanized. If we compare the share of gross value added of these two segments within the food industry as a whole, first-stage processing accounts for more than 60% while second-stage processing accounts for around 40%.

In Catalonia, the following segments are very important within the industry: the meat industry, dairy products, oils, milled products, tinned and prepared fruits and vegetables, animal food, second-stage-processing products and drinks.

Meat production is Catalonia's most important first-stage food-processing segment. It accounts for nearly 30% of overall turnover for the food and drink industry and somew- hat less for gross value added (close to 24%) because it includes some activities that generate a relatively low added value compared with other segments. The meat speciality accounts for nearly 30% of all employment in the food and drink industry as a whole. The considerable specific weight of the meat industry in Catalonia is to a large extent due to well-established livestock farms, especially pig farms. Catalonia produces close to 33% of all pork products produced in Spain by volume and approximately half of the pork products for exportation. In other meat specialities, the contribution of Catalan companies to the nationwide total is lower. However, Catalonia does produce approximately 20% of the beef produced in Spain by volume, 15% of sheep and goat meat and over 30% of poultry. Overall, the Catalan meat-producing industry's production capacity goes far

31 2. Local industrial production systems in Catalan industry

beyond internal consumption needs, exceeding the level of self-sufficiency by an estimated 120%. Catalan exports in all meat segments represent over 30% of all of Spain's exchanges with outside markets.

• Although the relative weight of the dairy industry within the food and drink industry is relatively small, it maintains a fairly significant presence with just over 7% of turnover, 8% of gross value added and close to 5% of employment. Within the food sector, companies that produce dairy products account for close to 9% of turnover, just over 10% of the gross value added and nearly 6% of jobs. Foreign competition is remarkably intense in the dairy segment and imported products have penetrated the market to a greater degree than in almost any other area of the Catalan food sector.

• The olive-oil industry is a food speciality that does not have a terribly significant specific weight in Catalonia. Its share of the total turnover for the food and drink industry is close to 6% and its share of employment is just over 2%. This speciality is highly con- ditioned by the quality of the annual olive harvest, which considerably influences both the volume of production obtained each year and market prices. At the nationwide level, production generally far exceeds the absorption capacity of the internal demand, which means that sales in outside markets are a determining factor. As the home of nearly 25% of the world's olive-producing land, Spain is the world's leading olive-oil producer and exporter. Catalonia's share of nationwide production is quite small at approximately 4%, while Andalusia produces the vast majority of the Spain's olive oil (close to 80%).

• Milled products make up about 4% of the overall turnover of the food and drink industry. However, if bread and cookie production is included, this figure increases considerably to approximately 12%.

• The production of tinned and prepared fruits and vegetables within the Catalan food and drink industry accounts for about 3% of overall turnover and slightly less in terms of employment.

• The animal-food production industry is relatively important in Catalonia, due to a large extent to the region's well-established livestock-ranching segments and first-stage meat processing, which are clearly related activities. Pet-food products make up a rather dynamic market, with a significant presence of multinational corporations. The specific weight of this segment with respect to the overall turnover of the food and drink industry in Catalonia is 12-13%. The segment's share of employment is much lower (approximately 3%), as this type of activity is much more capital-intensive than others. Commercial exchanges with foreign countries are relatively unimportant for the animal-food segment. In fact, this segment generates one of the industry's lowest external outflows. The sum of imports and exports accounts for less than 3% of all foreign trade generated by the food sector. Traditionally, the balance of trade for this speciality is generally negative and the cover rate is close to 75%.

• The second-stage food-processing segments that have a higher capacity for growth are those which produce items that have a higher added value and more capacity for differentiation and are more highly adapted to the preferences of consumers. These products include fresh and refrigerated pastries, prepared dishes, pre-cooked dishes, sauces and other ready-to-eat condiments, appetizers and snacks, and dietary products, etc. These segments make the sector considerably more dynamic and are included in the strategic lines of action of the most innovative companies.

32 • The drinks sector can be divided into different segments: cava, still wines and all other drinks. Within the latter category, two main groups can be differentiated: non-alcoholic beverages – including mineral water – and beer. The category also includes other products with a smaller relative weight, such as spirits, cider and other fermented drinks. In Catalonia, wine and cava account for over 40% of turnover in the drink industry. All other alcoholic drinks account for just over 30% and water and non-alcoholic beverages account for nearly 30%.

33 2. Local industrial production systems in Catalan industry

Local industrial production systems in the food and drink industry in Catalonia

This industry has 4 local industrial production systems in Catalonia. Together, they include 580 industrial establishments, employ close to 12,300 people and generate turnover of around € 3.5 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès

Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Pork Meat Segrià Vallès Occidental Osona

Garrigues Conca Gironès de Barberà Barcelonès Alt Selva Penedès Baix Llobregat Alt Garrotxa Camp Baix Penedès Mineral Garraf Pla de l’Estany Priorat Water Tarragonès Selva Ribera Baix Camp d'Ebre Terra Alta

Olive Oil Wine & Cava Baix Ebre Baix Camp Alt and Baix Penedès Urgell Garraf Garrigues Montsià Montsià Baix Ebre Priorat Number of Ribera d’Ebre Establishments Employees Up to 50 Up to 1.000 50-100 1.000-3.000

More than 100 More than 3.000

34 Map of Local Industrial Production Systems in the Food and Drink Industry in Catalonia

Dairy products

Manufacturers of machinery for the food Manufacturers of industry meat products: - Slaughterhouses - Meat processors

LPS

Animal Manufacturers of feeds second-stage processed food Restaurants, products (pastries, hotels and confectionery, catering Agriculture, ready-prepared services livestock meals, etc.) (HORECA and fisheries Milled Distribution channel) products Traditional shops

Departament Wine and cava stores Fruit and products vegetable processing LPS

Other food Oils and fats products –frist-stage processing. LPS

Bottling mineral water

LPS Technology centres, Industry laboratories Associations Spas and and training hot springs centres

Institut Català de la Vinya i el Vi AIABECA, ACEA, ASFAC, FECIC, (INCAVI), Institut de Recerca i UVIPE, FEAD (Madrid) Tecnologia Agroalimentàries Gremi d’Indústries Làcties de (IRTA), etc. Catalunya, DO, etc. Local industrial LPS production systems

35 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Pork products in the counties of Girona province and Osona county.

Location: Garrotxa, Gironès, Osona, Pla de l’Estany and Selva Counties Number of establishments: 222 Number of employees 8,289 Turnover (estimated): € 2000 million Exports/production (%): 25 Specialization index: 3.33 Weight in its sector in Catalonia (%): 38.41 Weight in all Catalan Industry (%): 0.49

Main companies in Name of company City or town the local industrial Casademont, SA Sant Gregori production system Casa Tarradellas, SA Gurb Embutidos y Jamones Noel, SA Sant Joan les Fonts Patel, SA Santa Maria de Corcó Càrniques de Juià, SA Juià Esteban Espuña, SA Olot Embutidos Monells, SA Seva La Piara, SA Manlleu Cárnicas Toni Josep, SL Vic Joaquim Albertí, SA Campllong

Description of the This local industrial production system's activity focuses on pork local industrial products. Two different lines of business – fresh and processed production system meats – can be distinguished, as they have different production processes and sales channels. Processed meats can also be classified as either cured (ham, fuet, llonganissa, etc.) or cooked (ham, pâté, mortadella, etc.).

Despite this diverse range of businesses, for the purposes of this study we have considered this a single local industrial production system because they all share the same raw material, preliminary stages of the production process (farming, slaughtering, cutting), support agents and related industries. Furthermore, some companies are involved in both businesses.

As for geographical demarcation, we have chosen Gironès, Garrotxa, Osona, Pla de l’Estany and Selva Counties as the main core of a local industrial production system that is actually much larger. This core concentrates the activities with the greatest added value and the best-organized structure in terms of relations between businesses.

36 However, it is important to note that some counties bordering on this core also have high concentrations of companies from the meat industry (Ripollès, Alt Empordà, Baix Empordà and Bages).

The traditional non-industrial production of sausage meats is widespread in many Catalan counties and complemented livestock farms, but it was not until the late 19th century, with the introduction of steam power, that the trade was industrialized. The first sausage factory to use steam-powered machines, in 1882, was Torra i San, in the city of Vic. However, true industrial development did not take place until after the Spanish Civil War of 1936. A growing demand, a protected market and a low start-up investment favoured the appearance of numerous small and medium-sized businesses.

Almost the entire value chain is present within the local industrial production system. The production process could be said to start with the production of animal feed, since the companies that make it are also often the owners of livestock (but not necessarily the farms). Catalonia, and especially the local industrial production system area, has a high density of pig farms and animal-feed factories,13 which are aided by their proximity to the Port of Tarragona, which is specialized in cereal imports. The value chain continues with the slaughterhouses, which carry out the most delicate work of the whole process and tend to be very large. The slaughterhouses sell the slaughtered ani- mals to the cutting plants, which are normally smaller and more specialized according to the destination of the meat. Two thirds of the cuts are destined for the processing industry (cured and cooked products), and the rest are sold fresh. Within the local industrial production system, there are many companies that manufacture additives and packaging for finished products.

As for technology, these counties enjoy the presence of a significant number of manufacturers of meat-processing machinery (see the file on the local industrial production system of food-industry machinery companies in the counties of Girona province and Osona County).

For an idea of the importance of the industry, Catalonia produces close to 33% of all Spanish pork products by volume and about half of all Spanish pork exports.

Other agents that - Federació Catalana d’Indústries de la Carn, amb seu a Barcelona collaborate with (IND) http://www.fecic.es/ the local industrial - Associació d’Indústries de la Carn de Girona (IND) production system http://foeg.intercomgi.com/index.php?action=associats&pagina=2 - Centre de Tecnologia de la Carn de l’IRTA (TEC) http://www.irta.es/ - Centre de Formació Professional de l’IRTA (TRA) http://www.irta.es/

13 In fact, we could identify an animal-feed local industrial production system, but we have instead considered it a part of the pork local industrial production system.

37 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Mineral water in Selva County

Location: Selva County Number of stablishments: 11 Number of employees: 634 Turnover (estimated): € 400 million Exports/production (%): 0 Specialization index: 15.46 Weight in its sector in Catalonia (%): 44.00 Weight in all Catalan industry (%): 0.02

Main companies in Name of company City or town the local industrial Font Vella, SA Sant Hilari Sacalm production system Nestlé Waters España, SA Arbúcies and Caldes de M. Vichy Catalán, SA Caldes de Malavella Fontdor, SA Arbúcies Font Selva, SA Santa Coloma de Farners Font del Regàs, SA Arbúcies Sol del Camp, SA Arbúcies Malavella, SA Caldes de Malavella Comercialización y Elaboración Osona de Aguas Minerales

Description of the Mineral water has been exploited in Selva County for thousands of local industrial years (the Caldes de Malavella hot springs date back to the Roman production system period). However, industrial bottling began in the mid-20th century as the standard of living increased and consumer habits chan- ged as a result.

The local industrial production system is located in Selva County because of the quantity and quality of springs in the Montseny and Guilleries mountains, especially in the towns of Arbúcies and Sant Hilari Sacalm. In fact, it could be considered that the local industrial production system reaches towns that are close to Montseny but which belong to other counties, such as Viladrau (Osona), which is home to a Nestlé Waters establishment, and Sant Esteve de Palautordera (Vallès Oriental), which has an Agua del Montseny establishment.

Service providers involved in transportation, logistics, bottles and packaging (plastic, glass, graphic arts, etc.) have cropped up around the mineral-water bottling companies. Some facilities also have spas and related services.

38 For an idea of the importance of this industry, Catalonia produces 45% of all Spanish mineral waters and 44% of all Catalan mineral-water companies are located in the Selva local industrial production system. However, some of these companies are very large, and the percentage in terms of production is surely even higher.

However, Catalonia is currently losing relative weight in Spain because bottling plants have been opened in Castilla-La Mancha, Extremadura, Valencia, Galicia and other regions.

The mineral-water market is clearly booming, as demonstrated by the fact that Catalan companies nearly doubled the volume of their production between 1996 and 2003. The causes of this strong growth are the climate, good sales promotion and the poor quality of tap water. For these reasons, different foreign multinational corporations such as Nestlé and Danone have been investing in the Selva local industrial production system for a few years now.

Other agents that - Associació Catalana d’Envasadors d’Aigua (IND) collaborate with http://www.grupobonmacor.com the local industrial - Laboratori Dr. Oliver Rodés (TEC) http://www.oliver production system rodes.com/index.php

39 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Penedès wines and cavas

Location: Alt Penedès, Baix Penedès and Garraf Counties Number of establishments: 214 Number of employees: 2.478 Turnover (estimated): € 575 million Exports/production (%): 60 (cava) and 30 (wine) Specialization index: 10,65 Weight in its sector in Catalonia (%): 43,09 Weight in all Catalan industry (%): 0,48

Main companies in Name of company City or town the local industrial Freixenet, SA (group) Sant Sadurní d’Anoia production system Codorníu, SA (group) Sant Sadurní d’Anoia Miguel Torres, SA Pacs del Penedès Masia Vallformosa, SA Vilobí del Penedès Bodegas Pinord, SA Vilafranca del Penedès Coop. Agrícola i Caixa Agrària L’Arboç de l’Arboç, SCCL Marquès de Monistrol, SA Sant Sadurní d’Anoia Juvé & Camps, SA Sant Sadurní d’Anoia Mont Marçal Vinícola, SA Castellví de la Marca Gramona, SA Sant Sadurní d’Anoia

Description of the The main line of business of this local industrial production system local industrial is the production of wines and cavas with different designations of production system origin (DO). The Penedès DO includes 100% of Alt Penedès, Baix Penedès and Garraf Counties and a portion of Anoia, Alt Camp, Baix Llobregat and Tarragonès Counties. This region also produces sparkling wines under the Cava DO, but it is important to note that 95% of the wine produced under this DO comes from the Penedès. Finally, some wines from this area have the Catalonia DO. Due to this broad range of geographical demarcations, we chose to limit the local industrial production system to its central core (Alt Penedès, Baix Penedès and Garraf) for the purposes of this study. There is a long tradition of producing wine and cava in these counties. Therefore, skilled labour is abundant and the business culture is focused on this industry.

Over 27,500 hectares of vines are planted in the Penedès DO. The most common grape varieties are Macabeo, Xarel·lo and Parellada for white wines and Merlot and Cabernet Sauvignon for red wines.

40 The tradition of growing vines and making wines in Catalonia goes back to the Roman period. In the late 18th century, wines and marc brandies were among the region's top exports. In the second half of the 19th century, several families from Sant Sadurní d’A- noia began applying champagne-making methods to Penedès wines, and the first bottle of cava was produced by the Codorníu winery in 1872. However, the industrial production of wine and cava, vertically integrated with vine-growing, was not developed until the mid 20th century.

Numerous suppliers of cardboard packaging and a few manufacturers of stainless-steel tanks are present in the local industrial production system. However, other inputs for the production process, such as glass bottles, labels and corks, come from outside this geographical area.

The technology used also tends to come from other regions. For an idea of the importance of the Penedès local industrial production system, the area produces over 500,000 hectolitres of wine and over 150 million bottles of cava per year.

Other agents that - Unió Vinícola del Penedès (IND) http://www.interceller.com/uvipe/ collaborate with - Denominació d’Origen Penedès (IND) http://www.dopenedes.es/ the local industrial - Associació Vinícola Catalana (IND), a Barcelona production system - Institut Català de la Vinya i el Vi (TRA – OTH) http://www.gencat.net/darp/incavi.htm - Consell Regulador del Cava (IND – OTH) http://www.crcava.es/ - Facultat d’Enologia de la Universitat Rovira i Virgili, a Tarragona (TRA) http://www.urv.net - Escola de Viticultura i Enologia Mercè Rossell i Domènech (TRA) http://www.diba.es/siae/centres/viti/index_viti.asp

41 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Olive oil in southern and western Catalonia

Location: Baix Camp, Baix Ebre, Garrigues, Montsià, Priorat, Ribera d’Ebre and Urgell counties Number of establishments: 129 Number of employees: 887 Turnover (estimated): € 500 million Exports/production (%): 30 Specialization index: 7.30 Weight in its sector in Catalonia (%): 64.18 Weight in all Catalan industry (%): 0.29

Main companies in Name of company City or town the local industrial Aceites Borges Pont, SA Tàrrega production system Unió Agrària Cooperativa, SCCL Reus Industrializadora Tortosa y Distribuidora Esp. de Alim. SA Coop. Agrícola i Caixa Agrària La Selva del Camp La Selva del C. SCCL Cargill España, SA Reus Soldebre, SCCL Tortosa Agroles, SCCL Les Borges Blanques Agrícola del Camp Santa Bàrbara Santa Bàrbara, SCCL Pla d’Urgell, SCCL Les Borges Blanques Cooperativa Campo Maldà Maldà

Description of the Like many other Mediterranean regions, Catalonia has been pro- local industrial ducing olive oil since the Roman period. However, olive-oil pro- production system duction as we know it today began in the early 20th century. At that time, there were already 60 mills in Les Borges Blanques, making it an important production centre frequented by mer- chants from France and Italy.

The olive orchards included in this local industrial production system cover many of the counties of Tarragona province and western Catalonia. Industrial activity, however, is concentrated mainly in Baix Camp, Baix Ebre, Garrigues, Montsià, Priorat, Ribera d’Ebre and Urgell Counties. There are currently two protected designations of origin (PDO) (Siurana PDO and Garrigues PDO) and the Baix Ebre-Montsià PDO is in the process of being recognized by the EU. There is a long tradition of producing olive oil in these coun-

42 ties. Therefore, skilled labour is abundant and the business culture is focused on this industry.

Two local olive varieties are grown in the area (the morruda or morrut and the sevillenca), but the farga and the empeltre are also used, especially in the Ebro River area, as well as the arbequina, especially in Garrigues and Baix Camp Counties. The arbequina olive is highly valued around the world for its flavour. Because it adapts well to poor soil and resists the cold, it is Catalonia's most widely cultivated variety, with over 55,000 hectares of orchards.

The local industrial production system's value chain starts with the agricultural facilities, which sell the olives to first-stage cooperatives for milling. The oil obtained is bottled and marketed through second-stage cooperatives or packaging companies. An estimated 80% of the olive oil produced is sold in bulk and just 20% is bottled.

While Catalonia's olive oil only makes up a small percentage of the overall production in Spain (3.5%), it is of higher quality and is more highly valued on international markets. Catalonia therefore produces 30% of Spain's exported olive oil.

Other agents that - Asoliva, with headquarters in Madrid (IND) collaborate with http://www.asoliva.es/home.htm the local industrial - Consell Regulador de la Denominació d’Origen Protegida production system Siurana (OTH) http://www.siurana.info/ - Consell Regulador de la Denominació d’Origen Protegida Les Garrigues (OTH) http://www.olidoplesgarrigues.com/ - Fira de l’Oli de Qualitat Verge Extra de les Borges Blanques (OTH) http://www.firaoli.com/

43 2. Local industrial production systems in Catalan industry

2.2.2 Local industrial production systems in the textile, clothing and leather industry

Basic characteristics of the textile, clothing and leather industry in Catalonia

The textile and clothing industry encompasses a broad range of industrial activities that, taken vertically as a production chain, are: manufacturing chemical fibres, fabrics (spinning, weaving and finishing), manufacturing other textiles (felt, rugs, ribbons, etc.), manufacturing knitted fabrics and clothing, and manufacturing house furnishings (sheets, curtains, tablecloths, etc.). The early stages of the textile production chain are basically capital-intensive, while the clothing-manufacturing stage is more labour-intensive. The industry's production chain ends with distribution, which is not a manufacturing activity but is increasingly linked to manufacturing for reasons related to logistics, marketing and technology.

Along with the above description, the traditional classification of the industry has also been maintained. This classification is based on the raw materials and technology used. The sectors in this case are cotton, wool, silk, dyes and finishes, etc. Although technological progress and changes in the market make classifications according to raw materials less suitable, a large number of industry associations, institutions, studies and statistics use this traditional classification of sectors.

The industry's demand is distributed in three major groups of products: clothing (approximately 55% of total consumption), house furnishings (close to 30%) and technical and industrial textiles (close to 15%).

Except for the speciality of technical and industrial textiles, the textile and clothing industry generally presents the typical characteristics of a mature industry. First, it faces demand with low income elasticity, i.e. consumption grows more slowly than the standard of living and wealth. Second, the technologies used are now well known. In any event, the economic importance of the industry is derived especially from its absolute specific weight, because spending on textiles is still relatively high. In Spain, families spend 6% of their budget on textiles.

The textile and clothing industry has traditionally been very important in the production structure in Catalonia. Today, despite the dynamic nature of other industries and the restructuring of its activity, the industry employs approximately 94,400 people in Catalonia, or 12% of all industrial employment. This industry accounts for 7% of all industrial production in Catalonia.

The business community is made up of 2,600 companies, most of which are small or medium-sized. This type of company is better suited to dealing with changes in the textile market and the geographical concentration of the industry (85% of the activity is concentrated in 10 counties), which favours complementary relationships between companies. The average number of employees per company is 36. The larger companies – those which have more than 500 workers – make up only 0.5% of the total.

The chemical-fibre sector is at the top of the textile chain. This sector makes non-natural fibres with oil-based monomers (synthetic fibres) or through cellulose treatment (artificial fibres). The products are presented either as fibres, which are later spun, or as filament yarns, which do not need to be spun and can be used immediately to make woven or

44 knitted fabrics. The chemical-fibre activity is highly capital-intensive, which means that good use of production capacity is essential to making facilities sufficiently profitable. Catalonia is home to half of this sector nationwide.

Cotton production – including spinning, fabrics and house furnishings – is the sector with the highest relative weight in the industry, even after the process of capacity adjustment that the industry has undergone in recent years. Cotton production accounts for 30% of the entire textile and clothing industry. Catalonia is home to 70% of Spain's cotton-production sector. The activity in Catalonia basically consists of companies with local capital and a good level of technology. However, spinning companies continue to make major investments in modernization and automation. As a result, labour currently accounts for less than 15% of the total cost of products.

The wool sector represents 15% of Catalonia's textile and clothing industry overall. This sector is highly concentrated in Vallès Occidental County – especially Sabadell – where over half of all Spanish wool products are produced. Despite the drastic restructuring that the wool sector underwent in the 1980s, it has retained its personality and currently has a significant presence on foreign markets, which allows it to maintain a positive balance of trade.

The silk sector has also kept the name of its original raw material, although today all products in this sector are produced with filament yarns of synthetic or artificial fibres. This activity represents 10% of Catalonia's textile and clothing industry overall and involves large companies. In recent years, the silk industry has benefited from the market's prefe- rence for filament yarns. This development has been slowed due to the strong growth of imports and the lack of dynamism on foreign markets.

The dyes and finishes sector is responsible for dyeing, finishing and printing different textile products. In general, these companies are subcontractors that carry out tasks and operations for other companies. However, some companies in the textile and clothing industry have integrated these activities into their manufacturing structure. This sector is made up of activities that are basically labour-intensive (40% of the industrial cost) and energy- and water-intensive (12%), because the raw materials (yarns and fabrics) are often supplied by the clients.

The knitted-fabrics sector, which largely produces finished goods, accounts for 15% of Catalonia's textile and clothing production overall. With respect to other sectors of the industry, the knitted-fabrics sector enjoys significant relative advantages thanks to high entry barriers due to the very specific types of technology and know-how required. The sector also has a great ability to respond to changes in demand. It is characterized by lower final unit prices than, for example, the clothing-manufacturing sector. In Catalonia, this sector has 500 companies out of a total of 800 nationwide.

The clothing-manufacturing sector is well established in Catalonia and employs 25% of all workers in the textile and clothing industry. In this area, a few large companies coexist with many small companies that work as subcontractors. The central core of this activity is located in Barcelonès County and the surrounding areas, yet there are companies in all counties of Catalonia, including rural areas, where labour is cheaper.

The leather sector can be divided into various areas of activity, such as tanning, footwear, leather garments, furs and Morocco leather. In Catalonia, tanning is the most impor-

45 2. Local industrial production systems in Catalan industry

tant activity. It accounts for nearly half of all employment, 60% of added value and 70% of total industry exports. The other activities have a less significant presence and are carried out by small manufacturers, many of which are run by craftspeople and some of which operate in the so-called hidden economy.

Catalonia's tanning industry is a leader within Spain, where it represents close to 50% of production. The production establishments located in Catalonia represent nearly 45% of the production units nationwide and employ 37 workers on average. This sector has a close relationship with foreign markets. It is a dynamic exporter (it accounts for nearly half of the production of the activity as a whole) and has taken business initiatives to relocate production in foreign countries. Exports from Catalan companies represent 54% of Spain's sales in foreign markets. Catalonia's importance is especially significant in the speciality of sheepskin (with or without wool). In this area, Catalonia's share of Spain's sales in foreign markets is 72%, while this figure is lower for other types of tanned hides. In terms of volume of production, Catalonia's tanning industry is second only to Italy’s in the European Union.

Tanning includes two major areas of activity. The first, bovine leather, uses the hides of cows and calves. The second, sheepskin, uses the hides of sheep (to a lesser extent, the hides of goats and pigs are also used in this type of tanning). There are two kinds of sheepskin. Sheepskin without wool is used for jackets, slacks other articles of clothing and, to a lesser extent, high-quality women's shoes. Sheepskin with wool, better known as double-face leather, is made from a native species of livestock, the merino sheep, and is used mainly for coats.

The sheepskin segment includes the largest companies in the tanning industry. The segment consists of around seventy manufacturers and depends significantly on the clothing industry. The behaviour of this segment is therefore closely linked to its capacity to export to developing countries, which currently make up the majority of the demand for these types of tanned skins. The direct presence of production facilities of Catalan companies in foreign countries is more pronounced for sheepskin than for any other speciality of the tanning industry. This presence may take the form of affiliates or shares in local companies and is most common in the countries with the highest-quality raw skins (such as Bra- zil, Mali, Nigeria, Lebanon, Great Britain, Greece and China). This strategy of relocating industrial activities is an attempt to guarantee access to raw materials and take advantage of the lower relative cost of the phases of production that are the most labour-intensive and have the greatest environmental impact. These factories mainly tan skins to be marketed directly in the developing countries. They also make semi-finished skins that undergo the rest of the production process in Catalan factories.

Catalonia is responsible for 35% of all bovine leather produced in Spain. This segment is made up of small companies – around fifty companies with an average of 20 employees each. These companies’ facilities are highly concentrated geographically around the town of Igualada, especially those which manufacture shoe soles. To a lesser extent, this segment also produces upholstery, Morocco leather and assorted leather clothing products.

This segment applies traditional manufacturing methods and incorporates technological innovations more slowly than other specialities in the tanning industry. Due to the small size of most of the production establishments, only a handful of companies are involved in exportation. For this reason, and because the footwear industry has a minor presence

46 in Catalonia, this segment depends largely on the Spanish footwear industry, which is the main destination of bovine-leather products.

The footwear sector is not very important in Catalonia (it employs 500 people), although we could also include the activity of other companies that sell products made using means of production located mainly outside of Catalonia.

Catalonia's leather clothing sector is important and quite prestigious. Its structure basically consists of small and medium-sized businesses, with the exception of a few leading companies with a major presence in both national and foreign markets. The rest of the companies mainly work on local markets with medium-quality products. There are also small workshops that work as subcontractors for the companies mentioned above and other companies outside Catalonia (Aragon, Valencia, etc.). In Catalonia, there are around 300 companies in this sector, many of which distribute their products directly in their own sales outlets.

Finally, the Morocco-leather sector produces a wide range of leather items, including accessories (belts, handbags, wallets, etc.), travel gear (bags, suitcases, etc.), backpacks (both for school and for sport) and small objects (key rings, coin purses, etc.). This activity originated with craftspeople and over time has maintained a structure of small, family-run manufacturing units with an average of 9 workers per company. Large companies are the exception in this activity. In recent years, this speciality has improved its situation thanks to dynamic internal consumption. This has especially favoured products such as bags, briefcases, school backpacks and small Morocco-leather products, including belts.

47 2. Local industrial production systems in Catalan industry

Local industrial production systems in the textile, clothing and leather industry in Catalonia

The textile and clothing industry has nine local industrial production systems in Catalo- nia. These local industrial production systems are formed by close to 1,200 companies, directly employ 23,000 people and generate a turnover of around €4 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Cotton Spinning Narrow Bages Fabrics Berguedà Recycled-Cotton Vall d'Aran Bages Osona Spinning Garrotxa

Pallars Sobirà Alta Ribagorça

Cerdanya Bovine Alt Urgell Alt Empordà Leather Ripollès Anoia Pallars Jussà Garrotxa Pla de Berguedà l'Estany Knitted Solsonès Fabrics Osona Gironès Baix Anoia Empordà Noguera

Selva

Bages Segarra MAPA Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental Sheepskin Osona Garrigues Conca Barcelon de Barberà ès Vallès Oriental Alt Pened ès Baix Llobregat Alt Camp Baix Penedès Garraf Knitted Fabrics Priorat Clothing Maresme Tarragonès Barcelona M.A. Ribera Baix Camp d'Ebre Terra Alta Wool Spinning Vallès Occidental

Baix Ebre

Montsià

Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000 Barcelona M.A.=Barcelona Metropolitan Area. Made up of Vallès Occidental, Barcelonès and Baix Llobregat. More than 100 More than 3.000

48 Map of Local Industrial Production Systems in the Textile, Clothing and Leather Industry in Catalonia

Other uses: home textiles (30%) and industrial uses (15%)

Other suppliers Fibre suppliers (buttons, labels, packaging, etc)

Narrow fabrics Clothing makers Company shops/ LPS channel brand Spinners LPS and weavers Independent retail Recycled-cotton Distribution spinning LPS LPS Franchises

Manufacturers Department LPS Spinners of of knitted fabrics stores knitted fabric LPS LPS Manufacturers od textile machinery Leather tanning Footwear and leather products GRÀFIC LPS LPS Suppliers of chemical products

Dyers and finishers

Universities Technology Centres Associations and Guilds and Training Centres

LEITAT Gremi Fabricants Sabadell Escola Canet de Mar UPC Terrassa Gremi Confecció Barcelona Enginyeria Industrial AIICA, CETEMSA, etc. AITPA, CITYC, FAGEPI, UPC Terrassa UDAC, etc. ESDIT, etc.

Local industrial LPS production system

49 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Clothing manufacturers in the Barcelona metropolitan area

Location: Barcelonès, Baix Llobregat and Vallès Occidental Counties Number of establishments: 500 Number of employees: 7,894 Turnover (estimated): € 700 million Exports/production (%): 25 Specialization index: 1.30 Weight in its sector in Catalonia (%): 51.38 Weight in all Catalan Industry (%): 1.11

Main companies in Name of company City or town the local industrial Burberry (Spain), SA Barcelona production system Grup Ermenegildo Zegna Sant Quirze del Vallès, (Italvest SA, Italco SA, Polinyà and Sabadell Solteco SA) San Patrick, SA El Prat de Llobregat Symor Línea, SA Barcelona SA Jover’s Barcelona Punto-Fa, SL Palau-solità i Plegamans Lencería Mitjans, SA Terrassa Naturana Ibérica, SA Molins de Rei Prad, SA Terrassa Twenty, SA Sant Joan Despí

Description of the The production of clothing in Barcelonès County and neighbouring coun- local industrial ties is linked to its proximity to the market that consumes these products: production system the population of the Barcelona metropolitan area. It is also linked to the surplus of female labour that occurred in the early 20th century around Barcelona. At that time, women were leaving the agricultural industry and provided labour for this activity at moderate prices.

In the 1960s, foreign companies began to make investments in the region. These investments have lasted until the present day and these companies are now the biggest in the area. These companies chose to establish operations in this local industrial production system because it was in a protected market with high tariffs, potential for growth and competitive prices. Lingerie producers were the first foreign companies to invest in the region (Warner, Naturana), and companies from other segments, such as Italco, SA (Grup Zegna), entered later.

50 The main line of business – the production of textiles for clothing – is classified by specialities. The following have the greatest presence in the Barcelonès local industrial production system: haute couture, wedding gowns, shirts, ties, lingerie and bath items, women's outerwear, men's outerwear, women's underwear, knitwear, and children’s clothing.

There are numerous suppliers of textiles (both of natural and synthetic fibres) within the Barcelona metropolitan area, but this local industrial production system also contracts textile companies from the rest of Catalonia, the rest of Spain and other countries. For example, shirt producers have increasingly begun to use European fabrics (when they want quality) and Chinese fabrics (for other segments). Suppliers of other inputs – such as thread, buttons and zippers – are also present in the local industrial production system.

Subcontracting in the Barcelonès clothing local industrial production system is estimated to account for over 40% of total production, which demonstrates the high degree of interrelationship among the companies in the local industrial production system.

Distribution in the local industrial production system is dominated by retail stores, which account for over half of sales. However, in recent years, organized distribution (chains, franchises and hypermarkets) has significantly increased its market share. The local industrial production system includes major companies that integrate production and distribution (Punto Fa – Mango).

Other agents that - Gremi d’Indústries de la Confecció de Barcelona collaborate with http://www.gic-bcn.com (IND) the local industrial - Escola Superior de Disseny de Sabadell http://www.esdi.es/ (TRA) production system - Consejo Intertextil Español http://www.consejointertextil.com/ (IND) - Saló Gaudí http://www.moda-barcelona.com (OTH) - Centro de Información Textil y de la Confección http://www.cityc.es (OTH) - Laboratorio de Ensayos e Investigaciones Textiles del Acondicionamiento Tarrasense http://www.leitat.com ) (TEC) - Escola Tècnica Superior d’Enginyers Industrials de Terrassa http://campusterrassa.upc.es/ (TRA) - Escola Universitària d’Enginyeria Tècnica en Teixits de Punt de Canet de Mar http://www.upc.es/catala/escoles/fescoles/870.htm (TRA)

51 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Cotton spinning and weaving in central Catalonia

Location: Bages, Berguedà, Osona and Ripollès Counties Number of stablishments: 153 Number of employees: 2,945 Turnover (estimated): € 325 million Exports/production (%): 45 Specialization index: 5.47 Weight in its sector in Catalonia (%): 47.81 Weight in all Catalan industry (%): 0.34

Main companies in Name of company City or town the local industrial Hilaturas Llaudet, SA St. Joan de les Abadesses production system St. Pau de Segúries Textil Abadesses, SL St. Joan de les Abadesses Grup Tèxtil Dresca Navarcles Obradors, SA Prats de Lluçanès Enrique Ballús, SL Sant Boi de Lluçanès Acabats del Bages, SA Monistrol de Montserrat (Grup Santanderina) Alditex, SA Vilada Hispano Tex, SA Moià La Preparación Textil, SA Ripoll Edmundo Bebié, SA Les Llosses

Description of the Cotton spinning and weaving played an important role in the early local industrial stages of industrialization in Catalonia. However, the steam-powe- production system red machines that were used ran on coal, an expensive mineral that was usually imported. For this reason, some companies turned to a cheaper and more familiar energy source – water power. They moved to the Ter and Llobregat river basins, where this local industrial production system was born. Since that time, cotton spinning and weaving has been traditional in these counties. Ski- lled labour is therefore abundant in these areas.

This local industrial production system’s main activity is the production of yarn and cotton fabrics, but the companies in the local industrial production system supply their products to a broad range of markets. Half of the local industrial production system's production is used for clothing, 30% is used for house furnishings and the rest is used for industrial purposes such as technical textiles, automotive products, medical textiles, etc. These companies

52 have ongoing client-supplier, subcontracting and cooperation relationships with each other and are also closely linked to other local industrial production systems in Catalonia, such as the Barcelonès clothing local industrial production system.

In addition to the 153 cotton spinning and/or weaving establishments in these counties, there are also 28 industrial finishing establishments that work mainly for the local cotton local industrial production system.

The raw material (cotton) is usually imported from places like Rus- sia, the United States, Africa, France and Greece.

Other agents that - Asociación Industrial Textil del Proceso Algodonero, a Barcelona collaborate with http://www.aitpa.es (IND) the local industrial - Escola Tècnica Superior d’Enginyers Industrials de Terrassa production system http://campusterrassa.upc.es/ (TRA)

53 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Knitted fabrics in Anoia County

Location: Anoia County Number of establishments: 129 Number of employees: 2,611 Turnover (estimated): € 225 million Exports/production (%): 16 Specialization index: 11.64 Weight in its sector in Catalonia (%): 27.33 Weight in all Catalan industry (%): 0.29

Main companies in Name of company City or town the local industrial Industrias Valls 1, SA Igualada production system Biosca Riera, SA Igualada Torradas, SA Vilanova del Camí Sara Lee/D.E. España, SA Igualada Carlomagno, SA Igualada Esteve Aguilera, SA Igualada Depunt, SA Igualada Jerthim, SA Igualada Pedro Carner, SA Igualada Gèneres de punt Madi, SA Igualada

Description of the This local industrial production system originated in the late 19th local industrial century when the owners of several leather companies decided to production system diversify their activities. Development took place quite rapidly. By 1927, a clothing and knitted-fabrics union had been formed and there were 16 companies in Igualada and around the county. Together, these companies had a total of around 500 looms and employed over 1,000 workers. Companies involved in dyeing, finishing, embroidery and label production sprang up, along with a network of workshops that worked as subcontractors.

The main products manufactured by the local industrial production system are knitted outerwear (sweaters, dresses, jackets, etc.) and underwear.

In addition to the 129 companies that produce knitted fabrics, the county is home to 76 clothing manufacturers, 25 finishing companies and 28 companies involved in other activities largely related to the value chain for the manufacture of knitted products. This makes for a complex network of subcontracting relationships with

54 numerous workshops – some of which even work in the hidden economy – which has grown as a result of the area's abundant skilled labour, the business tradition and the fact that the investments required for the activity are relatively affordable for a family.

Some of the companies in the local industrial production system have integrated distribution. However, independent retail shops are the predominant marketing channel and chains, franchises and hypermarkets have also increased their market share.

Technology and machinery are possibly the weakest points of this local industrial production system, but the companies do use the services of the Textile Innovation Centre (CETEX) in Mataró.

Other agents that - Agrupació Comarcal de Fabricants de Gènere de Punt d’Igualada collaborate with http://www.fagepi.net (IND - TRA) the local industrial - Fundació per a la Innovació Tèxtil http://www.fitex.es (TEC - TRA) production system - Centre d’Innovació Tèxtil (located in Mataró) http://www.cetex.net (TEC)

55 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Knitted fabrics in Maresme County

Location: Maresme County Number of establishments: 196 Number of employees: 2,231 Turnover (estimated): € 200 million Exports/production (%): 25 Specialization index: 7.25 Weight in its sector in Catalonia (%): 41.95 Weight in all Catalan industry (%): 0.44

Main companies in Name of company City or town the local industrial Aretex, SA Arenys de Mar production system Canet Punt, SA Canet de Mar Gallostra, SA Pineda de Mar Punto Martínez Llopart, SA Pineda de Mar Indepun, SA Malgrat de Mar Géneros de Punto Clarín, SA Pineda de Mar Indesmalla, SA Pineda de Mar Centro Textil Massana, SA Mataró BGT International, SA Cabrera de Mar Tritema, SL Argentona

Description of the The textile industry in Maresme County was established around local industrial 200 years ago. Mataró's cotton spinning and weaving industry production system dates back to the Industrial Revolution, when the first steam- powered machines were introduced. The production of knitted fabrics played a secondary role in this county until the spinning and weaving companies relocated to the river basins. The knitted- fabrics industry developed over the course of the 20th century, sur- viving cyclical crises and even prompting machinery manufacturers to spring up in the area.

Maresme County traditionally produces undergarments such as briefs, stockings, undershirts, etc. However, in recent years, the undergarment sector has lost importance to outerwear, sportswe- ar and children's clothing.

Apart from the 196 industrial establishments involved with the local industrial production system's main activity, there are 400 clothing manufacturers, 113 finishing companies, 26 weaving companies, 15 spinning companies and 58 companies that carry

56 out other activities, mostly related to the value chain for the manufacture of knitted fabrics. Together, these establishments provide jobs to around 7,800 people and have an estimated turnover of 750 million. This makes for a complex network of subcontracting relationships with numerous workshops – some of which even work in the hidden economy – which has grown as a result of the area's abundant skilled labour, the business tradition and the fact that the investments required for the activity are relatively affordable for a family.

Some of the companies in the local industrial production system have integrated distribution. However, independent retail stores are the predominant marketing channel and chains, franchises and department stores have also increased their market share.

Technology and machinery are possibly the weakest points of this local industrial production system, but the companies do use the services of the Textile Innovation Centre (CETEX) in Mataró.

Other agents that - Associació d’empresaris de gènere de punt de Mataró i comarca collaborate with http://www.asegema.org (IND) the local industrial - Centre de tecnologia empresarial de Mataró-Maresme production system http://www.cetemmsa.es (TEC - TRA) - Centre d’Innovació Tèxtil http://www.cetex.net (TRA - TEC) - Escola Universitària d’Enginyeria Tècnica en Teixits de Punt de Canet de Mar http://www.upc.es/catala/escoles/fescoles/870.htm (TRA)

57 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Wool spinning and weaving in Vallès Occidental County

Location: Vallès Occidental County Number of establishments: 88 Number of employees: 2,616 Turnover (estimated): € 275 million Exports/production (%): 35 Specialization index: 6.10 Weight in its sector in Catalonia (%): 80.91 Weight in all Catalan industry (%): 0.20

Main companies in Name of company City or town the local industrial Juan D. Casanovas, SA Sabadell production system Artextil, SA Sabadell Velta, SA Terrassa Soc. Anónima Idatex (Grup Bosser) Sabadell Gorina, SA Sabadell Puig Codina, SA Terrassa Fibosa, SA (Grup Bosser) Sabadell Lanitex, SA Sabadell Marcre, SL Terrassa Texdam, SL Sabadell

N.B.: Some major companies have their headquarters in Vallès Occidental County but have their production centres outside the local industrial production system, such as the Génesis Group (Ripoll), Textil Riba (St. Joan de Vilatorrada) and Egarfil (Pons).

Description of the The wool industry is present throughout Catalonia, but historically local industrial it has been concentrated mainly around Sabadell and Terrassa. production system Neither of these cities had any characteristics that would seem to favour the wool industry (flocks of sheep, sources of energy, etc.), but they did have a relatively large accumulation of capital and an entrepreneurial tradition that became specialized in this activity.

In the 19th century, the Gremi de Fabricants de Sabadell (Manu- facturer's Guild of Sabadell), which dates back to medieval times, began organizing to defend the interests of the region's wool industry and created local economic, social and cultural initiatives.

The raw material (natural wool, synthetic fibres, polyester, etc.) is purchased from outside the local industrial production system. The finished product – wool fabric – may be sold in the Barcelonès clothing local industrial production system (which includes Vallès Occi-

58 dental County), to be used for making outerwear, or to companies in other areas (one third of production is sold in foreign countries).

Vallès Occidental County is also home to cotton spinning and weaving companies. However, only the companies that work with wool and wool blends can be considered a local industrial production system because they are much more highly concentrated and they are closely linked in client-supplier, subcontracting and business-cooperation relationships, etc.

In addition to 88 industrial establishments that spin and/or weave wool, Vallès Occidental County is also home to 96 finishing companies, most of which work in the wool local industrial production system. Some of the more important finishing companies are: SA de Tintes y Acabados, Grau SA, Acabados Tintoretto SA, SA Bros and Hijos de Salvador Segura SA.

As a complementary indicator of this local industrial production system's high level of concentration, Vallès Occidental County is responsible for producing approximately 80% of Spain's wool fabrics.

Other agents that - Gremi de Fabricants de Sabadell http://www.gremifab.es (IND) collaborate with - Confederació Empresarial Comarcal de Terrassa the local industrial http://www.cecot.es (IND) production system - Escola Superior de Disseny de Sabadell http://www.esdi.es/ (TRA) - Escola Tècnica Superior d’Enginyers Industrials de Terrassa http://campusterrassa.upc.es/ (TRA) - Escola Tèxtil d’Arts i Oficis de Sabadell http://www.gremifab.es (TRA) - Institut d’Investigació Tèxtil i Cooperació Industrial http://rackham.upc.es/ (TEC) - Laboratori de Condicionament Tèxtil de Sabadell (TEC) - Laboratorio de Ensayos e Investigaciones Textiles del Acondicio- namiento Tarrasense http://www.leitat.com (TEC)

59 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Sheepskin in Osona and Vallès Oriental Counties

Location: Osona and Vallès Oriental Counties Number of establishments: 28 Number of employees: 1,918 Turnover (estimated): € 300 million Exports/production (%): 65 Specialization index: 3.17 Weight in its sector in Catalonia (%): 34.74 Weight in all Catalan industry (%): 0.16

Main companies in Name of company City or town the local industrial Colomer y Munmany, SA Vic production system La Doma, SA de Curtidos La Garriga Genís Antel, SA Vic Máximo Mor, SA Montmeló Curtidos Codina, SA Vic Acabados del Vallés, SA La Garriga Galaico Catalana de Pieles, SL Vic Curtidos Riba Guixà, SL Caldes de Montbui Pell a Mans, SA Mollet del Vallès Lefa, SA Mollet del Vallès

Description of the This local industrial production system first emerged in the Middle local industrial Ages, when the leather-tanning process gradually concentrated in production system the city of Vic, which became specialized in this trade. In the 18th century, the activity was consolidated and the companies operating today were formed, including the local industrial production system's biggest company.

The local industrial production system's main activity is the transformation of raw sheepskin (and also goatskin) into a material appropriate for making clothing or, to a lesser extent, footwear.

This local industrial production system was originally located in Osona County because of the availability of water (although the Gurri and Méder Rivers do not carry very much water), the proximity of the forests of the Pyrenees foothills, which provided the materials for tanning, and the county's livestock farms. The extension of the local industrial production system into Vallès Oriental County took place some time later, as companies turned to the Congost River for water and sought proximity to the industrial area of Barcelona.

60 Today, the local industrial production systems' suppliers of raw hides, chemical products, machinery, etc., are located outside of these counties, as are the clients. However, the tanning production process has many stages (purchase, soaking, tanning, paring, dyeing, wringing, checking, stretching out, drying, finishing and sale). Client-supplier and subcontracting relationships among the companies of the local industrial production system are frequent because some companies specialize only in certain stages of the process. In Osona and Vallès Oriental Counties, there are also industrial establishments that manufacture leather clothing, Morocco-leather goods and footwear components. Leather manufacturing is traditional in these counties. Therefore, skilled labour is abundant and the business culture is focused on this industry.

The double-face leather sector is quite important in this local industrial production system. This type of leather in made from the skins of the merino sheep, a native species, and is used mainly for coats. The double-face leather manufacturers in this local industrial production system are world leaders in this sector, both for the quality of their raw materials and the technology they use. These companies are responsible for two thirds of the double-face leather produced and exported by Spain. Eighty percent of the double-face leather produced is sold in foreign markets.

Other agents that - Unió d’Adobadors de Catalunya http://www.leather-spain.com (IND) collaborate with - Gremi d’Adobadors d’Osona (IND) the local industrial - Museu de l’Art de la Pell de Vic (This museum displays historical production system pieces and is also a leather documentation centre) (OTH) - Asociación de Investigación de Indústrias del Curtido y Anexas, with headquarters in Igualada http://www.aiica.com (TEC)

61 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Bovine leather in Anoia

Location: Anoia County Number of establishments: 46 Number of employees: 791 Turnover (estimated): € 175 million Exports/production (%): 65 Specialization index: 10.00 Weight in its sector in Catalonia (%): 23.47 Weight in all Catalan industry (%): 0.11

Main companies in Name of company City or town the local industrial Fontanellas y Martí, SA Igualada production system Vila Vaqués y Pelfort, SA Igualada Vidal Bosch, SA Igualada Dernova, SA Igualada Curtidos Badia, SA Igualada Industrial Igualadina, SL Igualada Curtidos Farrés y Cía., SA Igualada Tonipell, SA Igualada Miret y Compañía, SA Igualada Armando Ramón Arcal, SL Igualada

Description of the This local industrial production system dates back to the Middle local industrial Ages, when the craft of tanning became concentrated in Igualada. production system In the 18th century, traditional tanning – especially the production of shoe soles and cordovan leather – was boosted by the Catalan economy. The industry in Igualada became more specialized and concentrated. From 1724 to 1765, the number of tanneries increased eightfold. Over the course of the next century, a new, specialized industrial district developed around the city’s irrigation ditch. This ditch – which still exists today – made it possible to create larger tanneries.

The local industrial production system's main activity is the transformation of raw cowhide into a material appropriate for making footwear (60% of sales), clothing (30%), Morocco-leather goods (9%) and upholstery (1%).

The local industrial production system's suppliers (of cowhides, chemical products, machinery, etc.) and clients both tend to be

62 located outside the county. However, the tanning production process has many stages (purchase, soaking, tanning, paring, dyeing, wringing, checking, stretching out, drying, finishing and sale). Client-supplier and subcontracting relationships among the companies of the local industrial production system are frequent because some companies specialize only in certain stages of the process. In Anoia County there are also industrial establishments that manufacture leather clothing, Morocco-leather goods and footwear components. Leather manufacturing is traditional in this county. Therefore, skilled labour is abundant and the business culture is focused on this industry.

Other agents that - Unió d’Adobadors de Catalunya http://www.leather-spain.com (IND) collaborate with - Gremi de Blanquers d’Igualada (IND) the local industrial - Museu de la Pell d’Igualada (OTH) production system - Asociación de Investigación de Indústrias del Curtido y Anexas http://www.aiica.com (TEC) - Escola Universitària d’Enginyeria Tècnica Industrial d’Igualada http://www.euetii.upc.es/ (TRA)

63 2. Local industrial production systems in Catalan industry

Name of the local industrial production system Narrow fabrics in Bages County

Location: Bages County Number of establishments: 28 Number of employees: 820 Turnover (estimated): € 100 million Exports/production (%): 20 Specialization index : 5.73 Weight in its sector in Catalonia (%): 20.90 Weight in all Catalan industry (%): 0.06

Main companies in Name of company City or town the local industrial Industrias Ponsa, SA Manresa production system Perramón i Badia, SA Manresa Bordados Unidos, SA Santpedor Dalmau, SL Manresa Producciones José Manubens, SA Manresa Salvador Figueras, SA Sant Fruitós de Bages Bieses y Elementos Textiles, SA Manresa J. Pérez Llongarriu, SL Castellbell i el Vilar Iber Fashion, SL Sallent Cintería Hispano Italo Americana, SA Manresa

Description of the The main activity of this local industrial production system is the local industrial production of narrow fabrics. This category includes fabrics under production system 30 cm wide. They made be produced using many different types of fibres and used for a wide range of purposes, including clothing manufacturing (lingerie, ribbons, etc.), house furnishings (curtain bands, etc.), medical supplies (bandages, gauze, etc.), automotive products (seatbelts, etc.) and cord manufacturing (shoelaces, etc.).

Textile ribbon manufacturing dates back to the 16th century. This industry was based on the skills acquired from the production of leather bands, straps and accessories for carriages.

Most of the companies in this local industrial production system belong to the Gremi de Cintaires (Ribbon-makers' Guild), which for many years was based in Manresa, the capital of the county. This organization is now located in Barcelona.

The local industrial production system's suppliers of raw materials (natural, elastic and synthetic fibres) and clients are located in

64 Bages County, other parts of Spain and even in foreign countries. The special characteristics of the activity make it impossible to define a narrow-fabrics local industrial production system in any strict sense. Still, due to the high concentration of such a specific activity and the relationships between the companies, this local industrial production system does indeed have a specific character.

A competing local industrial production system, at the European level, is located in St. Etienne, France.

Other agents that - Gremi de Cintaires, with headquarters in Barcelona collaborate with http://www.fts.es/cast/ (IND) the local industrial - Escola Universitària d’Enginyeria Tècnica en Teixits de Punt de Canet production system de Mar http://www.upc.es/catala/escoles/f-escoles/870.htm (TRA)

65 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Recycled-cotton spinning in Garrotxa County

Location: Garrotxa County Number of establishments: 22 Number of employees: 738 Turnover (estimated): € 100 million Exports/production (%): 80 Specialization index: 9.99 Weight in its sector in Catalonia (%): 18.00 Weight in all Catalan Industry (%): 0.05

Main companies in Name of company City or town the local industrial S Vilarrasa, SA Besalú production system Hilaturas Victoriano Puigdemont, SA Sant Esteve d’en Bas Hilados Dusol, SA Les Planes d’Hostoles José Valeri Homs, SA Olot Francisco Pagès Valentí, SA Sant Jaume de Llierca Filatura Vera, SA Olot Hilados Olotenses, SA Olot Hilaturas de Castellfullit, SA Besalú Triturados Textiles, SA Besalú Fontfilva, SA Olot

Description of the The main line of business of this local industrial production system local industrial is the recycling of used cotton fibres. The output of the production production system process is a thick yarn that is normally used to make knitted fabrics but may also be used for weaving. This product is no different from other types of spun cotton in terms of quality. Rather, it is differentiated because it is used for different purposes, such as house furnishings (bedspreads, etc.), sports textiles (gym socks, track- suits, etc.) and textiles for cleaning (rags, etc.). Products that have been partially or totally manufactured from recycled yarn are labe- lled to this effect.

This activity was introduced in Garrotxa County in the early 20th century as a means of reusing wool yarn. In the 1920s, the local industrial production system began processing cotton, and it even- tually came to be fully specialized in this activity.

Foreign countries are the main suppliers of raw materials (Turkey, India, Pakistan, etc.) and machinery (Germany, Switzerland, Italy, etc.). The production process is capital-intensive, with labour representing only 10-15% of production costs.

66 The special characteristics of the activity make it impossible to define a local industrial production system in any strict sense, since both the suppliers and the clients are located outside of the local industrial production system. Nevertheless, the concentration is very high, as the following data show:

• Garrotxa County is responsible for 50% of Spain's recycled-co ton exports (the rest of Spain's exports come almost entirely from a competing local industrial production system located in Onti yent).

• Nearly all of the Catalan businesses dedicated to this activity are located in Garrotxa County. However, this activity does not have a specific CCAE code. Its weight within the sector is listed as 18% because it is calculated as a percentage of Catalonia's co ton-spinning sector.

Other agents that - Gremio de Hiladores de Fibras de Recuperación de la Región collaborate with Catalana (which forms a part of the AITPA –Asociación Industrial the local industrial Textil del Proceso Algodonero–, with headquarters in Barcelona) production system http://www.aitpa.es (IND)

67 2. Local industrial production systems in Catalan industry

2.2.3 Local industrial production systems in the wood, furniture and cork industry

Basic characteristics of the wood an cork industry in Catalonia

This industry can be divided into three sectors: wood, furniture and cork.

The first sector, wood, can be divided into first-stage processing and second-stage processing. The first-stage-processing segment is basically made up of two specialities: 1) sawing and the industrial preparation of wood, and 2) the manufacture of boards, planks and panels.

The second-stage-processing segment includes wooden structures, woodwork and cabi- network for construction, the manufacture of wooden packaging and the manufacture of other wood products (frames, coffins, etc.)

Close to 18% of Spain's companies in this industry are located in Catalonia. Catalonia provides 8% of jobs nationwide in the first-stage-processing segment and 18% in the second-stage-processing segment. The wood sector is highly atomized. The majority of the business community is made up of small companies (96% of the companies have fewer than 20 employees). This sector is highly atomized because many of these businesses are family-run, there are practically no barriers to entry for new businesses (which are easily established), and foreign capital is uncommon in this industry. The production activity of the wood sector is also quite labour-intensive and the companies involved in the sector are not very profitable.

The most important segment within the wood industry is woodwork for construction, which accounts for 63% of production and 70% of employment in the sector. This sector's business community is quite fragmented and dominated by small companies that produce custom-made items.

This speciality is closely linked to the construction industry. Woodwork accounts for 10% of the total cost of building a home. The woodwork sector is characterized by major cyclical fluctuations. It faces intense competition from products such as PVC and aluminium and from European manufacturers specialized in high-quality products, especially from Italy, Germany and France. In addition to competition from substitute products, especially for outdoor elements (windows, shutters, etc.), the woodwork sector also faces competition from the do-it-yourself phenomenon.

Other segments of the wood sector are upholstery and packaging. The upholstery segment can be divided into custom-made and mass-produced upholstery. The packaging segment includes the production of boxes, pallets, crates and wooden cylinders for cables. This segment is mostly located in the Barcelona area, because it needs to be close to the market where the end consumer operates, and in the province of Lleida, because it is a major fruit producer.

The furniture sector consists of two major segments: mass-produced and custom-made furniture. Solid-wood furniture, plywood furniture, coated plywood furniture, melamine furniture and Formica furniture are produced within each of these segments.

68 The furniture industry in Catalonia has around 5,000 manufacturing centres and directly employs approximately 36,000 workers. Catalonia is responsible for close to 17% of production in this industry nationwide, which makes it the leading autonomous community after Valencia, which is responsible for 38% of production and 33% of exports.

Of all the different specialities that make up the furniture industry, the most important in Catalonia is mass-produced furniture. This segment is made up of more than a hundred companies, each relatively specialized in certain lines of business and products. These companies have 50 employees on average, making them the largest companies in the industry. These companies mainly carry out the design, assembly, packaging and distribution phases for modular furniture. They also manufacture some custom-made furniture, which yields a greater margin of profit. However, for all other phases of the production process, companies in the mass-produced-furniture sector generally use subcontractors. Geographically, this activity is highly concentrated in two areas: Montsià County, on one hand, and Alt Camp and Vallès Oriental Counties, on the other. These activities require a small initial capital investment and are therefore not very technology- intensive.

The other major segment of the furniture industry, the production of custom-made furniture, consists of over a thousand woodworking workshops located throughout Cata- lonia. Most of these establishments are very small – employing, on average, around 3 workers – and operate in local or regional markets. These workshops are generally specialized in manufacturing handcrafted products, especially household furniture. They often use semi-finished modular products in order to reduce labour costs.

The three main activities in the furniture sector, defined by the destination of the goods produced, are: household furniture, office furniture, and conference furniture and outdoor fixtures.

The household-furniture sector has the greatest relative weight within the wood and furniture industry in terms of production volume, exports and employment. Catalonia is responsible for just over 20% of production, exports and employment nationwide in this sector, making it the most important autonomous community after Valencia. Most household furniture produced in Catalonia is sold on the domestic market, which absorbed close to 80% of production in 2003.

In recent years, distributors on the domestic market have formed groups that share a series of retail outlets. By concentrating the orders of each of the businesses, these distributors attain a very high level of purchasing power. This situation also benefits the furniture manufacturers, since they are able to receive larger orders, which guarantees cost and control advantages, among other things.

Catalonia's office-furniture segment is made up of approximately 300 companies. About a third of these companies are currently involved in industrial development and have a significant presence on the national market. The rest are small companies with less than 10 employees that make handcrafted products. This segment is characterized by the presence of companies that are not completely specialized in manufacturing office furniture. More often, these companies are involved in several different areas of furniture production. Another feature of this segment is the growth of investments in the research and development of new products, with particular focus on the design factor.

69 2. Local industrial production systems in Catalan industry

The conference-furniture and outdoor-fixtures segment supplies products for the catering industry, waiting rooms, auditoriums, conference halls and banks.

The cork sector includes a series of industrial processes that can be grouped into three major segments defined according to the purpose of the finished products: corks for cavas and sparkling wines, corks for still wines and other cork products.

Catalonia has just over 75,000 hectares of holm-oak groves and is responsible for close to 15% of nationwide cork production. This sector is a consolidated processing industry, but Catalonia's production of the raw material covers only 10% of the need of Catalo- nia's cork industry. The industry therefore depends largely on foreign cork and is extremely sensitive to changes in the price of the raw material.

The Catalan cork industry has a long tradition of producing very high-quality products. Nearly 65% of all Spanish companies in this sector are located in Catalonia. These approximately 80 small and medium-sized companies employ close to 1,100 people and produce around 1.6 billion corks every year. Catalonia is Spain's leading cork-producing region, with nearly 70% of the country's manufacturing activity, or 18% of production worldwide. This activity is mostly located in two counties in Girona province: Gironès and Baix Empordà Counties.

The most important segments of the Catalan cork industry are the production of corks for cavas and sparkling wines and the production of corks for still wines. Together, these segments account for approximately 95% of the activity's total turnover. The behaviour of the cork industry is therefore highly influenced by the dynamic nature of the area's cava and wine producers.

Although the Penedès region absorbs much of Catalonia's cork sales targeting the domestic market, the segment of corks for cavas and wines is highly influenced by foreign demand due to the high level of exports in this industry. In fact, close to 61% of this segment's production is sold abroad.

The production structure of the still-wine cork segment is less complex and less technologically advanced than that of the cava and sparkling-wine cork segment. Handcrafted production is an important component of this segment. Due to an aggressive investment policy, Catalan corks have improved in quality considerably in recent years. Local producers have tried to differentiate their products to compete with Portuguese companies, which are increasingly dominant on world markets.

The relative weight of all other cork products is small. However, some of the specialities included in this segment have a considerable presence on foreign markets. This segment includes expanded pure agglomerated cork and agglomerated composition cork – used in parquet flooring and decorative items – and specialities used for gift and decoration items and special-size corks.

Expanded pure agglomerated cork accounts for approximately 2% of overall sales in the sector. This segment makes environmentally friendly items by using rejected cork from other activities in the industry. Expanded pure agglomerated cork is a natural product and is therefore quite expensive. However, this product yields very small margins of profit due to strong international competition, especially from Portuguese manufacturers. As a result, Catalan companies have been gradually mechanizing their processes in recent

70 years. A higher degree of automation has allowed them to compete by offering better quality. Companies have also invested in reducing their environmental impact and marketing a by-product of powdered cork for the gardening industry.

Agglomerated composition cork has a specific weight of close to 3% within the Catalan cork industry. Over 60% of this segment's production is sold abroad, mainly to the Ita- lian market.

Finally, the segment of specialities used for gift and decoration items and special-size corks is of only minimal importance within the sector, with only 1% of sales overall. However, it has been rather successful in penetrating foreign markets. Exports account for nearly 60% of the segment's total turnover.

71 2. Local industrial production systems in Catalan industry

Local industrial poduction systems in the wood, furniture and cork industry in Catalonia

This industry has 4 local industrial production systems in Catalonia. Together, they include 450 industrial establishments, employ close to 4,300 people and generate turnover of around €525 million. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta MAPA Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Cork Urgell Anoia Maresme Baix Empordà Segrià Vallès Occidental Gironès

Garrigues Conca Barcelon de Barberà ès Alt Pened ès Baix Wood Llobregat Alt Camp Baix Industries Penedès Garraf Priorat Osona Selva Tarragonès Ribera Baix Camp Home d'Ebre Terra Alta Furniture Vallès Oriental

Baix Ebre

Montsià

Number of Establishments Employees

Home Up to 50 Up to 1.000 Furniture 50-100 1.000-3.000 Montsià More than 100 More than 3.000

72 Map of the Local Industrial Production Systems in the Wood, Furniture and Cork Industry in Catalonia

Technology Centres Educational and Industry Training Centres Associations

Institut Català del Suro Institut Municipal de Gremi Provincial de Torners AIDIMA (València and Benicarló) Formació de la Garriga CEMS Institut Vila Romana ASIMO AECORK Unió Fabricants de Mobles de la Garriga

Suppliers of pieces and parts of other materials (metal, glass,pastics)

GRAFIC Manufacturers of home Importers and First and furniture producers of second wood wood and cork transformation LPS LPS LPS Distribució Manufacturers of office and Manufacturers other furniture Manufacturers of tools and of cork products machinery for (corks 95%, working, wood insulation, (lathes, saws, etc.) etc.) LPS and cork

Construction Wine and Construction cava industry and other industries

Local industrial LPS production system

73 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Lumber industry in Osona and Selva Counties

Location: Osona and Selva Counties Number of stablishments: 227 Number of employees: 1,228 Turnover (estimated): € 100 million Exports/production (%): 10 Specialization index: 1.91 Weight in its sector in Catalonia (%): 11.70 Weight in all Catalan industry (%): 0.50

Main companies in Name of company City or town the local industrial Technotraf, SA Sant Vicenç de Torelló production system Alnus, SA Sant Hilari Sacalm Àngel Ripoll, SA Sant Hilari Sacalm Fusteria Gurdó, SL Sant Feliu de Buixalleu Manipulacions de Fusta, SL Prats de Lluçanès Fustes Solà, SL Prats de Lluçanès Tecfusta, SL Anglès Torneria Pujolasos, SL Sant Pere de Torelló Maderas Verdaguer, SA Vidrà Vepse, SA Sant Pere de Torelló

Description of the This local industrial production system's main line of business is local industrial manufacturing lumber (sawing, planing, turning, and producing production system boards, planks, latticework, chipboards, packaging and other products). However, some of these activities, such as turning, are more highly concentrated in the Vall de Ges area (Torelló, etc.) and Gui- lleries area (Sant Hilari Sacalm, etc.).

This cross-cutting local industrial production system supports other Catalan industries (furniture, construction, toys, etc.). The local industrial production system is made up of companies specialized in different woodworking techniques and whose suppliers/clients are other companies in the local industrial production system or outside of the local industrial production system that carry out another phase of the production process. Therefore, the companies in the local industrial production system are highly interrelated and form a complex network of subcontracting relationships that benefit from the area's skilled labour and wood-processing tradition. In Osona County, there are also examples of collaboration between businesses, especially in waste management.

74 Most companies in the local industrial production system work as subcontractors (making products to order in accordance with the technical and production-related specifications of their clients) and produce components of furniture, packaging, boxes, corks for toiletries, etc. The rest of the companies make consumer products (decorative items, games, toys, pipes, etc.) and construction products. The companies cannot be classified according to type of client because they tend to work for a range of sectors. These calculations include the companies that have the CCAE code for the lumber industry. However, it is important to note that the local industrial production system's market is even bigger due to the fact that many companies work with lumber but have the code for furniture manufacturing (112 companies), toys, lighting, etc. Some companies even work in the hidden economy.

This local industrial production system was formed in the 19th century when the textile industry spread along the Ter River, which prompted the creation of turneries specialized in manufacturing parts for spinning mills in the Vall de Ges area in Osona County. The proximity of the raw material and the skills of the local craftspeople also influenced the local industrial production system's expansion throughout the rest of Osona and Selva Counties.

This area is also home to a few manufacturers of woodworking machinery and finishing workshops (varnishing, painting, etc.). The raw material (mostly pine) is usually imported, but the local industrial production system also works with local woods (alder).

Other agents that - Gremi Provincial de Torners i Indústries Diverses de la Fusta (IND) collaborate with http://www.torners.com/ the local industrial production system

75 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Cork in the Costa Brava

Location: Baix Empordà and Gironès Counties Number of establishments: 83 Number of employees: 1,130 Turnover (estimated): € 225 million Exports/production (%): 55 Specialization index: 18.09 Weight in its sector in Cataloni (%): 89.25 Weight in all Catalan Industry (%): 0.18

Main companies in Name of company City or town the local industrial Francisco Oller, SA Cassà de la Selva production system Trefinos, SL Palafrugell Subertap, SA Sant Feliu de Guíxols Mundial Cork, SA St. Feliu de G. and Palamós Givecork, SA Cassà de la Selva Agglotap, SA Sant Feliu de Guíxols Tapones y Espec. del Corcho, SA Palafrugell J. Vigas, SA Palafrugell Juan Rutllant, SA Palafrugell Pere Roca, SA Palamós

Description of the This local industrial production system was created because of the local industrial abundance of cork-giving holm oaks in the counties of Girona pro- production system vince. Although corks have been used since the Roman period, industrial production of corks did not begin in the towns of the Costa Brava until the 18th century. In the early 20th century, employment in this industry peaked with nearly 12,000 workers, and the first foreign investments took place. In the 1960s, the increased popularity of bottled wines led to the expansion of the cork industry and the mechanization of the production processes. Because of this, the industry now produces much more cork than at the turn of the century while employing just over a thousand people. This expansion was so great that local raw materials now only cover 10% of the industry's production capacity. The companies now have to buy cork from Extremadura and Portugal. Some companies are even investing in North Africa to make sure raw materials will be available in the future.

The local industrial production system's main activity is manufacturing cork products of all sorts, yet corks for cava and wine bot-

76 tles account for 95% of production. This local industrial production system supplies an estimated 70% of the world's corks for sparkling wines (cava and champagne) and 10% for still wines.

The geographical scope of this local industrial production system is basically concentrated in three towns in Baix Empordà County (Palafrugell, Sant Feliu de Guíxols and Palamós) and one town in Gironès County (Cassà de la Selva). However, there are also some companies located in neighbouring counties (Maresme and Selva). Cork production is traditional in this local industrial production system. Therefore, skilled labour is abundant and the business culture is focused on this industry.

As for the value chain, most of the raw material comes from outside the local industrial production system. The machinery used also tends to come from outside the local industrial production system, mostly from Italy. However, there are some small machine shops in the area that mostly produce specialized, custom-made machines.

Other agents that - Institut Català del Suro (TEC) http://www.corcho-web.com collaborate with - Associació d’Empresaris Surers de Catalunya (IND) the local industrial http://www.corcho-web.com production system - Museu del Suro de Palafrugell (OTH) http://www.museudelsuro.org/pub

77 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Househol furniture in Vallès Oriental County

Location: Vallès Oriental County Number of establishments: 95 Number of employees: 942 Turnover (estimated): € 100 million Exports/production (%): 5 Specialization index: 1,54 Weight in its sector in Catalonia (%): 10,63 Weight in all Catalan industry (%): 0,21

Main companies in Name of company City or town the local industrial Muebles Piferrer, SA La Garriga production system Eurofusta, SL Figaró – Montmany Fácil Mobel, SA Lliçà de Vall Estanterías Bope, SA Canovelles Curvat, SA Martorelles Muebles Ébano, SL La Garriga Muebles Maracu, SL L’Ametlla del Vallès Mobles Ciurans, SL La Garriga Muebles Acsa, SL Canovelles Llumac Mobles, SL La Garriga

Description of the The main activity of this local industrial production system is the local industrial production of household furniture (dining-room and bedroom production system sets, etc.). Most furniture produced by this local industrial production system is made of veneer and targets the medium-high market segment, which demands a modern design. Most of the companies are small and are mainly concentrated in La Garriga and nearby towns. Furniture manufacturing is traditional in this area. Therefore, skilled labour is abundant and the business culture is focused on this industry.

This creation of this local industrial production system in the early 20th century was linked to a factory that produced wooden spo- ols for player pianos in La Garriga. In 1925, Ramon Ciurans opened the town's first furniture factory. By the mid 1950s, the town's many furniture companies and wood workshops had begun to form a network characteristic of a local industrial production system.

As for the value chain, this local industrial production system, while small, enjoys the presence of suppliers specialized in wood and glass components and furniture stores (some manufacturers

78 even have their own distribution channel). The county is also home to about a dozen chair and upholstery manufacturers that have not been included in these calculations because they have a CCAE code that also includes manufacturers of seats for motor vehicles.

In this local industrial production system, companies have been known to collaborate to transport furniture for the La Garriga furniture fair.

Other agents that - Associació d’Industrials del Moble, ASIMO (IND) collaborate with - Unió de Fabricants de Mobles de la Garriga (IND) the local industrial http://www.unioempresarial.com production system - Institut d’Ensenyament Secundari Vila Romana (TRA) - Institut Municipal d’Educació de la Garriga (TRA) - Fira del Moble de la Garriga (OTH) http://www.firamoblelagarriga.com/

79 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Household furniture in Montsià County

Location: Montsià County Number of establishments: 36 Number of employees 938 Turnover (estimated): € 100 million Exports/production(%): 15 Specialization index: 2.15 Weight in its sector in Catalonia (%): 4.03 Weight in all Catalan industry14 (%): 0.08

Main companies in Name of company City or town the local industrial Naturantaix, SA La Sénia production system Pla Royo, SA La Sénia Promoble, SL La Sénia Mobi Cenia, SA La Sénia Muebles García Sabaté, SA La Sénia Mobles JJP, SAL Ulldecona Linea Mobel, SA La Sénia Fecibega, SL La Sénia Coenia, SA Amposta Tresfor, SA Ulldecona

Description of the This local industrial production system's main line of business is local industrial manufacturing household furniture. With few exceptions, the local production system industrial production system's production focuses on wooden furniture for bedrooms, dining rooms, living rooms and entrance halls.

The geographical scope of the local industrial production system is limited to Montsià County and concentrated mainly in the town of La Sénia. However, the local industrial production system does continue into Baix Maestrat County (Benicarló, Vinaròs, etc.) in the north of the autonomous community of Valencia.

This local industrial production system was formed in the mid-20th century when a sawmill in La Sénia began the small-scale production of bedroom sets. Since then, the local industrial production system has grown mostly as a result of spin-offs as workers left their employers to start their own businesses. Furniture manufacturing is traditional in Montsià County and in particular in La Sénia.

80 Therefore, skilled labour is abundant and the business culture is focused on this industry.

This local industrial production system is quite complete. The county is home to suppliers of all sorts of components – both metallic and glass – and complementary companies specialized in certain phases of the production process (varnishing, lacquering, etc.). Business cooperation and subcontracting are both common. However, some of the most important raw materials by volume – such as melamine chipboard and mouldings – come from other parts of Spain or foreign countries.

The clients are also located outside the local industrial production system and are mostly independent shops and, to a lesser extent, specialized hypermarkets. However, there are also quite a few shops inside the local industrial production system, especially in the town of La Sénia.

Other agents that - Col·lectiu d’Empresaris del Moble de la Sénia (IND) collaborate with http://www.cemsenia.com the local industrial - AIDIMA (TEC), amb seu a València i una unitat tècnica a Benicarló, production system http://www.aidima.es

14 In order to be considered a local industrial production system, a group of establishments should represent at least 0.1% of all industry in Catalonia. However, despite the fact that the Montsià local industrial production system has a small number of establishments, its market is the same size as the household-furniture of Vallès Oriental County in terms of the number of people employed and turnover.

81 2. Local industrial production systems in Catalan industry

2.2.4 Local industrial production systems in the paper, publishing and graphic-arts industry

Basic characteristics of the paper, publishing and graphic arts industry in Catalonia

This industry can be divided into three sectors: 1) paper and cardboard, 2) graphic arts and 3) publishing.

The paper and cardboard sector is made up of two major areas of activity: the production of the pulp or stock – the raw material – and the production of paper and cardboard. The paper and cardboard segment includes newsprint, printing and writing paper, tissue paper, so-called brown products (corrugated cardboard, kraft paper for bags and cardboard) and speciality products.

The worldwide paper and cardboard sector is characterized by a growing demand linked to general developments in the economy. However, it is influenced by marked cyclical fluctuations in market behaviour, which last approximately three to five years. These fluctuations are highly influenced by the intense internationalization of the activity and in particular by the performance of the sector in the United States, which is the leading producer worldwide. They are also influenced by changes in supply, which shows considerable changes in production capacity in response to the pressure of the demand and the behaviour of prices. When new pulp-manufacturing facilities are opened or facilities that had been closed are reopened during periods of upswings in demand and rising prices, an excess of supply is often caused. This lowers the market prices and changes the trend, which brings about a series of difficulties. The cyclical fluctuations that afflict the sector are also affected by the major multinational paper manufacturers' strategies of expansion and research of new markets and, to a lesser extent, by the sector's relatively fragmented international business community. This fragmentation involves lack of coordination in investments, growth of production capacity and generation of stocks, which has cumulative effects on the trends of the segment and causes the fluctuations to become more intense and frequent.

For example, despite the major economies of scale that characterize the production of cellulose paper and cellulose stock, the world's fifteen largest manufacturers have a worldwide market share of close to 35%. However, in the last five years, less cyclical behaviour has been observed in the paper and cardboard market, which has been a basic factor for the sector's stability. This phenomenon is the result of actions taken by the largest multinationals to deal with fluctuations in business cycles through concentration strategies while at the same time improving their position on the market. These actions have taken a variety of forms. Some companies, such as certain world groups, have carried out mergers. Others have bought other companies. In other cases, multinationals have exchanged business divisions between groups. Another type of strategy adopted by major paper and cardboard companies in recent years is the restructuring and elimina- tion of unprofitable units and areas of business.

The crisis in Southeast Asia that lasted from the second half of 1998 through late 1999 and the slow recovery over the last four years have affected the performance of the international paper and cardboard industry in recent years. Asia, a net importer of paper and cardboard, is important to the worldwide industry for two reasons. First, it has potential

82 for consumption growth, which encourages European and North American companies to develop and improve. Asia still has low levels of paper and cardboard consumption (7 kg per inhabitant per year), so we can expect demand to keep growing in the future. Second, major local investments have recently been made in new paper and cardboard factories, which are capable of operating at lower costs than Western factories and therefore threaten Western exports to Asia.

The international paper and cardboard industry tends to concentrate its activity. This trend is also present in Spain. Spain's paper and cardboard industry – together with that of Italy and Portugal – has a much more fragmented structure than the leading countries, but in recent years the number of businesses and production facilities has steadily declined. In 1981, there were 193 companies with 204 factories and 22,800 employees. In 1990, the number of companies had dropped to 157, with 167 factories and 19,700 employees. In 2003, there were 147 factories – 15 of which produced pulp and 132 of which produced paper and cardboard – with 17,500 employees. At the same time, the industry began the concentration process, whereby the number of large-capacity companies increased and the number of small companies decreased. For example, the percentage of factories capable of producing more than 100,000 tonnes per year went from 6% in 1996 to 14% in 2001. However, on average Spanish companies in this industry remain smaller than their foreign competitors.

The paper and cardboard industry has a strong presence in Catalonia. This region is home to a considerable percentage of the industry nationwide, with over 40% of the companies, 32% of employment and 20% of production overall. On average, the Catalan companies are smaller than their counterparts in the rest of Spain. However, the degree of penetration by foreign-owned companies is greater – they are responsible for more than 70% of the industry's turnover in the region.

The different production activities that make up the paper and cardboard industry have a significant presence in Catalonia. However, in recent years the pulp and stock segment has declined considerably. Today, Catalonia only produces pulp and stock for special types of paper. So-called brown products are the most important in Catalonia's paper and cardboard industry, accounting for close to 63% of the industry's production overall. The next largest segment is printing and writing paper, with a relative weight within the sector of 25% – with coated paper accounting for 85-90% of that share – followed by tissue paper (8.5%) and speciality products (3%). This activity is located mostly in Alt Penedès, Alt Camp, Anoia, Vallès Oriental and Ripollès Counties, and to a lesser extent in Baix Llobregat, Vallès Occidental, Gironès, Garrotxa and Segrià Counties.

In recent years, the paper and cardboard industry has been affected by the increasing importance of distribution activities. In fact, manufacturers have become increasingly dependent on their clients, which have established numerous requirements for quality, prices and delivery deadlines. In Catalonia there are many family businesses that dedicate some or all of their production capacity to manufacturing products that are marketed under distributor brands. This is especially common in specialities that rely on broad distribution and end users, such as tissue paper.

Much of the raw material used by Catalan companies in this industry is recycled. Speci- fically, more than 70% of the paper and cardboard manufactured in the region is made from recycled material. The high level of recycling is a consolidated characteristic of the

83 2. Local industrial production systems in Catalan industry

industry, thanks to collaboration between some companies and the Ministry of the Envi- ronment of the Catalan Government. Furthermore, the selective-collection programmes for the general public initiated in the 1990s have surpassed the optimum figure of one recycling bin per 500 residents.

The graphic-arts sector includes a broad range of activities. In addition to the main activities of producing books, newspapers, magazines and collection instalments, the sector supplies many companies, institutions, and retail industries with many different products, including forms, labels, catalogues, packaging (especially for the food, pharmaceutical, toiletries and cosmetics industries), plans and maps, calendars, planners, posters, pamphlets, cards and postcards. This product variety is the main reason this sector is so closely linked to the performance of other activities and the economy in general. Consumption behaviour has a strong direct impact on this sector and also strongly influences other segments that consume many graphic-arts products, such as advertising.

This industry is made up of companies that work in graphic arts and those which make paper and cardboard products. The graphic-arts activity includes books, pamphlets, periodicals, albums, maps, calendars, postage stamps, etc. The paper- and cardboard-products activity includes mainly envelopes, labels, different types of cardboard packaging (micro- corrugated, compact, cardboard, fine cardboard, etc.), and products that also include other materials, such as silk, flocking, plastic, etc.

The graphic-arts industry has three different phases: pre-printing, printing, and finishing and binding. The pre-printing phase includes the processes of photocomposition, photo- lithography, and layout, which have all undergone major changes in recent years. Prin- ting involves creating a large number of copies of original elements through various different techniques, including typography, offset, intaglio engraving, silk-screening, flexography, digital printing, printing on demand, reprography and other printing systems (electronic, variable, no-impact, etc.). Finally, the finishing processes involve binding and other previous or subsequent activities, such as folding, trimming, plastic-coating, stamping, etc.

Of the three phases that make up the graphic-arts industry, printing is the most important with close to 75% of the companies, followed by pre-printing with 20% and finally finishing and binding with the remaining 5%. Today, strategies in this sector focus on increasing the flexibility of production by reducing the minimum efficient sizes to a level that allows for shorter print runs and better reaction times in meeting delivery deadlines. Deadlines are very important to clients that order pamphlets and promotional materials and also for publishing houses.

The quest for greater production flexibility has led some companies to integrate all of the phases of the production process (pre-printing, printing and finishing). The finishing phase provides the greatest added value for the product, despite the fact that it receives proportionally less attention. The main companies have also broadened their business goals. They now carry out other functions for their clients, including logistics, database management, personalized mailings and design tasks.

Catalonia has a larger specific weight in Spain's graphic-arts industry than any other autonomous community. Because of the great importance of the direct relationship between clients and suppliers in graphic services, the companies in the graphic-arts industry have traditionally been located in the areas with the greatest concentration of economic

84 activity, businesses and institutions and therefore the greatest number of potential clients.

Although this industry is quite atomized in Catalonia – the average number of employees per company is 11 and approximately 95% of the production facilities have less than 50 employees – this region clearly has more medium-large and large companies than any other part of Spain. Over 60% of Spain's graphic-arts companies with more than 50 employees are located in Catalonia.

The publishing sector creates products printed on paper and also uses other formats such as digital media. In absolute terms, digital publishing makes up a small percentage of the market. Print publishing (books and collection instalments) is basically the most common mechanism for introducing this sector's products. Independent marketing of digital products is therefore very much an exception, unless it is through products such as video games, which form a part of a very specific segment. The most common non-print medium used is CD-ROM, followed by videos, cassettes, on-line publishing, CD-I, DVD and diskettes. It is important to note that close to 64% of private Spanish publishing houses only carry out print publishing. The remaining 36% also use other media, even though the turnover for products of this type is relatively low – just 5% of turnover for publishing houses overall and 9% for the publishing houses that use both print and non- print media. Large publishing houses tend to be the most committed to introducing non- print media on the market.

Catalan companies are making major investment efforts in electronic publishing, despite the fact that publishers were extremely reluctant to explore this new type of production when it was first introduced. The speed of technological advances, the large investments required and the high level of risk associated with entering this field were the reasons for this reluctance. One segment with great potential for the future is publishing focused on researching and selecting specialized information and documentation and distributing it to clients on the Internet. Updating and expanding the contents of refe- rence works – or even encyclopaedias and similar works – and distributing them to subs- cribers via computer networks is a line of activity that is expected to be developed considerably in the medium term.

Books in Catalan have a specific weight of 16% of overall turnover for the publishing sector. In Catalonia, general literature and non-academic texts are the subjects with the greatest proportion of titles in Catalan.

Catalonia is the leading region in terms of turnover within the publishing sector and is home to 23% of all private publishing houses in Spain. However, the autonomous community of Madrid remains Spain's leader in terms of the number of publishing houses, with 25% of the total. However, many of the country's largest publishing houses are located in Catalonia. The average number of employees per company in this sector is 24 in Catalonia, as opposed to 20 in Spain as a whole. As a result, Catalonia's share of employment and turnover with respect to national totals for the sector is quite high. In fact, Catalonia is responsible for close to 45% of employment and 53% of turnover nationwide, while the figures for the autonomous community of Madrid are 47% and 42%, respectively. .

85 2. Local industrial production systems in Catalan industry

Local industrial production systems in the paper, publishing and graphic-arts industry In Catalonia

This industry has 2 local industrial production systems in Catalonia. Together, they include more than 1,000 industrial establishments, employ close to 21,000 people and generate turnover of around €2.65 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès MAPA Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental

Garrigues Conca Barcelon de Barberà ès Alt Pened ès Baix Llobregat Alt Camp Baix Penedès Garraf Priorat Graphic Arts and Publishing Tarragonès Ribera Baix Camp Barcelona M.A. d'Ebre Terra Alta Manufacture Anoia of Paper and Bages Cardboard Alt Penedès Baix Ebre Anoia Baix Llobregat

Montsià Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000 Barcelona M.A.=Barcelona Metropolitan Area. Made up of Vallès Occidental i Oriental, Barcelonès More than 100 More than 3.000 and Baix Llobregat..

86 Map of Local Industrial Producion Systems in the Paper, Publishing and Graphic-Arts Industry in Catalonia

Manufacturers of Manufacturers machinery for the of dyes and other graphic-arts and printing products publishing industries (offser, rotary press, etc.)

Other Institutions Graphic arts Industry and and publishing services in general Raw material for making paper LPS Museu Molí Paperer de Capellades

Papermaking Distributors: Bookshops Production of Department Stores paper pulp, Newsstands paper, corrugated institutions cardboad and GRÀFICetc. Educational and cardboard Training Centres Other industries LPS

Escola d’FP A. Algueró ETSEI Terrassa

Recyclers Packaging Consumer and industrial products

Industry Associations Manufacturers of machines for perforating, handling and Gremi d’Indústries Gràfiques packaging de Catalunya Gremi d’Editors de Catalunya Cambra del Llibre de Catalunya Associació Graphispack Associació de fabricants de Paper i Cartró de Catalunya

Local industrial LPS production system

87 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Production of paper and carboard in the Anoia, Bitlles and Llobregat River basins

Location: Alt Penedès, Anoia and Baix Llobregat Counties Number of establishments: 31 Number of employees: 1,673 Turnover (estimated): € 400 million Exports/production % 30 Specialization index: 2.60 Weight in its sector in Catalonia (%): 33.7 Weight in all Catalan Industry (%): 0.07

Main companies in Name of company City or town the local industrial Guarro Casas, SA Gelida production system Reno de Medici Ibérica, SL El Prat de Llobregat J. Vilaseca, SA Capellades Unión Industrial Papelera, SA La Pobla de Claramunt Virtisu, SL La Torre de Claramunt Juan Romaní Esteve, SA La Pobla de Claramunt M.B. Papeles Especiales, SA La Pobla de Claramunt Ahlstrom Barcelona, SA Capellades Papelera Riudevitlles, SA Sant Quintí de Mediona Paper, SA Esparreguera

Description of the The main activity of this local industrial production system is the local industrial production of paper and cardboard from regenerated fibres. The production system companies that make up this local industrial production system make products in a variety of specialities, including cardboard, flu- ting paper, tissue paper, compact cardboard, thick cardboard, filter paper, two-colour paper, and printing and writing paper.

The paper industry requires rivers with a large volume of water flow. It is therefore not surprising that this local industrial production system is located along the Llobregat River and two of its tri- butaries, the Anoia and the Bitlles. The Capellades Paper-Mill Museum bears witness to the tradition of the paper craft in these river basins dating back to the 18th century, when this was one of Spain's leading paper-producing areas with over a dozen mills.

The industrialization process began in the 1960s, and was followed by foreign investments. Today, the production process is highly mechanized and has made significant progress in terms of efficiency, environmental protection and water conservation. In the value chain, the suppliers are the companies that collect and pro-

88 cess the paper and the cardboard to be recycled. There are a few local companies that carry out these functions but they do not meet the demand, so the companies in the local industrial production system use imports as well. As for clients, the wide range of products produced by the local industrial production system targets packaging, stationery and graphic-arts companies, etc., many of which are located in the Barcelona metropolitan area. Other specialities, such as cardboard and printing and writing paper, export more than 50% of their production.

Some specialities are highly concentrated in Catalonia – for example, 75% of all Spanish cardboard is produced in this region.

Other agents that - Associació de Fabricants de Paper i Cartró de Catalunya (IND) collaborate with - Museu Molí Paperer de Capellades (OTH) the local industrial http://www.mmp-capellades.net/ production system - Asociación Nacional de Fabricantes de Pasta, Papel y Cartón (IND), with headquarters in Madrid http://www.aspapel.es/ - Escola Tècnica Superior d’Enginyeria Industrial de Terrassa (TRA) http://etseit-ct.upc.es/

89 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Graphic arts and publishing in the Barcelona metropolitan area and central Catalonia

Location: Anoia, Bages, Baix Llobregat, Barcelonès, Vallès Occidental i Vallès Oriental Counties Number of establishments: 1.025 (*) Number of employees: 19.208 Turnover (estimated): € 2.250 million Exports/production (%): 30 Specialization index: 1,26 Weight in its sector in Catalonia (%): 74,55 Weight in all Catalan industry (%): 2,28

Main companies in Name of company City or town the local industrial La Vanguardia Ediciones, SL Barcelona production system Printer Industria Gráfica, SA Sant Vicenç dels Horts Cayfosa Quebecor, SL Santa Perpètua de M. Taller Auria, SCCL Igualada Eurohueco, SA Castellbisbal Grupo Amcor Flexibles Hispania, SL Granollers Litografía Roses, SA Gavà Grafos, SA Barcelona Pechiney Celograf, SL El Prat de Llobregat Gráficas de Prensa Diaria, SA Parets del Vallès

(*) Companies that work exclusively in publishing are not required to register with the Register of Industrial Establishments of Catalonia. Therefore, major publishing houses such as Planeta Corporación, Grupo Zeta and RBA Holding Editorial are missing from this list. If they were included, the data would show that the local industrial production system is significantly larger. .

Description of the The main activity of this local industrial production system is the local industrial printing of newspapers, magazines, other periodicals, books, pos- production system ters, leaflets, catalogues, etc. It also includes related activities such as editing, binding, finishing, composition, photoengraving, etc. Companies in this local industrial production system print not only on paper but also on plastic.

This local industrial production system has a very large market and is for the most part cross-cutting, since it supports other local industrial production systems in Catalonia – mostly by providing printing services for packaging but also with advertising and promotional items such as posters, catalogues, leaflets, shopping bags, etc. However, publishing accounts for 10% of the activity of the graphic-arts local industrial production system. A separate local industrial production system could be identified for this sector, but we have been unable to accurately define it for the purposes of this study for two reasons:

90 first, because publishing houses are not required to register with the Register of Industrial Establishments of Catalonia and, second, because graphic-arts companies that work for publishing houses often print items for other industries as well.

The geographical scope of the local industrial production system includes the Barcelona metropolitan area – because of the proximity of potential clients – and extends into Bages and Anoia Coun- ties. Because of their proximity to the Penedès winemaking local industrial production system, the companies in Anoia County are fairly specialized in printing labels for wine and cava.

This local industrial production system is also involved in publishing books and periodicals. All of the activities of the value chain (editing, pre-printing, printing, finishing and binding) and many related services (translation and proofreading services, graphic design, distribution, etc.) are found within the local industrial production system. In this local industrial production system, 99% of the companies are small or medium-sized and have intense subcontracting relationships with each other, making it one of Catalonia's most complete local industrial production systems.

The raw materials are also usually supplied from within the local industrial production system, while the suppliers of machinery tend to be located abroad (in Germany and Italy, for example).

With 75% of Catalonia's establishments in this sector, this local industrial production system is clearly very important. In fact, Cata- lonia is home to 25% of Spain's graphic-arts companies and 23% of Spain's publishing houses, making it the first- and second-place autonomous community in these categories, respectively.

The region's importance in the sector dates back to the year 1474, when Barcelona's first print shop opened. In 1498, the first graphic-arts guild was formed. The activity continued to expand. By the early 20th century, Barcelona had become an important graphic- arts and publishing centre, due to the high concentration of cultural institutions, universities and other organizations, such as the Catalan Bookmaking Institute and the Professional Bookmaking School. The Port of Barcelona has also played an important role in the development of the industry by making it possible to export products to Latin America, especially after the Spanish Civil War.

Other agents that - Gremi d’Indústries Gràfiques de Catalunya (IND) http://www.gremi.net collaborate with - Gremi d’Editors de Catalunya (IND) http://www.gremieditorscat.es the local industrial - Cambra del Llibre de Catalunya (OTH) production system http://www.cambrallibrecat.com - Escola de Formació Professional Antoni Algueró (TRA) http://www.escolaalguero.net - Asociación Graphispack (OTH) http://www.graphispack-asociacion.com

91 2. Local industrial production systems in Catalan industry

2.2.5 Local industrial production systems in the chemical industry

Basic characteristics of the chemical industry in Catalonia

This sector is made up of five segments: the raw-chemical industry, agricultural chemicals, industrial chemicals, consumer chemical products and the pharmaceutical industry.

The raw-chemical industry consists of two types of activities. First, it includes the production of organic chemical products, mostly petroleum derivatives – such as acetylene, benzene, ethylene and propylene – and other types of products as well – such as alco- hols, organic acids, phenols, ethers and nitrogen compounds. Second, it includes the production of inorganic products, such as industrial gases, sulphuric acid and its derivatives, carbides, phosphorus, calcium, hydroxides, halides, salts and inorganic acids. The raw-chemical industry also includes the production of plastic raw materials – polyesters, polyamides, polymerization products, polyurethanes, etc. – synthetic rubber and latex, and artificial and synthetic fibres.

The second segment within the chemical industry consists of activities that basically target the agricultural industry, known as the agrochemical or agricultural-chemical industry. This category basically includes manures and fertilizers of all sorts, insecticides and pesticides (fumigants, fungicides, seed disinfectants, herbicides, molluscicides, etc.) and all kinds of livestock-raising products, except veterinary pharmaceuticals.

The third segment within the chemical industry is industrial chemicals. This segment basically includes all products that target industry. It encompasses a wide range of items, such as compressed gases (hydrogen, nitrogen, oxygen, liquid air, etc.); colourings and pigments; paints; varnishes and lacquers; printing ink; industrial oils and greases; essential oils and natural and synthetic aromatic substances; glues and gelatins; supplemen- tary products for the textile, leather and rubber industries; explosives; and other assorted products (stripping agents, antifreezes, descalers, abrasives, transmission fluids, metal- treatment products, etc.).

The fourth segment is consumer chemical products. This group encompasses all products designed for end users and is therefore rather vast. It includes all sorts of common soaps, detergents and bleaches; toiletries and cosmetics in all their diversity (colognes, lotions, perfumes, toilet soaps, deodorants, cosmetic and personal-hygiene products, beauty products, hair-care products, etc.); waxes and paraffins (for making candles, for household purposes, for cleaning vehicles and other uses); sensitive photographic materials; pyro- technics; mixed uses, etc.; and any other product that targets end users (fabric softeners and other additives, air fresheners, stain removers, glass cleaners, metal cleaners, household cleaning products of all sorts, etc.).

Because these four segments manufacture such a variety of products with such a broad range of uses, they are highly affected by retail demand and the demand generated by a vast range of industrial and non-industrial production-related activities (agriculture, construction, etc.). These segments are therefore very sensitive to any sort of fluctuation (investment, exports, etc.) in the economic cycle and to possible changes in the behaviour of consumers.

92 The fifth segment, the pharmaceutical industry, has a different set of characteristics and will be covered separately.

Catalonia is responsible for 47% of production in Spain's chemical industry (not coun- ting pharmaceuticals), making it the leading autonomous community, followed by the Autonomous Community of Madrid, Valencia, Andalusia and the Basque Country. Of all the regions of Spain, Catalonia is clearly among the most specialized in this industry. It is responsible for nearly half of the country's total exports. This specialization is also important within the region. The chemical industry (including pharmaceuticals) has the highest gross value added of all sectors of Catalan industry.

As for the structure of activities in Catalonia, the raw-chemical industry is the leading sector. The specific weight of the raw-chemical industry within the Catalan chemical industry is close to 48% in terms of production. The Catalan raw-chemical industry is even more important within the Spanish raw-chemical industry than it is within the chemical industry as a whole, with over 60% of production. This is due to the strong presence of this activity at the petrochemical complex in Tarragona, which is southern Europe's most important strategic centre in the petrochemical industry.

The pharmaceutical sector is made up of two major segments, which have a very high degree of vertical integration. The first segment is the production of raw materials and active ingredients, which are the basic elements for manufacturing pharmaceutical products. The second segment is the production of preparations, which are used to treat consumers who suffer from certain conditions. The first segment is normally referred to as the fine-chemicals industry. The products in the second segment – which is more important to the industry in economic terms – are developed by pharmaceutical laboratories. Because of the close interrelationship between the two segments, most large pharmaceutical corporations operate in both in fine chemicals and in the development of pharmacological preparations.

One of the most significant characteristics of the worldwide pharmaceutical industry is the fact that the companies continuously and systematically make major investments in research and development (R&D).

The worldwide pharmaceutical industry faces circumstances consisting of four main factors that are quite interrelated. These factors are: a reduction in the profitability of investments in research and development; the impact of many failures that take place in the late stages of product development and even after the product has been introduced on the market; the difficulty of launching top-of-the-line products, which yield high profits; and finally, the significant number of drugs that are no longer protected by patents and those that will lose their patent protection in the coming years, combined with highly competitive markets, especially in the generic-drugs segment.

In this context, analysts of this sector have suggested that pharmaceutical companies need to define a new business model that will allow them to avoid the difficulties mentioned above as much as possible and enjoy the comparative advantages of more innovative lines of investigation in the biotechnology field. This new model should introduce important changes in the main areas of activity of the companies in the industry. In the area of research and development, in the future the most important aspects would be learning how biological and genetic factors influence illnesses and adapting treatments to patients' unique cases and specific needs. In the areas of distribution and sales, com-

93 2. Local industrial production systems in Catalan industry

panies should make a much greater effort to increase the flexibility of distribution mechanisms to meet patients' requirements and adapt sales systems to new, more individualized clinical practices. As a result, important changes would need to be made in medical- prescription procedures, the production and pricing of drugs, and logistics and distribution systems. In the long term, the pharmaceutical market would likely become segmented. The strongest and most innovative companies would have the strongest position in submarkets of this type and all other companies would focus on more standardized products with less added value.

In any event, for now the factors that influence the market and the trends expected in the future seem to reaffirm the importance of economies of scale in this industry, especially with regard to research and development but also for other functions (such as distribution, marketing and sales). The leading companies in the industry will therefore need to combine their great potential for mobilizing resources – hence the importance of economies of scale – with considerable flexibility in order to meet patients' demands. This task requires the ability to adapt production, distribution and sales processes. The demand for pharmaceuticals is also very rigid, as it essentially responds to the needs of the treatment of pathologies. Therefore, under no circumstances does it increase because of preferences or increased customer satisfaction. Together, these factors make for very special market conditions. Consumers are quite demanding in this market, because the product they consume affects and influences their most valued asset: their health. Furthermore, because citizens of socioeconomically advanced countries tend to see healthcare as a basic right, without regard for the exact costs of a leading healthcare system, consumers apply considerable pressure for access to the most modern and efficient treatments for all sorts of illnesses, which logically has an impact on costs.

In the countries that consume the most drugs – especially those which have the most social protection – the market for pharmaceuticals operates in a very unusual way. The person who makes the decision about what product to consume is not the consumer but the prescriber (the doctor who decides what treatment to apply), who neither consumes the product nor assumes the cost. The public sector, meanwhile – which assumes most of the cost of the product – has a very limited amount of influence over the prescriptions and the needs of consumers. As a result, pharmaceutical expenses in advanced countries are generally rising quite sharply. This forces the entity that essentially pays the bill, i.e. the public sector – to look for all possible mechanisms to reduce these major costs. The person who makes the consumption decision – the health professional – usually has little incentive to reduce costs. In fact, since they are pressured by patients to achieve the best possible results, they tend to disregard the costs. Meanwhile, consumers are growing increasingly concerned about their health and, to the extent possible, demand the most modern and effective treatments, which are usually also the most expensive.

The pharmaceutical sector has for decades been a traditional industrial specialization in Catalonia, which is one of the leading regions of Spain in this activity. Approximately 44% of Spanish pharmaceutical laboratories – about 165 of a total of 375 – and more than half of Spanish fine-chemicals manufacturing centres are located in Catalonia. Cata- lan companies are responsible for close to 56% of pharmaceutical production nationwide – including both raw materials and preparations – and account for close to 52% of employment. The four most important Spanish-owned laboratories – Almirall-Prodesfar- ma, Esteve, Ferrer Internacional and Uriach – are all Catalan-owned. Together, these firms supply just over 12% of the domestic demand. Furthermore, several multinational pharmaceutical companies have production facilities in Catalonia. With respect to all Catalan

94 industry, the pharmaceutical sector represents nearly 8% of overall turnover, more than 5% of gross value added and just over 3% of total employment.

Pharmaceutical laboratories are by far the largest segment of the industry. They account for 77% of total turnover in Catalonia and slightly higher percentages of the total number of companies and jobs. Several companies operating in this segment in Catalonia are among the nation's most important in terms of turnover. Some of these firms are locally owned, while others belong to multinational groups.

The fine-chemicals segment accounts for approximately 23% of turnover for the sector as a whole in Catalonia. A significant concentration of Spanish companies in this field is located in Catalonia. As a result, the Catalan fine-chemical industry is responsible for manufacturing close to two thirds of the pharmaceutical raw materials produced by Spain. The average number of employees for these companies is quite high, with just over 50 workers each. This segment is also characterized by considerable stability over time, which can be largely attributed to the fact that the companies in this segment have a strong tendency toward exports. Overall, these companies sell close to 80% of their production abroad, mainly within the European Union – which absorbs 70% of all exports – but also to the United States and Japan. This segment is highly integrated with manufacturers of pharmacological preparations. Its companies have also been able to penetrate international markets to a remarkable degree, causing the production of the fine-chemicals segment to grow slowly but steadily.

95 2. Local industrial production systems in Catalan industry

Local industrial production systems in the chemical industry in Catalonia

This industry has three local industrial production systems in Catalonia, located in the Barcelona metropolitan area and Tarragona and the surrounding area. Together, they include close to 400 industrial establishments, employ more than 25,000 people and generate turnover of around €11 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

MAPA

Pharmaceutical Products Barcelona M.A.

Consumer Chemical Products Barcelona M.A.

Raw Chemicals Baix Camp Tarragonès

Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000 Barcelona M.A.=Barcelona Metropolitan Area. Made up of Vallès Occidental and Oriental, Barcelonès, Baix Llobregat and Maresme. More than 100 More than 3.000

96 Map of the Local Industrial Production System in the Chemical Industry in Catalonia

Maintenance Recyclers, companies treatment of oil and fats

Oil companies Manufacturers Industrial chemistry: and importers of raw chemicals -paint, varnish of crude oil -printing dyes -oils and greases LPS -colourings and pigments, etc.

Suppliers of Agricultural inorganic -chemistry industry raw materials

Pharmaceutical products

Manufacturers of Fine chemistry chemical plants LPS and wharehousing Distribution and logistics GRÀFIC infrastructure Consumer chemical products: cosmetics and perfumes, cleaning products, etc. LPS

Manufacturers of contaniners and packaging

Educational and Industry Technology Training Centres Associations Centres

Institut Químic de Sarrià AEQT, Fedequim Parc Científic de Barcelona ETSEI Barcelona AEPSAT, ADELMA Parc de Recerca Biomèdica ETSEQ (URV) Farmaindustria Fundació Doctor Robert AFAQUIM LGAI, CREVER, ICIQ Col•legi Ofícial de Químics Local industrial de Catalunya LPS production system

97 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Consumer chemical products in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Maresme, Vallès Occi- dental and Vallès Oriental Counties Number of establishments: 205 Number of employees: 8,056 Turnover (estimated): € 2,100 million Exportacios/production (%): 30 Specialization index: 1.38 Weight in its sector in Catalonia (%): 72.44 Weight in all Catalan industry (%): 0.46

Main companies in Name of company City or town the local industrial Henkel Ibérica, SA Sant Adrià de Besòs, Montornès production system del Vallès and Malgrat de Mar Sara Lee D.E. España, SA Santa Perpètua de Mogoda Antonio Puig, SA i Myrurgia, SA Barcelona and Sant Just Desvern Cotyastor, SA Granollers Reckitt Benckiser, SL Granollers Procter & Gamble Mataró, SL Mataró Cosmética Cosbar, SL El Prat de Llobregat Industrias Marca, SA L’Hospitalet de Llobregat Dermofarm, SA Rubí Cognis Iberia, SL Barcelona

Description of the The main activities of this local industrial production system are 1) local industrial the production of soaps, detergents and other cleaning and polis- production system hing products, including surfactants, and 2) the production of perfumes, beauty products and personal-hygiene products. Although they may seem to be two different lines of business, these activities have very similar processes of production and, especially, marketing. Furthermore, some companies work with both kinds of products.

Barcelona has been producing large quantities of soap since the early 19th century. The first Catalan perfume company, Renaud Germain, was created in 1847. The discovery of synthetic surfactants after World War II brought about a revolution in the industry that progressively caused traditional soap to be displaced and spar- ked a wave of domestic capital investments around Barcelona because of the area's industrial tradition and the proximity of a major consumer market. Another influence was the existence of

98 training centres like the Chemistry Institute of Sarrià, where many of the industry's future businesspeople studied. However, as a result of many economic recessions of the 1970s and 1980s, many companies were bought out by foreign multinationals.

In the value chain, the suppliers are raw-chemical manufacturers located either in the Barcelona metropolitan area or the Tarragona local industrial production system. The clients of manufacturers of intermediate products, such as surfactants, are other companies in the local industrial production system. The clients of the consumer- goods manufacturers are businesses everywhere.

In the local industrial production system, there are no major suppliers of machinery and technology, most of which comes from Italy. However, there are some suppliers of boiler works located near the local industrial production system.

The local industrial production system has a moderate level of innovation because, in order to create a new surfactant or active ingredient, companies must comply with numerous health and environmental regulations, which increases costs. New consumer products therefore usually consist of new combinations of existing raw materials.

This local industrial production system is responsible for a significant percentage of Spanish production – up to 85% in the case of surfactants.

Other agents that - Asociación Española de Productores de Sustancias para Aplica- collaborate with ciones Tensioactivas (IND) the local industrial - Federació Empresarial Catalana del Sector Químic (IND) production system http://www.fedequim.es/ - Institut Químic de Sarrià (TRA) http://www.iqs.es/ - Asociación de Empresas de Detergentes y de Productos de Limpieza, Mantenimiento y Afines, with headquartes in Madrid (IND) http://www.adelma.es/ - Escola Tècnica Superior d’Enginyeria Industrial de Barcelona (TRA) http://www.upc.es/ - Col·legi Oficial de Químics de Catalunya (OTH-TRA) http://www.colquim.org/

99 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Raw chemicals in Tarragona and the surrounding area

Location: Baix Camp and Tarragonès Counties Number of establishments: 47 Number of employees: 4.891 Turnover (estimated): € 5.600 million Exports/production (%): 30 Specialization index: 4,26 Weight in its sector in Catalonia (%): 20,8 Weight in all Catalan industry (%): 0,1

Main companies in Name of company City or town the local industrial Basf Española, SA Tarragona production system Repsol Petróleo, SA La Pobla de Mafumet Repsol Química, SA El Morell Bayer Polímeros, SL Tarragona Dow Chemical Ibérica, SL Tarragona/La Pobla de M. Celanese Emulsions Ibérica, SL Tarragona Basell Poliolefinas Ibérica, SA Reus and Tarragona Aiscondel, SA Vila-seca Clariant Ibérica, SA Tarragona Aragonesas Industrias y Energía, SA Vila-seca

Description of the The raw-chemicals local industrial production system in Tarragona local industrial and the surrounding area was created in the 1960s, when three production system chemical companies (Aliada Química, Hidro-Nitro and Inquitasa) set up operations near Tarragona, attracted by the proximity of the port. This was the prelude to a more important industrialization process that began in 1966 when the Asesa asphalt plant was opened. In the mid 1970s, with the investment in the EMP refinery and the two adjacent racks, Tarragona consolidated itself as Spain's leading petrochemical centre, with both public-sector companies and foreign multinationals.

With 60% of its traffic travelling to or from the chemical plants, the Port of Tarragona is the key factor behind the local industrial production system's location. Another factor is the reasonable dis- tance from a significant number of potential clients – the chemical and plastics industries of the Barcelona metropolitan area. The local industrial production system currently consists of two main locations: the 470-hectare northern complex and the 720-hectare southern complex.

100 The main activity of the local industrial production system is the production of organic petrochemical products and plastic raw materials. The value chain therefore begins with the importation of petroleum or naphtha and ends with the sale of chemical products to companies that produce industrial chemicals or consumer chemical products, process plastics, distribute energy products, etc., which are normally located in other parts of Catalonia, Spain or foreign countries. The companies in the local industrial production system are highly interrelated. They carry out different phases of the production process and their proximity to one another gives them a considerable competitive advantage.

This is one of Catalonia's most complete local industrial production systems, due to the fact that there are many instances of collaboration between businesses. Examples include the company Aguas Industriales de Tarragona, SA (created to distribute water to the chemical companies), the waste incineration plant in Constantí, and the pipe racks that link the different companies to each other and with the Port of Tarragona. There are also plans for a new underwater wastewater outlet.

For an idea of the importance of this local industrial production system, it is responsible for close to 50% of Spain's production of raw chemicals. It is responsible for 80% of polymers and 100% of the production of certain products. It also generates considerable employment (close to 4,000 jobs) in these two counties in related activities such as steel construction specialized in the chemical industry and various services including security, cleaning, catering, logistics and transportation.

Other agents that - Centre d’Innovació Tecnològica en Revalorització Energètica i collaborate with Refrigeració (TEC) http://www.crever.urv.es/ the local industrial - Escola Tècnica Superior d’Enginyeria Química de la URV (TRA) production system http://www.urv.net/ - Institut Català d’Investigació Química (TEC) http://www.iciq.es/

101 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Pharmaceutical products in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Maresme, Vallès Occi- dental and Vallès Oriental Counties Number of establishments: 132 Number of employees: 12,523 Turnover (estimated): € 3,300 million Exports/production (%): 25 Specialization index: 1.25 Weight in its sector in Catalonia (%): 64.39 Weight in all Catalan industry (%): 0.29

Main companies in Name of company City or town the local industrial B. Braun Medical, SA Rubí production system Boehringer Ingelheim España, SA Sant Cugat del Vallès and Malgrat de Mar Grup Grífols (Instituto Grífols, SA Parets del Vallès i Lab. Grífols, SA) Alcon Cusi, SA El Masnou Laboratorios del Dr. Esteve, SA Barcelona and Martorelles Industrias Farmacéuticas Almirall Sant Just Desvern, Sant Prodesfarma, SL Andreu de la Barca (and Manlleu) Merck Farma y Química, SA Mollet del Vallès Laboratorios Menarini, SA Badalona Laboratorios Lesvi, SL Sant Joan Despí Beiersdorf, SA Argentona

Description of the This local industrial production system is involved in two major local industrial activities that are highly vertically interrelated. The first activity is production system fine chemicals, or the production of raw materials and active ingredients. The second activity is the production of human and veterinary drugs and other pharmaceutical products.

This local industrial production system dates back to the 19th century and early 20th century, when small, family-run drug, phar- macy and chemical businesses began the industrial production of drugs. However, the true expansion did not begin until the 1950s.

Today, the pharmaceuticals local industrial production system includes numerous foreign multinationals (mostly from central Europe), which are responsible for close to half of production overall, but national groups are also among the main companies.

102 This industry is geographically concentrated in the Barcelona metropolitan area, including Maresme County. It is also relatively concentrated in Gironès and Selva Counties, but in those areas the industry is not structured enough to be called a local industrial production system.

The metropolitan area is also home to a significant concentration of related industries including health services (such as general hos- pitals and internationally renowned specialized clinics), research centres and university departments.

For an idea of the importance of this local industrial production system, it concentrates two thirds of employment and production for Catalonia's pharmaceuticals industry, which in turn is responsible for 56% Spain's total production.

Other agents that - LGAI technological center (TEC) http://www.lgai.es collaborate with - Farmaindustria, with headquarters in Madrid (IND) the local industrial http://www.farmaindustria.es production system - Parc Científic de Barcelona (TEC - TRA - OTH) http://www.pcb.ub.es - Fundació Doctor Robert (TRA) http://www.fdrobert.org - Parc de Recerca Biomèdica (TEC - TRA) http://www.prbb.org - Asociación Española de Fabricantes de Química Fina (IND) http://www.afaquim.org

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2.2.6 Local industrial production systems in the plastic industry

Basic characteristics of the plastics industry in Catalonia

A variety of carbon derivatives are used as raw materials in the production of plastics. These materials are obtained by cracking petroleum – a process that involves breaking down the macromolecules of hydrocarbons – which yields various different by-products. The petroleum-refining process yields two major groups of derivatives. The first group consists of energy products (gases, benzine, diesel fuel, fuel oil, kerosene, etc.). The second group consists of inputs for the chemical, pharmaceutical, textile and plastics industries (naphtha, heavy fuel oil, asphalt, etc.). The two main derivatives used for manufacturing plastic raw materials are ethylene and propylene, both obtained from naphtha. By applying different treatments and incorporating different additives to these two derivatives, a remarkably large number of polymers can be produced (close to 3,000). Different procedures – though not nearly as many – are later used to process these plastic materials. Just 4% to 5% of the total volume of refined petroleum is used for producing plastics; approximately 3% is used for manufacturing other industrial products; 7% is used to make solvents, paints, tar, etc.; and close to 85% is used as fuel or other energy purposes (transportation, heating and energy).

The plastics industry is usually divided into three major blocks of activity. The first block is the production of plastic raw materials, mostly obtained by cracking petroleum. The second block is the plastic-processing sector, which turns the plastic raw materials into consumer goods or, more often, into items designed to be used in final products (industrial parts, semi-finished products, components, packaging, bags, furniture, construction materials, etc.). Although plastic processing requires close to twenty basic processes, a very large number of applications and products can be obtained by processing plastic raw materials. Finally, the recycling sector focuses on recovering plastic waste produced by industry and consumers for later reuse in production processes to make new plastic items.

These sectors have quite distinct structural characteristics, as they have very different technological requirements and capital intensities. In the raw-materials-production industry, for example, such a large investment is required and economies of scale are so important that only a small number of companies work in this field and the supply is highly concentrated. Plastic raw materials are included in the commodities market, i.e. products that are not differentiated from each other. A very small number of multinational companies operate on this market, where very important trade flows are registered worldwide.

In contrast, the companies that process plastic raw materials tend to be small or medium- sized, because this type of process does not require such a large investment or present such significant technological barriers. In fact, in Spain this sector includes more than 4,100 companies. However, there are some cases of vertical integration. These firms tend to be owned by large industrial groups, especially in segments that produce components and parts for other processing segments, such as the automotive or household-appliance industry. The recycling sector is also characterized by atomization and a relatively small scale of operations. In this industry, the most important determining factor is not the investment required but the availability of large spaces.

104 Four major groups of plastic raw materials are used in the production and processing processes. In general, each of these groups is used for quite different purposes, although alternative materials may be used for certain purposes. The first group – which is by far the most important – is consumer thermoplastics. These materials are used for a wide variety of consumer products: packaging of all kinds (such as bottles, jars, drums, etc.), dishes and glasses, mesh and netting, sacks and bags, boxes, buckets, tanks, trays, films, cables, tubes, profiles, protective materials, etc. This group includes high- and low-density polyethylene, polypropylene, polyvinyl chloride (PVC) and polystyrene. Consumer thermoplastics account for close to 60% of all Spanish plastic production in tonnes. This amounts to approximately 53% in monetary terms, since the value per unit of volume produced is comparatively lower for this group than for the others. Spain has a trade deficit for these products, since it imports significantly more than it exports in terms of both volume and value.

The second group is thermosetting plastics, which are mostly used in different areas of industry and construction – for example, in insulation, panelling, decorations, footwear, paints and varnishes, plywood, furniture and boards, components of automobiles and household appliances, etc. This group of plastics mainly includes different types of resins (phenolic, alkyd, amino and epoxy), polyurethanes and unsaturated polyesters. This group is Spain's second most important in terms of volume of plastic production, with a percentage of approximately 19%. In terms of value, the group's percentage is slightly lower at 17%. Spain has a trade surplus for thermosetting plastics, since the net volume of exports is greater than imports. In terms of value, however, the balance of trade is only moderately positive.

The third group of raw materials is engineering plastics: polyamides, polycarbonates, polyethylene terephthalate (PET), cellulose acetates, styrene copolymers (ABS and SAN), ace- tal resins and other, far less common materials. These materials are mostly used for manufacturing parts and components for the automotive industry, aviation, household appliances, electronics, machinery, compact discs and DVDs. However, by far the most important product in this group, polyethylene terephthalate, is used to manufacture bottles for drinks (mostly water and soft drinks) and other liquids for human consumption (oil and vinegar, for example). Engineering plastics account for close to 16% of Spanish plastic production overall in terms of volume and 22% in monetary terms, since the unit value of these products is relatively high. Spain's balance of trade for this group of products is quite favourable in terms of monetary value and even more so if expressed in tonnes.

The final group consists of assorted plastics, such as vinyl polyacetate, polymethyl met- hacrylate, polyvinyl alcohol, etc., which are used for a wide range of industrial applications (adhesives, paints, textile finishes, furniture, signs, decorations, lighting, etc.). This group is responsible for approximately 5% of Spanish plastic production overall in terms of volume and close to 8% in terms of value. Spain has a trade deficit for these products in terms of value. Expressed in tonnes, however, the imports and exports of these materials are quite similar.

Many production activities use plastics, but the three largest markets – packaging, construction and the automotive industry – absorb over two thirds of all plastic consumed by weight. By far the largest segment is packaging, which accounts for 45% of plastics consumed overall. These products are used for a wide variety of purposes in different industries, mainly food and drinks, toiletries and consumer chemical products, and transpor-

105 2. Local industrial production systems in Catalan industry

tation and distribution. Other important purposes include packaging for electronics and household appliances, the production of toys and household items. Specific companies are also major consumers of plastic parts, cables and components. Plastics account for nearly 30% of all money spent on the different types of packaging used by production activities in general (industries of all sorts, agriculture, fishing, transportation, etc.), followed distantly by corrugated cardboard, paper and cardboard, glass, metal and other materials (wood, labels, etc.).

After the packaging market, the construction industry is a distant second in terms of plastic use. This industry consumes 14% of the plastics industry's production by volume, mostly in the form of pipes and tubes, flooring, window profiles, shutters, tanks, water- proofing, panelling and insulation. Obviously the construction boom of recent years has had a positive effect on the companies that manufacture the plastic items used in the construction industry. The boom has also has caused this market's share of the overall demand for plastics to increase.

The automotive industry is another important client of the plastics industry, not only because of its production volume (more than 9% overall in tonnes), but also because it consumes parts and components that are comparatively more expensive and therefore has a high relative weight in the total turnover of the plastics industry. The presence of plastics in automobiles has increased markedly over time. This trend is expected to continue in the future because plastics provide advantages in a number of areas, including cost, weight reduction, flexibility and safety, and also because plastics are continuously improving in all of these areas. Today, plastics account for an estimated 12% of the weight of a mid-range car. In the medium term, this figure is expected to increase to between 20% and 25%. This market therefore has lots of potential for growth. However, the trend in Europe is for assembly companies to relocate to eastern European countries. This has already begun to cause some problems for Catalan suppliers in the last few years.

The fourth- and fifth-largest plastic markets are the furniture and decoration industry and the agricultural industry, which each consume approximately 6.5% of overall production by volume. The furniture and decoration industry uses plastics in the production of chipboard, plywood, upholstery, mattresses, foams, patio furniture, indoor furniture, etc. The agriculture industry uses large amounts of plastics in the form of films, pipes, tubes, hoses, mesh, netting, flower pots, silos, tanks, greenhouses, etc. The agricultural industry also consumes a considerable amount of plastic packaging.

The electronics industry also consumes a significant percentage of total production – between 4% and 5%. Manufacturers of paint and household appliances each consume close to 3% of total production. Paint manufacturers consume slightly more, but household-appliance manufacturers are also major consumers of plastic packaging. Other activities that use plastics, although to a lesser extent, are manufacturers of toys, sporting equipment, household items, industrial parts (for different sectors), footwear, stationery and medical instruments.

By type of material, consumer thermoplastics clearly make up the largest group, with a production volume of over 2.2 million tonnes and consumption of approximately 3 million tonnes nationwide, i.e. close to 70% of all plastics consumed. High-density polyethylene is the most-consumed type of thermoplastic. Its consumption figure is 700,000 tonnes or 24% of all thermoplastics. Polypropylene, the second most important thermo-

106 plastic, accounts for 23.5% of thermoplastic consumption overall. Polyvinyl chloride (PVC) is in third place, with a demand of close to 550,000 tonnes or close to 19% of all thermoplastics. However, the relative weight of this plastic is declining within this segment. The consumption of low-density polyethylene is more than 530,000 tonnes – nearly 18.5% of all thermoplastics. These four types of plastic account for 85% of thermoplastic consumption.

In terms of production volume, polypropylene is way ahead of all other materials with a total volume of more than 680,000 tonnes, half of which is exported. PVC has a production figure of close to 400,000 tonnes and low-density polyethylene has close to the same figure. High-density polyethylene – the leader in terms of consumption – also has a fairly high production volume (around 350,000 tonnes), but this is still not nearly enough to cover the internal demand, which is close to twice as much. In fact, with the exception of polypropylene, which has similar volumes of imports and exports, all thermoplastics have internal consumption figures that clearly exceed production volume and a trade deficit.

All other groups of plastics have considerably lower production and consumption volumes than the consumer thermoplastics segment. The nationwide consumption figure for thermosetting plastics is close to 600,000 tonnes (practically one fifth of the demand for consumer thermoplastics) and the production figure is approximately 700,000 tonnes. Within this group, amino resins – which are used mostly in the production of chipboard and plywood – have by far the greatest relative weight, with 50% of consumption and 46% of production. Unsaturated polyesters are in second place with a considerably lower share (approximately 13% of production and 18% of demand). Polyurethanes also have a relatively important share of production (more than 20%), although their consumption levels are quite a bit lower because a large part of the production volume is sold on foreign markets.

The production volume for engineering plastics in Spain is approximately 600,000 tonnes. Consumption levels are slightly lower at 500,000 tonnes. The leading engineering plastic in terms of both production and demand is by far polyethylene terephthalate (PET), which accounts for close to 60% of production for this segment and close to 63% of consumption. PET is mainly used for manufacturing bottles and other kinds of packaging – especially for cosmetics and pharmaceuticals, which account for 90% of consumption. This plastic is also used for manufacturing photographic materials, films for reprography and drawing, paints and adhesives. Polyethylene terephthalate has almost completely displaced PVC in the production of bottles for water, soft drinks and other drinks and liquids for human consumption, but PVC maintains a significant market share in other uses, such as packaging for drugs and cleaning products. The use of PVC is also widely used in other industries, such as construction and agriculture, and to a lesser extent in processing activities like the automotive industry, electricity and electronics, furniture, toys, sporting equipment, etc. For this reason, PVC is solidly positioned in a wide range of markets and maintains substantial prospects for growth.

Of the remaining engineering plastics, styrene copolymers (ABS and SAN) and polycarbonates also have a significant relative weight. Styrene copolymers are mainly used in the automotive industry and in the production of household appliances, electronics and toys. These materials are responsible for more than 20% of production and close to 13% of consumption of engineering plastics. Polycarbonates are used especially in the production of CDs and DVDs and also in the automotive, household-appliance, electricity, ligh-

107 2. Local industrial production systems in Catalan industry

ting, electronics and toy industries. They account for 18% of production and 5% of demand for all engineering plastics.

The assorted-plastics group accounts for approximately 5% of plastic production overall and just over 4% of consumption in terms of volume. Within this group, the most important product is vinyl polyacetate, which is mostly used in the production of adhesives, paints and textile finishes. This material accounts for 42% of the production volume and a slightly higher percentage of consumption for this type of plastic.

The Spanish plastics industry is largely concentrated in Catalonia, which is the leading autonomous community in this industry, well ahead of second-place Valencia and third- place Madrid. Catalan companies are responsible for approximately 40% of total turnover nationwide, which comes to 16 billion for the production of plastic raw materials and plastics processing (not including the recycling industry). The production of plastic raw materials accounts for 20% of this figure and plastics processing accounts for 80%. Nearly 32% of Spanish plastics-processing companies are located in Catalonia, while 21% are in Valencia and close to 9% are in Madrid. In certain segments of the plastics industry, the percentage of the industry located in Catalonia is even higher, due to the major presence of companies that manufacture plastic raw materials in the petrochemical complex in Tarragona.

The processing and recycling segments are dominated by small and medium-sized companies, which makes for a rather atomized market. The total number of plastics-processing companies in Catalonia is over 1,300. The total for Spain is 4,100, which means approximately 32% of these companies are concentrated in Catalonia. Together, Catalo- nia's plastics-processing companies employ close to 31,000 people, or 34% of the nationwide total for the industry. Catalonia is also home to around 40 plastic-recycling companies, which are responsible for over 35% of the nationwide production volume.

The processing and recycling segments of the plastics industry are characterized by substantial corporate mobility, influenced by the ups and downs of the economy. During economic upswings the pressure of the demand causes a major increase in subcontracting and, as a result, small units of activity begin to crop up. These units often have trouble staying in business when the economy later takes a downturn. Because many of the plastics-processing companies produce materials for major firms in different industries – automotive, household appliances, electronics, construction, etc. – they face a rather high level of demand regarding quality and prices, which encourages dynamics of concentration and specialization.

The plastics-processing segment generally faces a complicated situation because of a combination of factors that causes serious difficulties for companies. First, there is upward pressure from foreign competition in Asia and eastern Europe. Second, there is a strong link between the vast majority of the companies in this segment and the major industrial corporations that manufacture end products. This puts the companies in a position of dependence, which makes it harder for them to diversify their activities to reduce the effects of major changes in demand. Because of this situation, the companies' strategies must necessarily involve focusing on products with greater added value and increasing efforts to introduce improvements in technology, design, specialization and product differentiation.

108 The plastic-recycling segment is strongly influenced by two factors: first, the price of the raw materials, which significantly influences the potential profitability of recycling plastics, and second, the degree to which the population uses mechanisms for the selective collection of domestic waste. Furthermore, the subsequent process of separating and selecting the different plastic waste elements is complex and laborious. It therefore requires a rather large number of workers, which inevitably makes a significant impact on costs. Large spaces are also needed to store materials and carry out the selection process. Therefore, the facilities must be established in areas where the price of land is not too high, which often leads to high transportation costs.

The price of energy is another factor that has a considerable influence on the competitiveness of the companies in this segment, since energy accounts for close to 30% of overall costs. This segment is also influenced by the fact that plastics obtained through the recycling process are only used for certain purposes, such as bags, mesh, pipe, etc., because they do not meet the high quality requirements of other potential clients, such as suppliers of automotive parts and components, electronics and industrial machinery.

109 2. Local industrial production systems in Catalan industry

Local industrial production systems in the plastics industry in Catalonia

This industry has one local industrial production system in Catalonia. It includes over 800 industrial establishments, employs more than 28,000 people and generates turnover of around € 3.8 billion.

The main data on this local industrial production system are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa MAPA Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental

Garrigues Conca Barcelon de Barberà ès Alt Pened ès Baix Llobregat Alt Camp Baix Penedès Garraf Priorat

Tarragonès Ribera Baix Camp d'Ebre Terra Alta Plastic products Barcelona M.A.

Baix Ebre

Montsià

Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000 Barcelona M.A.=Barcelona Metropolitan Area. Made up of Vallès Occidental and Oriental, Barcelonès and Baix Llobregat. More than 100 More than 3.000

110 Map of the Local Industrial Production Systems in the Plastics Industry in Catalonia

Educational and Industry Training Centres Associations

ETSEIT-UPC AIPC CEP CCP

Automotive

Consumer electronics

Household products Manufacturers LPS of plastic raw Manufacturers materials User Furniture GRAFIC of plastic products industries (injectors and Toys transformers) Gardening

Containers and packaging

Other

Machinery Mould and die Engineering firms manufacturers: makers and design studios Technology Centres -Presses -Injection machines -Blowing machines -etc. ASCAMM LGAI

Local industrial LPS production system

111 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Plastic products in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 803 Number of employees: 28,182 Turnover (estimated): € 3,800 million Exports/production (%): 30 Specialization index: 1.51 Weight in its sector in Catalonia (%): 70.32 Weight in all Catalan industry (%): 1.78

Main companies in Name of company City or town the local industrial Peguform Ibérica, SL Polinyà production system Neyr Plastiques Espagne, SA Sant Boi de Llobregat (and la Pobla de Claramunt) Saint-Gobain Calmar, SA Barcelona Industrias Metálicas Castelló, SA Barcelona Decoración y Termograbado, SL Castellbisbal Industrias Plásticas Trilla, SA Ripollet Aismalibar, SA Montcada i Reixac Complementos Sanitarios, SA Gavà Alkor Draka Ibérica, SA Sant Celoni Nobel Plastiques Ibérica, SA Sant Joan Despí

Description of the This local industrial production system's main line of business is local industrial manufacturing plastic products. It has a large, cross-cutting mar- production system ket and supports other local industrial production systems in Cata- lonia, mainly in the form of packaging – which accounts for close to half of the local industrial production system's production – but also through the production of elements used in construction, the automotive industry, furniture, agriculture, electronics and other fields.

This local industrial production system includes a handful of foreign multinationals and numerous small and medium-sized companies, most of which work as subcontractors (making products to order in accordance with the technical and production- related specifications of their clients). Only a small percentage of the small and medium-sized companies manufacture products of their own. No distinction can be made between companies based on the types of plastic they work with because the processes and

112 technology are identical in most cases. Nor can they be classified by type of client, since they tend to work with many different industries.

The plastics-processing industry originated in Catalonia in the 1940s and 1950s, when a group of manufacturers of metal products applied their knowledge to other materials, including thermosetting plastics, which cannot be deformed by heat and are worked much like metal. Since then, plastics have gradually repla- ced all sorts of industrial materials and this local industrial production system has grown significantly as a result of the proximity of numerous client industries. Today, Catalonia is home to 32% of the companies that manufacture processed-plastic products nationwide.

The suppliers of plastic raw materials are located outside of the local industrial production system, mostly in the Tarragona petrochemical complex. Most of the suppliers of plastic-processing machinery are also external – most are located in Italy or Germany. However, two closely linked elements located nearby are the mould and die industry of the Barcelona metropolitan area and the ASCAMM technology centre.

Other agents that - LGAI technological center (TEC) http://www.lgai.es collaborate with - Centre Tecnològic d’ASCAMM (TEC) the local industrial http://www.ascamm.com/ct/cat/ct-home.asp production system - Escola Tècnica Superior d’Enginyers Industrials de Terrassa (TRA) http://etseit-ct.upc.es - Centro Español de Plásticos (OTH – TRA) http://www.cep-inform.es - Centre Català del Plàstic (OTH – TRA) http://www.upc.edu/ccp - Asociación de Industriales de Plásticos de Cataluña (IND) http://www.aipcnet.com

113 2. Local industrial production systems in Catalan industry

2.2.7 Local industrial production systems in the metallurgy and metal-products industry

Basic characteristics of the metallurgy and metal-products in Catalonia

The metallurgy and metal-products industry can be divided into two sectors: 1) the production and first-stage processing of metals and 2) the production of metal products.

The production and first-stage-processing sector is made up of two major blocks: ferrous metallurgy and non-ferrous metallurgy. The ferrous and steel metallurgy block includes the production of iron and steel and the first-stage processing of these materials: smelting, forging and sintering. Smelting – obtaining metal pieces by melting raw material and using moulds – and forging – using deformation techniques to manufacture products from slabs or sheets produced by steel plants – are both mature activities that use traditional technology. Despite this, process innovations have always been significant. These activities are usually carried out by subcontractors that make products to order in accordance with the technical and production-related specifications of their clients. The items they produce are intermediate products, which are used as components by a wide variety of client industries, including the automotive and machinery-manufacturing industries in particular. The subcontractors depend greatly on these client industries. Sin- tering – using metal powders and moulds to manufacture products in a single phase with no further manipulation – involves rather advanced process technology, which requires continuous investments. This activity presents serious competition for traditional metal- processing techniques such as smelting and forging.

Non-ferrous metallurgy is the second major block of the production and first-stage-processing sector. This segment includes the processing of aluminium, copper and other non-ferrous metals (zinc, lead, etc.).

The production and first-stage processing of metals has a long tradition in Catalonia. This sector accounts for 1.5% of production and 2.3% of employment for all industry in Catalonia. While the Basque Country is the leading Spanish region in this activity, Cata- lonia is responsible for approximately 14% of production and 13% of employment nationwide.

The segments that make up the production and first-stage processing of iron and steel – also known as ferrous metallurgy – account for 72.2% of the sector, with steel plants and smelting activities playing a major role. The iron and steel production segment – which produces cast-iron ingots from minerals using blast furnaces – has no facilities in Catalonia due to the lack of raw materials. Steel plants – which make steel from cast iron or scrap iron using electric ovens – have traditionally been quite important in Catalonia. In the 1980s, the structure of the steel plants was overhauled under the Common Steel Restructuring Plan. This process continued until the early 1990s. Today, the only company operating in this segment in Catalonia is Compañía Española de Laminación (CELSA), which has two production facilities (Castellbisbal and Sant Andreu de la Barca) and produces steel products for construction (corrugated bars, plates, profiles, wire rods, etc.). In the smelting segment, Catalonia is responsible for 19% of employment and 23% of production nationwide. The segment consists of around thirty companies, the most important being those which work in iron smelting. Catalonia is not very significant in the forging segment. Over half of Spain's sintering production takes place in Catalonia, which is home to the segment's two largest companies.

114 Non-ferrous metallurgy accounts for nearly 28% of total production for the Catalan metal production and first-stage-processing sector. Aluminium and aluminium products make up the largest segment within this sector, followed by the copper segment. All other segments have a very small specific weight in Catalonia. The business community is basically made up of small and medium-sized companies, which mostly carry out processing activities, and companies that manufacture intermediate and finished products using techniques such as smelting, injection and extrusion.

The metal-products sector can be divided into two segments. The first is the production of intermediate metal products. This segment is made up of companies that are specialized in specific techniques and processes that can be applied to the production of a wide range of products. These techniques mostly involve metal deformation, which is the transformation of metals through processes that do not create metal filings (stamping, extrusion, wiredrawing, pressing, etc.); machining, which is the transformation of metals through processes that do create metal filings (milling, turning, grinding, surfacing, etc.); and finishes (thermal and surface treatments). The goods produced by this segment are mostly sold to industry to be used as components in more complex assemblies. They are manufactured by subcontractors that make products to order in accordance with the technical and production-related specifications of their clients. As a result, these companies become very dependent on the demand. This segment's behaviour is heavily influenced by the cost of the raw materials, which has a significant impact on certain activities and forces manufacturers to continuously improve in terms of productivity and added value.

The second segment is the production of metal final products, which includes a wide variety of goods that fall into two main categories. The first category includes products for different industries, including the construction industry (industrial tools, metal construction materials, metal packaging and closing mechanisms, etc.). The second category includes consumer products (household items, office supplies, safety mechanisms, hardware, DIY, etc.).

In both segments of the metal-products sector, business units are constantly appearing and disappearing as a result of several factors. First, there are many business units operating in this segment, many of which are small and have a limited structure. The average metal-products manufacturer has fewer than 10 employees. There are also very few entry and exit barriers in certain segments and product types. Furthermore, the manufacturers in this segment depend heavily on certain clients, which tend to be small in number, belong to very specific industries and have very aggressive purchasing policies. Finally, the number of international competitors in this segment has increased. Most new competitors come from emerging countries with low production costs. Because of all these factors, the companies in this segment have had to make a continuous effort to improve their market position, which is a more difficult task for small companies. In fact, these companies have focused their activity on manufacturing products that are higher- quality, more innovative and have a greater added value; increasing their flexibility; improving service; expanding their range of products; getting their products approved and obtaining certification for the ISO 9000 quality and environmental standards; reducing delivery times; and abandoning market segments and distribution channels with low unit margins and added value.

The production of metal products is very important in Catalonia. This sector is responsible for 8% of added value and more than 11% of employment for all industry. Howe-

115 2. Local industrial production systems in Catalan industry

ver, these percentages have suffered a slight decline in recent years as a result of the greater relative growth of other industrial activities. With over a quarter of Spain's activity overall, Catalonia is also the leading region in the production of metal products. The creation and subsequent consolidation of major industrial corporations in the Basque Country and industrial complexes recently created in other areas of Spain have had a negative impact on Catalonia's share of this activity as well.

Despite these trends, the importance of the production of metal products in Catalonia is clear in qualitative terms. This segment is very strategic within the general metallurgical processing sector (the automotive and machinery industries, etc.) because it supplies large quantities of a broad range of intermediate and end products while at the same time providing a wide variety of consumer products (household items, office supplies, etc.).

Most metal products can be classified as mature. In fact, this industry does not continually launch new products. Rather, it does so occasionally and specifically. Only a third of the industry's companies carry out research and development activities. R&D expenses are the equivalent of just 0.4% of total turnover, a much lower percentage than in other industries. The industry also faces major competition from sectors that manufacture products made from materials that can act as substitutes for metal, such as plastics and ceramics. These products are taking market share away from the metal-products segment. This process has been intensified by the fact that the traditional client industries – such as the automotive and household-equipment industries – are making efforts to replace the metal products they use in their end products with products made from other materials. As a result, companies are being forced to focus on introducing product and process innovations (technology, design, weight, size, etc.) and improvements in productivity that reduce costs and sales prices and/or pursuing other competitive advantages.

As mentioned above, a growing number of companies have strategically reoriented their business toward a more innovation-based approach. For example, some traditional metalworking shops have begun to focus on precision machining and custom engineering for non-traditional industries, which has made them highly innovative.

Exchanges with foreign countries have traditionally been insignificant in many of the segments that make up this sector, so the companies sell most of their production on the domestic market. This is due to many factors, including three major ones. First, local markets in different countries have special attitudes towards certain kinds of metal products (office supplies, household items, etc.), which in some cases forces companies to manufacture products with specific characteristics especially for each market. This reduces the benefits of economies of scale, among other things. Second, transportation costs have a strong impact on the final price of certain products, causing products sold far away to become considerably more expensive. This is especially true for products that are large and have little added value (metal construction materials, packaging, metal closing mechanisms, etc.). Third, in recent years the industry has become atomized and dominated by small businesses that lack the resources (economic, human, etc.) that would allow them to position themselves in other countries. Nevertheless, companies in this sector have recently intensified and consolidated their efforts at internationalization, as eviden- ced by the increase in exports and the implementation of several sales- and production- oriented projects aimed at penetrating other markets.

Other less-quantifiable factors that also have an impact on the survival of certain companies and the creation of new ones include the lack of new generations of trained

116 industry specialists and the progressive loss of the "metalworking culture" in the new generations. The small number of vocational-training students enrolled in metalworking specialities compared to other programmes is evidence of this trend. Meanwhile, the shortage of skilled labour has brought wages up, which has increased the difference in costs between local companies and companies in less developed countries.

As for metal recycling (steel and aluminium containers), there are four regular channels for recovery: composting, incineration, selective collection and complementary sources. The mass treatment of waste at composting plants remains the most effective system for recovering steel containers in Spain, accounting for 40% overall. Incineration plants provide 16% of recovered material, selective collection provides 18% and complementary sources and other systems provide the remaining 26%. In Catalonia, recovery of municipal waste at incineration plants is especially important and is responsible for 57% of the steel containers recycled using this method nationwide.

However, neither Spain nor Catalonia has reached the levels of aluminium recovery that other European countries have attained, since Spanish society's awareness of recycling is less mature and the management capacity still faces limitations. In Spain, there are five channels for aluminium recovery. First, there are traditional recovery methods: containers are separated and treated and later recycled at smelting plants, where they are once again cast into ingots. Second, there are compost plants, which separate the material from rubbish and municipal waste. The third method is complementary collection – by companies, associations, schools, etc. – as a primary or additional resource for maintai- ning their activities. Fourth, there is the massive non-selective collection of waste carried out by cities. Finally, there are the yellow recycling bins found on many city streets. Con- tainers deposited in these bins are sent to selection plants. Traditional recovery methods collect the most aluminium containers – over 4,000 tonnes a year – although they have recently been losing relative importance to the other channels.

117 2. Local industrial production systems in Catalan industry

Local industrial production systems in the metallurgy and metal-products industry in Catalonia

This industry has one local industrial production system in Catalonia. It includes close to 2,700 industrial establishments, employs more than 32,000 people and generates turnover of around €4.25 billion.

The main data on this local industrial production system are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà MAPA Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental

Garrigues Conca Barcelon de Barberà ès Alt Pened ès Baix Llobregat Alt Camp Baix Penedès Metallurgy and Metal Garraf Priorat Products

Tarragonès Barcelona M.A. Ribera Baix Camp d'Ebre Bages Terra Alta Maresme Osona

Baix Ebre

Montsià

Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000 Barcelona M.A.=Barcelona Metropolitan Area. Made up of Vallès Occidental and Oriental, Barcelonès and Baix Llobregat. More than 100 More than 3.000

118 Map of the Local Industrial Production System in the Metallurgy and Metal-Products Industry in Catalonia

Educational and Industry Training Centres Associations

UPC, Vocational UPM, CEAM, ADECAT, Training Centres AIAS, ASEFI, ASEFEC, Gremi Recuperació End consumer

Production and Manufacturers LPS first-stage metal of metal processing products (iron and steel, through metal forging, smelting, deformationGR orÀFIC Transport materials sintering) machining Machinery

User Construction Industries Household products Manufacturers of machine tools and Companies that other machines for provide surface Electronics working metal: and technical -lathes treatments Industry in general -mills -moulds and dies -etc.

Engineering firms Recyclers Technology Centres

ASCAMM LGAI Centre Tecnològic de Manresa Etc.

Local industrial LPS production system

119 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Metal products in the Barcelona metropolitan area and central Catalonia

Location: Bages, Baix Llobregat, Barcelonès, Maresme, Osona, Vallès Occidental and Vallès Oriental Counties Number of establishments: 2,680 (*) Number of employees: 39,018 Turnover (estimated): € 4.25 million Exports/production (%): 20 Specialization index: 1.25 Weight in its sector in Catalonia (%): 72.76 Weight in all Catalan Industry (%): 5.93

(*) In the Barcelona metropolitan area, there are also 78 establishments, with a total of 878 employees, which recycle scrap iron and other metal waste. These establishments have not been taken into account in calculating the size of this local industrial production system, but they do complement it by reintegrating waste into the production process.

Main companies in Name of company City or town the local industrial ESSA Palau, SA Palau-solità i P., Les Franqueses production system del Vallès and Polinyà Estampaciones Martínez, SA Barcelona and St. Joan Despí Novel Lahnwerk Española, SA Abrera Sintermetal, SA Ripollet Aleaciones de Metales Sinterizados, SA Sant Vicenç dels Horts Vanema, SA Martorell Gonvarri Industrial, SA Castellbisbal Llamas, SL Badalona Ruffini, SA Rubí Axilone Metal, SA Sant Pere de Torelló

Description of the This local industrial production system's main line of business is local industrial manufacturing metal products (forging, stamping, mechanical engi- production system neering, metal closing mechanisms, tanks, tools and other metal products) and metallurgy (especially metal smelting). This local industrial production system is very large, not only in terms of the size of its market but also its geographical extension. In addition to the Barce- lona metropolitan area, it also includes Bages and Osona Counties. All counties included in this local industrial production system are home to companies involved in many different activities. It is therefore impossible to say certain regions are more specialized than others (for example, smelting in county X and stamping in county Y or the automotive industry in county A and construction in county B). However, there are a few notable concentrations, such as the production of bolts, screws, chains and springs in Vallès Occidental

120 County; the production of cisterns, large tanks and metal containers in Vallès Occidental County; the production of mechanical tools in Baix Llobregat County; and the production of light metal packaging in Barcelonès County.

This cross-cutting local industrial production system supports other Catalan industries (automotive, electronics, machinery, etc.). The local industrial production system is made up of companies specialized in different metalworking techniques and whose suppliers/clients are other companies in the local industrial production system that carry out another phase of the production process. Therefore, the companies in the local industrial production system are highly interrelated and form a complex network of subcontracting relationships that benefit from the area's skilled labour and metal-processing tradition.

Most of the companies in the local industrial production system work as subcontractors (making products to order in accordance with the technical and production-related specifications of their clients) and only a small percentage manufacture consumer products (household items, hardware, etc.) or products for industry in general (tools, tanks, containers, etc.). Therefore, this could be considered a support local industrial production system for other local industrial production systems in Catalonia.

This local industrial production system's business community is mainly made up of small and medium-sized companies. However, certain large corporations linked to the automotive industry are a significant exception and are among the local industrial production system's most important companies.

The metalworking tradition in Catalonia dates back to the Middle Ages. During the industrialization period, attempts to create a Cata- lan iron and steel industry failed because not enough high-quality iron and coal was available. In contrast, metallurgy, which required a smaller investment, was more successful. Foundries began to appear in Catalonia in 1830. Later came the industrialization of locksmiths and the metal-products industry was born. By the early 20th century, this industry was located close to the main centres of the cotton and wool industries (Vallès, Bages and Barcelonès Counties). Its main activities at that time were metal-based repairs and construction.

Other agents that - Unió Patronal Metal·lúrgica http://www.upm.org (IND – TRA) collaborate with - Centre d’Estudis i Assessorament Metal·lúrgic the local industrial http://www.ceam-metal.es (TRA – OTH) production system - Associació de Decolletadors i Mecanitzadors de Catalunya http://www.adecat.org (IND) - Asociación de Industrias de Acabados de Superficies http://www.aias.es (IND) - Asociación Española de Fabricantes de Elementos de Fijación Metálicos http://www.asefi.org (IND)

121 2. Local industrial production systems in Catalan industry

- Asociación de Fabricantes Exportadores de Artículos de Ferretería http://www.asefec.com (IND) - Centre Tecnològic d’ASCAMM http://www.ascamm.com/ct/cat/ct-home.asp (TEC) - Universitat Politècnica de Catalunya http://www.upc.es (TRA) - Centre Tecnològic de Manresa http://www.ctm.upc.es (TEC) - Gremi de Recuperació de Catalunya http://www.gremirecuperacio.org (IND)

122 2.2.8 Local industrial producion systems in the machinery and mechanical-equipment industry

Basic characteristics of the machinery and mechanical equipment industry in Catalonia

The production of machinery and mechanical equipment has two unique characteristics. First, this industry has a close and direct relationship with industrial investment and, to a lesser extent, with the construction industry. Because of these relationships, this industry's performance depends greatly on the economic situation and cyclical fluctuations influence it with particular intensity. Second, most of the goods produced in this industry in Cata- lonia are made according to the specifications of the end user. As a result, most products are manufactured in small batches. Nevertheless, there are also certain specialities that involve mass production. Sales transactions and production processes normally take a long time to materialize, especially for large, complex products. As a result, financing – both for sales transactions and production – is very important for the companies in this industry, especially the smaller ones. In recent years, the industry has also intensified its use of subcontracting production-related functions to third-party companies – generally machine shops, especially in certain operations, such as those involving smelting and the machining of parts – in order to reduce risks and increase flexibility. Manufacturers have specialized in such tasks as design, final assembly, product marketing and after-sales service (training, technical support, etc.). This has caused direct employment figures for the industry to decline but at the same time has created jobs indirectly.

The machinery and mechanical equipment industry has a strong presence and tradition in Catalonia. This industry is responsible for 5.8% of production and 6.9% of value added at factor cost for all industry in the region. Catalonia concentrates nearly 30% of this activity nationwide. The region's manufacturers are leaders in their respective light-machinery segments at the national level. Catalan companies are operating in practically all existing specialities of the light-machinery sector because of the unique characteristics of the local business community (it is a diversified processing industry). The region is especially involved in the following segments: textile and clothing machinery, packaging machinery, machinery for the food industry and plastic- and rubber-processing machinery. Other significant specialities include woodworking machinery, graphic-arts machinery, agricultural machinery and machine-tools for deformation. Finally, in certain segments, such as industrial laundry machinery, Catalonia is responsible for the majority of Spanish production despite the fact that it has only a small number of manufacturers.

The business community in this industry can be divided into three major groups based on export-related behaviour. The first group includes companies with a long tradition of operating on foreign markets, some of which are world leaders in their segments. These companies have sales networks in major countries and are actively and prominently involved in exportation. The second and largest group is made up of small and medium-sized companies that have only a limited foreign sales structure that is still in the consolidation phase. Finally, the third group is made up mostly of small companies with limited resources that do not export or are just beginning to do so.

In Catalonia, the following segments are very important within the industry: the production of textile and clothing machinery, the production of packaging machinery, the production of machinery for the food and drink industry, the production of plastic- and rubber-processing machinery, and the production of moulds and dies.

123 2. Local industrial production systems in Catalan industry

Within the machinery and mechanical-equipment industry in Catalonia, the production of textile and clothing machinery is one of the most important segments. It accounts for 15% to 18% of the industry overall in Catalonia and 85% of its segment nationwide in terms of the number of companies (there are 75-100 firms in Spain with a total of around 2,000 employees). Spain is the fifth-largest producer of machinery and mechanical equipment in the European Union and is among the top ten producers worldwide. Spain is the industry's eleventh biggest exporter worldwide with a 1.3% share of world trade.

On international markets, Catalonia's textile-machinery companies mainly face competition from Germany and Italy (which have an estimated 400 manufacturers each). German manufacturers' products enjoy a good reputation on international markets. Although Ger- man companies have traditionally been burdened with high production costs, in recent years they have achieved quite good levels of economic competitiveness. The companies have obtained this reduction in costs by relocating production facilities to certain Asian countries. Despite the economic advantages, this move has had a negative impact on the quality of the equipment. Italian manufacturers have competitive prices, favourable financing conditions, good negotiation skills and machinery that incorporates design, which is quite successful on the markets. In Europe, many countries in this industry are in the process of carrying out mergers. This is not taking place in Spain and Catalonia, which dimi- nishes companies' chances of becoming more competitive (increase in size, reduction in costs, synergies, etc.). Competitors from Southeast Asia make inexpensive products and have begun to offer acceptable levels of quality.

The production of packaging machinery also has a strong tradition in Catalonia and is at the forefront of European technology. Important segments in Catalonia include horizon- tal and vertical packaging machinery, bottling machinery and container-printing machinery. In Spain, the packaging industry – including the production of machinery for these purposes – consists of around 1,800 companies that produce around 7.9 million tonnes of products worth 6.6 billion every year.

This is one of the most dynamic, fastest growing sectors of the economy, due to a series of factors:

• First, packaging of products – especially food and drink products – has become more important in developed societies for multiple reasons (aesthetics, safety, etc.). Packaging also has rather good prospects in less industrialized countries that are beginning to attain certain levels of wealth, including certain countries in Southeast Asia and Latin America.

• Second, the growth of the production of packaging, and consequently the growth of the production of machinery for this purpose, is linked to changes in social factors such as lifestyles, the entrance of women into the workforce, the purchasing power of families, new single-family homes, the habit of shopping in hypermarkets, etc. The successful launch of new products on the market – such as pre-cooked and frozen dough, diet foods and frozen foods – also has a positive impact on the dynamics of the segment, because new types of packaging must be introduced and therefore new facilities must be developed and existing facilities must be restructured. The constant innovations in the materials used in packaging (plastics, metals, gases, etc.), in types of packaging and in logistical techniques also have an impact on this segment.

124 • Third, the segment is influenced by fads, the interests of major multinational groups that manufacture raw materials for packaging and the prices of those materials. These forces often influence the use of various alternative materials in different applications, as in the struggle between Tetrabrik, plastic and glass in milk packaging. Today, paper and cardboard account for 36% of worldwide packaging sales, while plastic accounts for 34%, metal accounts for 20% and glass accounts for 10%. A long chain of segments – including paper and cardboard, plastics, metal, glass, wood, etc. – converge in this field, each with its own trends and developments.

• One recent development that affects this segment is the Spanish environmental legislation (Act 11/1997) and its effects on the conception and production of packaging. The design and production of these products must now involve the reduction of raw material, reuse, waste-to-energy recovery and reductions in energy consumption. Major trends in the segment also include the reduction of the weight of packaging, special attention to graphic presentation and easy opening mechanisms for consumers.

Because of the trends mentioned above, manufacturers of packaging machinery are forced to regularly invest in research and development and introduce continuous changes to the characteristics of their products in order to adapt them to the demand and meet customers' requirements for complexity and flexibility. In fact, flexibility is a basic determining factor for this segment as it faces changing legislation, the growing importance of contract packagers and packers, and the wide range of materials and container sizes used. The segment needs equipment and machines that are appropriate for small production batches and which have quick tool-change times between batches.

The production of machinery for the food and drink industry is the third segment strongly established in Catalonia. The region is responsible for a significant percentage of Spain's overall activity in this segment. In Catalonia, this segment is mostly made up of companies that are specialized in the production of machinery for the meat industry, machinery for bakeries and pastry shops, and refrigeration systems, which are the region's most important client industries. The last two specialities have been the segment's most dynamic areas in recent years because of product innovations and the application of new technologies. Medium-sized and especially small companies dominate this segment (97% of them have less than 100 employees).

The production of food and drink machinery is a growing activity, due to the worldwide importance of the client industry (the food and drink industry), especially in developing countries, which dedicate large quantities of their own resources and the resources of international agencies to this type of equipment and technology. The segment also shows great flexibility in dealing with its clients' innovations in the areas of raw materials, additives and especially preservation – mainly through refrigeration systems – which is increased by the segment's close relationship with the packaging sector. Along these same lines, increasingly strict health and hygiene controls and food and dieting fads are also major factors that determine the segment's performance. Likewise, recent changes in the food- distribution industry (the growth of bakery networks, the concentration of large-scale distribution, the intensification of promotional campaigns and special offers, the entrance of distributors in other fields, etc.) have also had an effect on the segment. At the same time, the food-distribution industry has intensified the use of multiple-use equipment and machines produced for this segment (the production of bread and pastries from frozen/pre-cooked dough and small ovens, slicing and preserving sausages and meats, etc.).

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In an international context, Spain and Catalonia are competitive manufacturers of food and drink machinery with a positive image on different markets. Companies in this segment have been forced to work in foreign markets due to the relative stability of the domestic demand. The main competitors in this segment are Germany, France, the Net- herlands, Great Britain, Switzerland, the United States and Japan.

The production of machinery for plastic and rubber is the fourth segment with an important tradition in Catalonia. With around 50 manufacturers, the region is home to more than 70% of the segment nationwide. The most important speciality is injection, followed by extrusion, flexography, welding and pressing. This is a very dynamic activity. Over half of this segment's production is sold to the packaging industry. The automotive industry is a distant second, followed by electronics, household appliances and construction. The Basque Country, Valencia and Madrid are other important autonomous communities in this segment.

The fifth important segment in Catalonia is the production of moulds and dies. These tools play an important role in the processing of most materials, which makes them strategically important and closely links them to most industrial and processing sectors. In fact, the competitiveness of end products depends largely on the quality of the design and production of these tools. The proper design and production of these tools may lead to significant savings in terms of weight, materials and assembly phases, and may also lead to new part functions and make it possible to eliminate certain unnecessary parts or components, etc. Furthermore, a good combination of tools, machinery and peripherals may lead to significant improvements in the productivity and reliability of the process. Because of this, all highly industrialized countries have strong, competitive mould and die production industries. Access to good suppliers of these tools has always been one of the first requirements of industries that produce finished products when considering setting up operations in a certain region.

The production of moulds and dies is carried out in accordance with clients' specific orders, since these tools are only used to produce the part or component that they are designed and built to make. Companies' structures are influenced by the fact that these tools are custom-made rather than mass-produced. They must have a flexible structure in order to adapt to major fluctuations in demand. This flexibility must include the companies' work systems, the technologies they use, their equipment and personnel requirements, etc.

The end clients of mould and die manufacturers belong to industries that manufacture industrial and consumer products that include metal and/or plastic parts or components. These industries include automotive; industrial and consumer electronics; packaging; telecommunications; toys; and metal products. However, the user of the tool is often a processing company that subcontracts its services to the end client and supplies plastic or metal parts or components. This is the case, for example, with plastic-injection and metal- stamping companies, which receive orders from end clients to produce one or more specific products. The technical and commercial relationship is usually established between mould and die manufacturers and processing companies rather than with the end clients. As a result, it is difficult for the mould and die manufacturers to participate in the process of designing and developing the parts and components. Therefore, the technological potential of these companies is sometimes not exploited to the fullest.

126 Local industrial production systems in the machinery and mechanical-equipment industry in Catalonia

This industry has 8 local industrial production systems in Catalonia. Together, they include 800 industrial establishments, employ more than 14,000 people and generate turnover of around €2.155 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Machinery for the Machinery for Textile and Clothing the Food Industry Industry Garrotxa Vallès Occidental Gironès Bages Osona Pla de l’Estany Selva Agricultural Machinery Noguera Pla d’Urgell Segrià Urgell

MAPA

Packaging Machinery and Equipment Barcelona M.A.

Moulds and Dies Barcelona M.A.

Valves and Taps Baix Llobregat Vallès Occidental Handling and Storage Machinery for Equipment the Food Industry Barcelona M.A. Vallès Occidental

Number of Establishments Employees

Up to 50 Up to 1.000

Barcelona M.A.=Barcelona Metropolitan Area. 50-100 1.000-3.000 Made up of Vallès Occidental and Oriental, Barcelonès and Baix Llobregat. More than 100 More than 3.000

127 2. Local industrial production systems in Catalan industry

Map of the Local Industrial Production Systems in the Machinery and Mechanical-Equipment Industry in Catalonia

Agricultural Agriculture indsutry machinery Suppliers of Industry standard Associations components LPS (motors, electrical and electronic Machinery for components, plastic the textile and Manufacturers in AMEC, (AFEMAC, and others) clothing industry the textile and ASFESPAN, AMTEX, ASCON, clothing industry ENVASGRAF, ALIMENTEC) LPS ASCAMM, FEM/AEM, AGRIVAL, AERATP FEMAC, FEMEL Handling and storage Industry in general equipment LPS Engineering firms GRÀFIC Technology Centres Machinery for the food Manufacturers of industry consumer products ASCAMM, INTEXTER, LPS LPS LGAI, Centre Tècnic de Filatura, IRTA, Centre de Mecanització Agrària Packaging machinery and equipment Ventilation and LPS refrigeration Construction Manufacturers of metal products and steel makers Valves and taps

Moulds and dies LPS

Educational and LPS Training Centres Surface-treatment companies (chrome-plating, Machine tools etc.) UPC Institut Català de Logística

Local industrial LPS production system

128 Name of local industrial production system: Machinery for the food industry in Vallès Occidental County

Location: Vallès Occidental County Number of establishments: 38 Number of employees: 500 Turnover (estimated): € 80 million Exportacions/production (%): 33 Specialization index: 1.59 Weight in its sector in Catalonia (%): 21.11 Weignt in all Catalan industry (%): 0.08

Main companies in Name of company City or town the local industrial SA Martín Lloveras Terrassa production system GPG Técnicas de Panificación, SL Santa Perpètua de M. Sabatecno, SAL Sabadell J. Esquerda, SA Terrassa Talleres Cato, SA Sabadell Fatosa, SA Sabadell Sun – Ice, SA Montcada i Reixac Tecaire Intercomercial, SA Sabadell Instalaciones Mecánicas La Selva, SA Castellar del Vallès (and Riudellots de la Selva) Rainte, SL Sabadell

This is a fairly young local industrial production system, but there are a few companies – such as Martín Lloveras, which manufactures chocolate-making machinery – that were established in the early 20th century.

As for the geographical scope of this local industrial production system, there are concentrations of food-machinery companies throughout the Barcelona metropolitan area. However, the only concentration that can be considered a local industrial production system is the one in Vallès Occidental County, because of its high degree of specialization in the bread- and pastry-making segment

129 2. Local industrial production systems in Catalan industry

and the fact that the companies are highly interrelated through subcontracting and collaboration. For example, companies that produce bread-making machinery and oven manufacturers have been known to collaborate on sales by complementing each other's special offers.

This local industrial production system is located in Vallès Occiden- tal County because of its proximity to the food industry and to machine shops throughout the Barcelona metropolitan area.

As for the value chain, many suppliers of mechanical and electronic components are located inside the local industrial production system or in neighbouring counties. The local industrial production system's clients tend to be small bakeries and pastry shops. The companies therefore have an average technological level.

Over half of Spain's manufacturers of bread- and pastry-making machinery are located in Catalonia, and the majority of them are located in Vallès Occidental County.15

Other agents that - Asociación Española de Fabricantes de Maquinaria para la collaborate with Industria Alimentaria (IND) http://www.amec.es/alimentec the local industrial - Asociación Española de Fabricantes de Maquinaria, Hornos y production system Equipos para Panadería, Pastelería y Similares (IND) http://www.amec.es/afespan - Centre Tecnològic del Pa, Universitat de Vic (TEC-TRA) http://www.uvic.es

15This local industrial production system's weight in its sector (21.11%) refers to all manufacturers of machinery for the food industry and not just manufacturers of machinery for making bread and pastries.

130 Name of local industrial production system: Machinery for the food industry in the counties of Girona province and Osona County

Location: Garrotxa, Gironès, Osona, Pla de l’Estany and Selva Counties Number of establishments: 77 Number of employees: 939 Turnover (estimated): € 125 million Exports/production(%): 35 Specialization index: 3.71 Weight in its sector in Catalonia (%): 42.78 Weight in all Catalan industry (%): 0.17

Main companies in Name of company City or town the local industrial Metalquimia, SA Girona and Palol de Revardit production system Roser Construcciones Metálicas, SA Cassà de la Selva Indebe, SA i Talleres Vilanova, SA Sant Joan les Fonts Instalaciones Mecánicas La Selva, SA Riudellots de la Selva (and Castellar del Vallès) Inoxpa, SL Banyoles Mas Construcciones Mecánicas, SA Caldes de Malavella Xuclà Mecàniques Fluvià, SA Olot Magic l’Espresso, SL Balenyà F. Mendoza, SL Balenyà Mecánicas Garrotxa, SA Olot

Description of the The main activity of this local industrial production system is the local industrial production of machinery for the food industry. Most of the com- production system panies that form a part of this local industrial production system are specialized in machinery for the meat industry, especially the preparation of cooked and cured products, although they also make machines for processing fresh meat (grinders, refrigerators, mixers, etc.). The local industrial production system also includes companies that produce machinery for different processes that are not exclusive to the meat industry (washing, drying, labelling, hygiene, etc.) and machinery for other food industries (bread and pastries, etc.).

This local industrial production system is closely related to the pork-products local industrial production system of the counties of Girona province and Osona County. These two local industrial production systems could even be considered a single system, since their geographical demarcation is identical. Because of this geographical proximity, manufacturers of pork products and machi-

131 2. Local industrial production systems in Catalan industry

nery producers mutually strengthen each other. Together they have created one of the most complete local industrial production systems in Catalonia, which includes companies that excel technologically on the world market.

The meat-industry-machinery local industrial production system dates back to the mid-19th century, but it did not develop indus- trially until after the Spanish Civil War. However, most of the companies that work in the local industrial production system today have only existed for one or two generations.

As for the value chain, there are suppliers of parts, moulds, electric motors, etc., inside the local industrial production system and in the area surrounding Barcelona. The local industrial production system mostly serves clients in the same counties, but it also has clients in other parts of Spain and in other countries.

Catalonia is home to 80% of the Spanish companies that produce machinery for the meat industry, 43% of which are located in this local industrial production system.

Other agents that - Asociación Española de Fabricantes de Maquinaria para la Indu collaborate with tria Alimentaria (IND) http://www.amec.es/alimentec the local industrial - Asociación Española de Comercializadores y Fabricantes de production system Maquinaria para la Industria Cárnica (IND) http://www.amec.es/aefemac - Centre de Tecnologia de la Carn de l’IRTA (TEC) http://www.irta.es/ - BTA Saló Internacional de la Tecnologia Alimentària (OTH) http://www.bta-tecnoalimentaria.com

132 Name of local industrial production system: Agricultural machinery in Western Catalonia

Location: Noguera, Pla d’Urgell, Segrià and Urgell Counties Number of establishments: 85 Number of employees: 615 Turnover (estimated): € 75 million Exports/production (%): 15 Specialization index: 5.09 Weight in its sector in Catalonia (%): 27.37 Weight in all Catalan industry (%): 0.17

Main companies in Name of company City or town the local industrial Ilemo Hardi, SA Lleida production system Talleres Gili 98, SL Montgai Argilés Disseny i Fabricació, SA Miralcamp Riegos Costa, SL Lleida Plameca, SA Lleida Tractomotor Industrial, SA Lleida Cedis-Mafrut, SL Alcarràs Roda Maquinària Agrícola, SL Vilanova de la Barca Multeyme, SL Torre-serona SL de Maquinaria y Equipos Dofi Lleida

Description of the The main activity of this local industrial production system is the local industrial production of agricultural machinery, such as motor cultivators, production system fruit-harvesting machines and sprayers.

This local industrial production system dates back to the 1950s, when a group of machine shops began focusing on the production of machinery for the area's farms, which were also expanding considerably, especially in the cultivation of fruit trees. The counties of Lleida province are currently Spain's leading producers of pears, apples, peaches, nectarines and prunes. The development of this machinery local industrial production system occurred while the farms in Western Catalonia were becoming mechanized – from the 1960s to the 1980s.

Geographically, the local industrial production system covers four counties but is quite concentrated in Segrià County, which has the most fruit and vegetable crops. As a result, the local industrial production system is also relatively specialized in machinery for these types of crops. Outside of the geographical demarcation of this local industrial production system, there are also major manufac-

133 2. Local industrial production systems in Catalan industry

turers of agricultural machinery in Osona, Vallès Occidental and Anoia Counties, but they do not constitute a local industrial production system.

The average agricultural-machinery company in the counties of Lleida province is very small. Only a few companies even have a business structure. Most have production processes based on small batches and custom-made machinery.

In addition to the local farms, this local industrial production system is also close to other related industries, such as workshops specialized in carrying out certain parts of the metalworking process as subcontractors. Within this local industrial production system, there are also cases of business cooperation, especially in the field of marketing.

Other agents that - Associació de Fabricants Exportadors de Maquinària Agrícola de collaborate with Catalunya (IND) http://www.femac.org the local industrial - Centre de Mecanització Agrària del Departament d’Agricultura, production system Ramaderia i Pesca (TEC) http://www.gencat.net/darp/cma.htm - Institut de Recerca i Tecnologia Agroalimentàries (TEC) http://www.irta.es - Federació d’Empresaris Metal·lúrgics de la Província de Lleida (IND) http://www.femel.org

134 Name of local industrial production system: Packaging machinery and equipment in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 54 Number of employees: 1,443 Tutnover (estimated): € 300 million Exports/production (%): 55% Index of specialization: 1.33 Weight in its sector in Catalonia (%): 62.07 Weight in all Catalan industry (%): 0.12

Main companies in Name of company City or town the local industrial Volpak, SA Santa Perpètua de M. production system16 Bossar, SL Barberà del Vallès Talleres Daumar, SA Badalona Posimat, SA Barberà del Vallès Rovema Ibérica, SA Sentmenat STE Packaging Engineering, SL Cerdanyola del Vallès Talleres Pupar, SA Sabadell Giró GH, SA Badalona Engineering Polydrop, SA L’Hospitalet de Llobregat Mespack, SL Santa Perpètua de M.

Description of the The main activity of this local industrial production system is the local industrial production of machinery for packaging products of all types (fruits, production system liquids, manufactured goods, etc.).

Companies in this segment are located throughout the Barcelona metropolitan area but are more highly concentrated in Vallès Occi- dental County. This concentration dates back to the origin of the local industrial production system. In most cases, companies from the machinery industry started to specialize in packaging machinery in the 1960s and 1970s. Many others were formed as spin- offs as workers left companies in the industry to start their own businesses. In recent years, foreign companies have invested in the local industrial production system and have bought out some of the main companies.

16Some companies make packaging machinery but have CCAE codes for other specialities. For this list and calculations, we have only taken into account the companies that have the CCAE code 29241 in the Register of Industrial Establishments of Catalonia.

135 2. Local industrial production systems in Catalan industry

As for the value chain, the companies in the local industrial production system have many of their suppliers of mechanical and electronic parts and components in the Barcelona metropolitan area. Many of the local industrial production system's clients are also located in the area – especially major consumer-goods companies that produce food and drinks, cleaning products and pharmaceuticals.

Other elements related to the production of packaging machinery are also located in the Barcelona metropolitan area, including engineering firms (which are important due to the complexity of the machinery) and companies that design packaging and barcodes. This makes for a complex network of subcontracting and cooperation relationships between companies.

More than 40% of the companies that produce packaging machinery in Spain are located in Catalonia. The packaging-machinery local industrial production system in the Barcelona metropolitan area competes with local industrial production systems in other European areas such as Emilia-Romagna (Italy), Hesse (Germany) and Baden-Württemberg (Germany).

Other agents that - Asociación Española de Fabricantes de Maquinaria para Envase, collaborate with Embalaje, Embotellado y su Grafismo (IND) http://www.amec.es the local industrial - Saló Internacional de l’Embalatge (OTH) http://www.hispack.com production system - Fundació Innopack (OTH) - Associació Graphispack (IND) http://www.graphispack-asociacion.com

136 Name of local industrial production system: Machinery for the textile and clothing industry in Bages and Vallès Occidental Counties

Location: Bages and Vallès Occidental Counties Number of establishments: 61 Number of employees: 55 Turnover (estimated): € 100 million Exports/production (%): 70 Specialization/index: 2,84 Weight in its sector in Catalonia (%): 48,03 Weight in all Catalan industry (%): 0,14

Main companies in Name of company City or town the local industrial Talleres Ratera, SA Manresa production system Argelich, Termes y Cía, SA Terrassa Galí Internacional, SA Sentmenat Motocono, SA Terrassa Construcciones Metalúrgicas Especiales, SA Sant Joan de Vilatorrada Galan Int, SL Terrassa Graf. España, SA Santa Perpètua de Mogoda Caldereria Viladecavalls, SA Viladecavalls Texma, SL Manresa Pumatex, SL Súria

Description of the Although Catalonia is a major textile-producing region, it has local industrial always been a net importer of machinery for this industry. Howe- production system ver, in the 19th century, Catalan mechanics specialized in repairs and maintenance demonstrated their skill for improving the productivity of imported machines. Later, sheltered by a protectionist trade policy, they began producing their own models. Ferran Casa- blancas was one such mechanic, born in Sabadell in 1874. As the son of an industrial finisher, he began improving many of the mechanisms in the family's factory.

The period of autarky following the Spanish Civil War also saw the creation of many new textile-machinery companies. Some metalworking shops entered the business to take advantage of nearby clients and the protected market, but they either had a low technological level or exploited foreign patents. Many of these companies went out of business when the markets were liberalized

137 2. Local industrial production systems in Catalan industry

and a series of economic recessions ensued. As a result, the companies that now make up the local industrial production system are rather new. Today's companies have their own technology – a very high level of technology, in fact. Some are even world leaders in their segment.

Today, the local industrial production system's main activity is the production of machinery for the textile and clothing industry. Dyeing and finishing machines make up the most important segment both in terms of volume and technological level. Other segments include braiding machines, spinning accessories, knitting machines, weaving preparation machines, and, to a lesser extent, clothing-manufacturing machines. However, the local industrial production system does not include manufacturers of spinning or weaving machinery.

Suppliers of metal and plastic components are located both inside the local industrial production system and in other parts of Cata- lonia. This makes it possible for many tasks to be carried out by subcontractors, which gives the manufacturers the degree of flexibility they need to face the cycles characteristic of the industry. Another important factor is the proximity of a number of companies that produce software specifically for textile machinery. The local industrial production system's clients are not all local. In fact, the local industrial production system has a very high level of exports.

Catalonia is responsible for 80% of the textile machinery produced in Spain. Much of this production takes place in Bages and Vallès Occidental Counties.

Other agents that - Asociación Española de Constructores de Maquinaria Textil (IND) collaborate with http://www.amec.es/amtex the local industrial - Centre Tècnic de Filatura de la UPC (TEC) http://www.ct.upc.es/ctf/ production system - Escola Universitària d’Enginyeria Tècnica en Teixits de Punt de Canet de Mar (TRA) http://www.diba.es/canet/ - Institut d’Investigació Tèxtil i Cooperació Industrial Intexter (TEC) http://rackham.upc.es/

138 Name of local industrial production system: Handling and storage machinery in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 139 (*) Nombre de treballadors: 4.400 Facturació (estimada): € 925 million Exportacions/producció (%): 25 Coeficient d’especialització: 1,47 Pes sobre el sector (%): 68,66 Pes sobre la indústria (%): 0,31

(*) The Register of Industrial Establishments of Catalonia (REIC) includes elevator manufacturers in CCAE code 2922, which is separate from the industrial handling and storage segment. This code also includes importers and after-sales services. Strictly speaking, we estimate that the companies working in this industry number around 60 with 1,900 employees. However, since it was impossible to identify all of the companies in this industry operating in Catalonia, we have calculated these indices using all companies with CCAE code 2922.

Main companies in Name of company City or town the local industrial Mecalux, SA L’Hospitalet de L. and Cornellà production system ABB Flexible Automation, SA Sant Quirze del Vallès Linde Carretillas e Hidráulica, SA Pallejà BT España, SA Barberà del Vallès Tractel Ibérica, SA L’Hospitalet de Llobregat Eleve, SL Badalona Técnicas de Alimentación Dinámica, SL L’Hospitalet de Llobregat Rodant, SA Palau-solità i Plegamans Bolzoni-Elman, SL Palau-solità i Plegamans Técnicas de Electrónica Barcelona y Automatismos, SA

Description of the The main activity of this local industrial production system is manu- local industrial facturing products for internal logistics and for handling goods, production system raw materials, semi-finished products, etc., within companies. The local industrial production system therefore makes a wide variety of products, including dollies, cranes of all sorts, handling machinery, robots, identification systems, conveyor belts, shelving and equipment for automated warehouses.

The local industrial production system's activities are closely related to industry in general. Its location in the Barcelona metropolitan area therefore puts it in close proximity to its clients.

139 2. Local industrial production systems in Catalan industry

This local industrial production system originated with companies like Maquinista Terrestre y Marítima and Material y Construccio- nes, but its true development was linked to the industrialization process of the 1950s and 1960s when investments by SEAT and some of its suppliers, such as Pianelli & Traversa, led Catalonia's manufacturers to introduce automated processes.

Today the local industrial production system includes some Spanish companies, but most are affiliates of foreign multinationals that use the technology of their parent companies.

As for the value chain, many suppliers are located inside the local industrial production system, including manufacturers of metal products, electrical and electronic equipment, and specialized software for automated warehouses, as well as engineering firms. The local industrial production system's clients belong to all areas of the manufacturing industry (pharmaceuticals, food, the automotive industry, etc.) and the commercial distribution industry.

Other agents that - Asociación Española de Manutención FEM/AEM (IND) collaborate with - Institut Català de Logística (TRA – OTH) http://www.icil.org/ the local industrial - Saló Internacional de la Logística (OTH) http://www.silbcn.com/ production system - Escola Tècnica Superior d’Enginyeria Industrial de Barcelona de la UPC (TRA) http://www.upc.es/ - Asociación Española de Robótica y Automatización Tecnología de la Producción (IND – TRA) http://www.aeratp.com/

140 Name of local industrial production system: Valves and taps in Baix Llobregat and Vallès Occidental Counties

Location: Baix Llobregat and Vallès Occidental Counties Number of establishments: 66 Number of employees: 1.700 Turnover (estimated): € 250 million Exports/production (%): 40 Index of specialization: 3,48 Weight in its sector in Catalonia (%): 78,57 Weight in all Catalan industry (%): 0,15

Main companies in Name of company City or town the local industrial Roca Sanitario, SA Gavà production system Industrias Ramon Soler, SA Sant Joan Despí Metalgrup, SA Sant Joan Despí and Sant Feliu de Llobregat Legris Española, SA Terrassa Sedal, SA Molins de Rei Standard Hidráulica, SA Montcada i Reixac IMI Norgren Terracco, SL Terrassa Supergrif Kitchen & Bath, SL Sant Feliu de Llobregat Feliu Boet, SA Cervelló Tebisa La Grifería, SA Sant Feliu de Llobregat

Description of the The main activity of this local industrial production system is the local industrial production of valves and taps for distributing and controlling production system liquids. Most of these products are used for plumbing purposes but some are also used for industrial purposes and for heating units.

Although there are companies that work in this activity throughout the Barcelona metropolitan area, the geographical scope of the local industrial production system is limited to Baix Llobregat and Vallès Occidental Counties because there the concentration is greater and the companies are more interrelated.

However, this local industrial production system probably originated in the late 19th century, when a number of manufacturers of taps for wine barrels concentrated in Barcelona. Over time, these companies relocated to Baix Llobregat and Vallès Occidental Coun- ties, where they found a wide range of suppliers of metal products that gave them a competitive advantage. Still, with few exceptions, today's companies are fairly young.

141 2. Local industrial production systems in Catalan industry

Most of the local industrial production system's end-product manufacturers carry out only a few of the phases of the production process internally (design, machining, assembly, etc.) and subcontract the rest (polishing, chrome-plating, smelting, stamping, etc.) to local companies. However, in recent years the amount of components imported from Asia has increased greatly. There are also cases of collaboration between businesses, especially in expor- ting. Suppliers of specialized machinery and design firms are also present in the local industrial production system.

The clients of the local industrial production system tend to be wholesalers and do not form a part of the local industrial production system. Rather, they are located all over Spain and, in some cases, in other countries.

For an idea of the importance of this local industrial production system, Catalonia is responsible for close to 80% of Spanish production in this segment. Furthermore, the companies in this local industrial production system generally have a good level of design and develop their own technology.

Other agents that - Asociación Española de Equipamientos para el Baño y la Cons- collaborate with trucción (IND) http://www.amec.es/ascon the local industrial - Asociación Nacional de Fabricantes de Grifería y Valvulería (IND) production system http://www.enlared.es/agrival/ - LGAI technological center (TEC) http://www.lgai.es

142 Name of local industrial production system: Moulds and dies in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 278 Number of employees: 3.691 Turnover (estimated): € 300 million Exports/production (%): 15 Specialization index: 1,76 Weight in its sector in Catalonia (%): 82,01 PWeight in all Catalan industry (%): 0,62

Main companies in Name of company City or town the local industrial Troquelería Dover, SL Barberà del Vallès production system Construcciones Mecánicas Marés, SA Montcada i Reixac Mopavid, SL Badalona Ballper, SA Barcelona La Forma Industrial XXI, SL Sabadell Carra, SA Badalona and Mollet del V. Aplifun, SA Granollers Moldinter, SL Cornellà de Llobregat Dicomol, SL Montcada i Reixac Industrial Constructora de Moldes Rubí y Afines, SA

Description of the Moulds and dies are tools that are used in the application of diffe- local industrial rent materials-processing techniques (injection, extrusion, blow production system moulding, stamping, pressing, smelting, etc.) used in the production of most plastic and metal products that exist today. The main activity of this local industrial production system is the production of these tools. The local industrial production system is relatively specialized in plastic injection moulds.

This local industrial production system originated in the mid-20th century when the demand for moulds and dies grew in response to the creation of SEAT and automotive-related industries in Cata- lonia. The first independent mould and die factories were Gramec, Arte, Marés and Miró i Pedragosa. However, these tools were already being manufactured by large companies such as Elizalde, His- pano-Suiza, Casa, La Fama, Hispano Olivetti and Aiscondel.

The development and consolidation of this local industrial production system in the Barcelona metropolitan area was mainly the

143 2. Local industrial production systems in Catalan industry

result of the proximity of different client industries such as automotive, consumer electronics, packaging, and plastic processing.

In contrast, the rest of the value chain – both the raw materials (mainly steel) and the machinery – come from outside of Catalo- nia.

Business cooperation and subcontracting are common in the network that makes up the local industrial production system. There are also engineering firms in the local industrial production system that design and develop moulds and dies.

Catalonia is home to Spain's greatest concentration of companies in this industry, which together account for 40% of overall turnover and 25% of exports, thanks to their fairly high level of technology and flexibility.

Other agents that - Associació Catalana d’Empreses de Motlles i Matrius (IND) collaborate with http://www.ascamm.es the local industrial - Centre Tecnològic d’ASCAMM (TEC) production system http://www.ascamm.es/ct/cat/ct-home.asp - ASCAMMPLUS Serveis Tecnològics (OTH)

144 2.2.9 Local industrial production systems in the electrical- and electronic-equipment industry

Basic characteristics of the electrical-and electronic-equipment industry in Catalonia

This industry is made up of two sectors: 1) electrical machinery and equipment and 2) electronics.

The electrical machinery and equipment sector is of essential importance to the operation of industrial production processes and the economy in general, including people's homes. It is therefore a basic element of the development of societies, has numerous links to other production sectors and is clearly involved in production and end consumption. The production of electrical machinery and equipment is very dependent on investment in the economy, including investments in infrastructure (electrical, logistical and transportation-related), industry (plants and equipment) and construction (residential and service-oriented). Because of these close links to the dynamics of gross fixed-capital formation, this industry experiences more intense cyclical fluctuations than others.

The main products manufactured by the electrical machinery and equipment sector can be grouped in three different segments. The first segment is the production of electromagnetic devices such as motors, generators and electrical transformers. The relative weight of this segment within the sector is 18%. The second segment is the production of electrical switchgear. This category includes active and passive electrical distribution equipment, both for industrial and domestic use (switching, distribution and measuring equipment, mainly). This segment accounts for close to 54% of production for the sector. The third segment is the production of electrical elements. This category includes different products related to electricity distribution, electrical components, chemical-electrical elements and products for using electricity (such as wires, cables, insulation and resistors). This segment accounts for close to 28% of production for the sector.

One significant consequence of the electrical machinery and equipment segment's highly diversified production is polarization in the configuration of the business community. The local industrial production system has two main types of production facilities – a small number of large multinational corporations and a relatively large group of small and medium-sized manufacturers. The large foreign groups have in recent years spearheaded a process of concentrating production by absorbing local small and medium-sized companies, which are normally highly specialized. By doing so, the large companies aim to cover additional market segments, gain access to new technologies and products, take better advantage of the segment's economies of scale and intensify the presence of their specialities.

As a result, the segment today consists of the large corporations, on one hand, which carry out a substantial part of production, are involved in a wide range of specialities, offer products with greater added value, and have demonstrated considerable skill for penetrating foreign markets; and small and medium-sized companies, on the other hand, which offer a more specialized range of products. In fact, the small and medium- sized companies mainly make products to order and use shorter production batches. As subcontractors, they also carry out many activities (such as plastic injection and assembly) that the foreign companies are not usually involved in.

145 2. Local industrial production systems in Catalan industry

This segment has a long tradition in Catalonia, which became a pioneer in the development of the activity in Spain when the companies Siemens and Pirelli established themselves in the region.

With respect to all Catalan industry, this segment has a relative weight of close to 4% of production and 4.8% of employment. Catalonia accounts for 28% of the establishments, 33% of turnover and 45% exports for this segment nationwide. The region is Spain's leading market and main producer in this segment and therefore has a significant presence and considerable strategic importance at the national level.

The production of electrical machinery and equipment is highly internationalized, both in terms of the volume of exports – which account for 40% of turnover – and the degree to which the domestic market has been penetrated by imports – which now have a specific weight of 50%. This sector is highly diversified in Catalonia, which has companies from most segments. However, there is a greater degree of specialization in the production of small equipment and material, which are mainly used for electrical energy by industries and end consumers.

Important segments within the sector include the production of electrical switchgear – which accounts for 54% of the sector's production – and the production of electrical elements – which accounts for nearly 28% of production. The electrical-switchgear segment is dominated by industrial switching and distribution equipment. The electrical-elements segment is dominated by the production of wires and cables; cabinets and panels; and insulation. In these three activities, Catalonia is responsible for nearly 60% of all production nationwide. The production of electromagnetic devices has a lower relative weight: 18% of the sector.

The electronics sector is made up of a wide range of goods, some used for personal consumption and others used by industry for a variety of applications. The most common definition of the electronics industry – not including telecommunications and computers – encompasses three major segments. The first segment is consumer electronics. This category includes the production of television sets, audio equipment (portable, high fide- lity, compact and combination, car stereos, MP3 players, CD players, portable CD players, home cinemas, etc.), and video devices (VCRs, video cameras, teletext systems, projec- tion TVs and DVD players). This segment is also known as brown goods and targets end consumers. The second segment is electronic components. This category includes parts and devices that are basic elements in the production of systems, equipment and appliances (semiconductors; tubes; condensers; resistors; electromagnetic, electroacoustic and inductive components; antennas; printed circuits; and microelectronics in general). The third segment is professional electronics, which includes industrial electronics, defence electronics, electromedicine, radio and television broadcasting systems, and educational equipment.

The electronics sector has many links to other industries because it consumes products from a wide range of industries, such as plastics, non-ferrous metallurgy, metal products, etc. However, in recent years the sector has made technological advances aimed at creating smaller products that take better advantage of materials, which has reduced its importance as a client industry. At the same time, the electronics sector – especially the electronic-component and professional-electronics segments – supplies intermediate products to other industries and even to other companies within the sector, for example, in the consumer-electronics segment. Production batches in this sector tend to be large,

146 except in the professional-electronics segment, which often makes products to order according to client specifications.

The electronics sector also invests a lot of money in research and development (R&D) and is a driving force behind technological innovation. In some cases, the fast pace of investments in R&D has allowed the industry to enjoy sustained growth because, despite the fact that the market is highly saturated, new products with better features are constantly appearing on the market. Because of the high level of international competition in this sector, companies use innovation as a strategic asset that helps them position themselves.

The most important electronics companies worldwide are basically from Japan, South Korea, the European Union, the United States and Southeast Asia. The sector is very open to trade, due in part to the fact that the main companies are multinationals. As a result, a large amount of goods move between countries and continents. As the sector has become more multinational, intra-industry and intra-company trade has become very important. Often the affiliates of a single group are specialized in specific products or parts of the production process and act as suppliers to affiliates located in other countries. A worldwide trend has been observed recently in which large companies relocate parts of the manufacturing process that have less added value and are more human- intensive to emerging countries where labour costs are lower, such as China, India and the Eastern European countries.

Because of its significant ability to innovate and its dynamic nature, electronics is a strategic sector for the economy and for industry as a whole. In Catalonia, the electronics sector accounts for 3.8% of turnover, 3.4% of production, 2.8% of employment and 2.6% of business establishments for all industry. In recent years, this sector's importance with respect to Catalan industry as a whole has increased because it is has been more dynamic than other industries. Nevertheless, the sector has recently suffered significant downturns in both employment and the number of establishments, particularly in activities with less added value whose main competitive factor is labour costs.

Catalonia's electronics sector is important at the national level. It is responsible for 44% of turnover nationwide, which is around twice the Catalan GDP (close to 19%). Further- more, this sector is highly international, both in terms of the proportion of exports – more than 54% of turnover – and the degree to which the domestic market has been penetrated by imports – which have a specific weight of 67%. The sector is also very multinational.

In Catalonia, companies that are totally or partially foreign-owned are responsible for over half of production. Foreign investment has concentrated in the larger companies, which are leaders in technology and in certain market segments. The entrance of major groups in Catalonia and Spain was especially intense in the 1980s, when many affiliates were created and many local companies were bought out. Some segments of activity even became dominated by foreign companies.

Consumer electronics or brown goods make up the most important segment of the electronics industry in Catalonia, with close to 63% of overall production. Catalonia is Spain's leading producer of these products, accounting for over 60% of the activity nationwide. The most important activity within the segment is the production of colour television sets (wide-screen sets in particular), which represent over 60% of the seg-

147 2. Local industrial production systems in Catalan industry

ment's total production, followed by VCRs and audio equipment. Spain is currently one of Europe's largest manufacturers and exporters of television sets. Companies in this segment are basically concentrated in Catalonia, although Madrid, Tarancón (Cuenca) and (Navarra) also have manufacturing facilities. More than 60% of the jobs in this segment of the electronics industry are related to manufacturing processes, while 7% involve research and development, which translates into 5,334 direct employees.

The business community in this segment is dominated by multinationals – especially Japa- nese corporations – that have factories in Catalonia and are also intensely involved in marketing and distributing products imported from other foreign affiliates of the same groups.

The electronic-component segment has a smaller specific weight within the Catalan electronics sector. It accounts for close to 12% of total production and 10% of overall turnover for the sector. Catalonia is responsible for 30% of this segment's turnover and employment nationwide. The main category within this segment is the production of passive components (conceptually electronic products including printed circuits, coils, transformers, resistors, etc.), which make up 35% of the segment's activity. Within this category, Catalan companies are responsible for approximately 60% of turnover nationwide. This segment also includes the production of active electronic components – strictly electronic products that are technologically advanced and have a complex production process (mainly semiconductors). In Catalonia, the electronic-component segment is led by medium-to-large multinational companies. There are also many smaller, locally owned companies. This activity is mainly located near the city of Barcelona in counties like Bar- celonès and Vallès Occidental. The performance of this segment is closely related to the performance of the consumer-electronics segment and the telecommunications and computer industries.

In Catalonia, the professional-electronics segment accounts for more than 25% of production and 21% of turnover for the electronics sector as a whole. Catalonia is home to nearly 27% of Spain's activity in this segment – the lowest specific weight of all electronics segments. The segment is made up of a small number of small and medium-sized companies, most of which also work in other industries, mainly the production of electrical machinery and equipment. Within this segment, the most important activity is industrial electronics, which accounts for over half of production overall. Other categories include defence, detection and navigation systems; radio and television broadcasting; electromedicine; and educational instruments and equipments.

148 Local industrial production systems in the electrical-and electronic-equipment industry in Catalonia

This industry has three local industrial production systems in Catalonia, located in the Barcelona metropolitan area: electrical switchgear, consumer and professional electronics, and lighting. Together, they include close to 400 industrial establishments, employ more than 15,000 people and generate turnover of around €3.25 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

MAPA Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental

Garrigues Conca Barcelon de Barberà ès Alt Lighting Pened ès Baix Llobregat Alt Barcelona M.A. Camp Baix Penedès Garraf Priorat

Tarragonès Ribera Baix Electrical Switchgear Camp d'Ebre Terra Alta Barcelona M.A. Electronics Barcelona M.A. Baix Ebre

Montsià Number of Establishments Employees

Up to 50 Up to 1.000

Barcelona M.A.=Barcelona Metropolitan Area 50-100 1.000-3.000 Made up of Vallès Occidental and Oriental, Barcelonès and Baix Llobregat. More than 100 More than 3.000

149 2. Local industrial production systems in Catalan industry

Map of the Local Industrial Production Systems in the Electrical -and electronic- Equipment Industries in Catalonia

Associations and Guilds

AETIC, AFME, SELCI, APLEC Mould and die makers

Retail trade: - Department stores - Shops Suppliers of plastic Manufacturers of components consumer electronics First-tier suppliers: and professional mechanical, electronics National and local electrical-mechanical, LPS operators Suppliers electrical assembly (CCRT, banks, etc.) of metal components GRAFIC Tools, telecommuni- Manufacturers cations, electro- of lighting medicine, etc. Manufacturers devices of wires and cables LPS

Manufacturers of Universities other electrical and Training components Centres (motors, trans- Automotive, formers, etc.) construction, infrastructure, UPC insdustries, Manufacturers Universitat Ramon Llull of electrical etc. switchgear LPS Technology Centres

LGAI, AENOR, Centre Nacional de Microelectrònica

Local industrial LPS production system

150 Name of local industrial production system: Electronics in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 125 Number of employees: 7,656 Turnover (estimated): € 2.200 million Exports/production (%): 75 (consumer) and 50 (professional) Specialization index: 1.78 Weight in its sector in Catalonia(%): 82.78 Weight in all Catalan industry (%): 0.29

Main companies in Name of company City or town the local industrial Sony España, SA Viladecavalls production system Sharp Electrónica, SA Sant Cugat del Vallès Eurocir, SA Barberà del Vallès Barayo, SA Barcelona Tecnimagen, SA Sant Boi de Llobregat Fábrica Ibérica de Altavoces, SA Vacarisses Circutor, SA Viladecavalls Electrónica Básica, SA Esparreguera JVC España, SA Sant Cugat del Vallès Universal de Desarrollos Electrónicos, SA Terrassa

Description of the The electronics local industrial production system originated in the local industrial 1950s and 1960s, with the creation of a series of companies spe- production system cialized in the production of valves, condensers, speakers and other electronic components, as well as radios and television sets. By 1958, Barcelona province had more people working in this industry than any other Spanish province.

However, true development took place later, when numerous foreign companies – especially from Japan – began investing in the local industrial production system in search of low production costs. They also wanted to take advantage of the fact that Spain was joining the European Community in order to operate in the European market.

At the same time, suppliers of components and manufacturers of professional electronics emerged to provide products such as instruments, radio broadcasting equipment, recreational games, electromedicine and communications equipment.

151 2. Local industrial production systems in Catalan industry

Strictly speaking, this local industrial production system could be defined as two separate local industrial production systems in two different market segments: consumer electronics (mainly sound and image systems), which consists mainly of multinational corporations that produce large batches; and professional electronics, which is made up of small and medium-sized independent companies that make specialized products in relatively small batches. However, we opted to group them in a single local industrial production system because it was not always possible to classify companies in one segment or the other according to their CCAE codes.

As for the value chain, numerous suppliers of metal and plastic components are located in the local industrial production system, while the electronic materials tend to be imported.

The distribution of finished products varies from one segment to the next. The consumer-electronics segment markets its products through three types of channels: large-scale distribution (department stores, hypermarkets, etc.), purchasing groups and independent trade. In contrast, professional electronics mostly consists of intermediate products and equipment that are sold to other industrial or service companies (radio and television operators, financial institutions, etc.).

Most of the companies in this local industrial production system make a great effort to invest in technological research and development (for example, an estimated 7% of the jobs in the consumer-electronics segment involve R&D activities). However, at some of the multinational corporations, the parent companies are responsible for R&D.

Finally, for an idea of the importance of this local industrial production system, Catalonia is responsible for 44% of turnover in Spain's electronics industry.

Other agents that - Asociación de Empresas de Electrónica, Tecnologías de la Infor- collaborate with mación y Telecomunicaciones de España http://www.aetic.es the local industrial (IND) production system - LGAI technological center http://www.lgai.es (TEC) - Centro Nacional de Microelectrónica http://www.cnm.es (TEC) - Universitat Politècnica de Catalunya http://www.upc.es (TRA) - Universitat Ramon Llull http://www.url.edu (TRA) - Associació de Proveïdors líders en electrònica de consum (IND) - Centre Tecnològic de Telecomunicacions de Catalunya http://www.cttc.es (TEC) - Corporació Catalana de Ràdio i Televisió http://www.ccrtv.es (OTH)

152 Name of local industrial production system: Electrical switchgear in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 133 Number of employees: 5,222 Turnover (estimated): € 750 million Exports/production (%): 15 Specialization index: 1.59 Weight in its sector in Catalonia (%): 73.89 Weight in all Catalan industry (%): 0.30

Main companies in Name of company City or town the local industrial Control y Montajes Industriales, SA Barcelona production system GE Power Controls Ibérica, SL Terrassa Tyco Electronics AMP España, SA Montcada and Reixac Schneider Electric España, SA Barcelona and Sant Boi de L. Simon, SA Barcelona, Castellbisbal and Canovelles Hispano Mecano Eléctrica, SA Molins de Rei Ferraz Shawmut Ibérica, SA L’Hospitalet de Llobregat Bticino Quintela, SL Gavà Terasaki España, SA Granollers Framatome Connectors España, SA Sant Esteve Sesrovires

Description of the The main activity of this local industrial production system is the local industrial production of equipment for electrical distribution and control for production system both industrial and domestic use.

This local industrial production system is located near Barcelona in order to be close to the metropolitan market. It emerged during the Industrial Revolution of the 19th century with the creation of companies like Sociedad Española de Electricidad, which was founded in 1881 in Barcelona.

This local industrial production system's production is highly diversified. As a result, the products it manufactures fall into two main categories, which coincide with the two main groups of companies: first, a small group of large multinational firms, mostly from other countries, which offer a broad range of standardized products;17 and second, a large number of small and medium-sized companies, which make more specialized products.

153 2. Local industrial production systems in Catalan industry

Many suppliers are located in the local industrial production system, especially those which make metal products (copper, steel sheets, etc.), plastics and moulds.

The local industrial production system's clients include wholesalers, which absorb 80% of the local industrial production system's sales; department stores, which absorb 10%; electric companies, which absorb 5%; and electrical installers, which absorb the remaining 5%.

At the multinationals, the parent companies provide technology. The local companies, however, do not put much effort into R&D.

Other agents that - Asociación de Fabricantes de Material Eléctrico collaborate with http://www.afme.es (IND) the local industrial - Asociación Electrotécnica Española production system http://www.electrotecnia.com (IND-TRA) - Asociación Española de Normalización y Certificación – Barcelo- na office http://www.aenor.es (OTH)

17We have included companies that have CCAE-93 code 31200. Because this industry is dominated by multinationals that make a broad range of products, some other companies may not have been included because they have other codes, such as 31100 or 31300. By the same token, the production of electrical switchgear may only be a minor activity for some of the companies included in the local industrial production system.

154 Name of local industrial production system: Lighing in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 125 Number of employees: 2.500 Turnover (estimated): € 300 million Exports/production (%): 35 Specilization index: 1.69 Weight in its sector in Catalonia (%): 78.66 Weight in all Catalan industry (%): 0.29

Main companies in Name of company City or town the local industrial J. Feliu de la Peña, SA Canovelles production system Roura Cevasa, SA Barcelona Fáb. de Lámparas Sant Boi de Llobregat y Elementos Decorativos, SA Lámparas Especiales, SA Rubí IEP Iluminación, SA Barcelona Talleres y Montajes Decorativos, SA El Prat de Llobregat Rótulos Mace, SA L’Hospitalet de Llobregat Lámparas Halógenas, SA Rubí C & G Carandini, SA Parets del Vallès Aneuker, SL Bigues i Riells

Description of the This local industrial production system's main line of business is local industrial manufacturing lighting. Some of the companies focus on produ- production system cing parts and components for lighting, while others use those parts to make finished products. Others carry out all phases of the production process.

This local industrial production system dates back to the early 20th century, with the creation of Fábrica Nacional de Lámparas Eléctri- cas de Incandescencia and Sociedad Española de Lámparas Eléctri- cas Z, which was later bought out by Philips. However, the local industrial production system did not truly begin to take shape until the 1960s, when numerous small and medium-sized companies began to emerge in this segment. Some of these were metallurgy companies that diversified into this activity, while others were spin- offs that were founded by workers who had left other companies.

155 2. Local industrial production systems in Catalan industry

The lighting segment produces two types of finished products: outdoor (street lighting, garden lighting, decorative lighting, archi- tectural lighting, etc.) and indoor (office lighting, technical lighting, home lighting, etc.). However, the local industrial production system in the Barcelona metropolitan area is specialized in outdo- or and technical lighting with a modern style and a design component that gives the products an added value and sets them apart from the rest. The local industrial production system even produces exclusive models that require specialized parts.

As for the value chain, while local suppliers do exist, the local industrial production system imports many components – mainly from China – particularly for the production of the most standardized models. The local industrial production system has three types of clients: department stores, furniture and lighting stores and others (city councils, distributors, engineering firms, etc.).

Other agents that - Agrupació de Fabricants Exportadors d’Aparells d’Il·luminació collaborate with (IND) http://www.selci.com the local industrial - LGAI technological center (TEC) http://www.lgai.es production system

156 2.2.10 Local industrial production systems in the transportation-equipment industry

Basic characteristics of the transportation equipment industry in Catalonia

This industry can be divided into five sectors: 1) private cars; 2) industrial, commercial and all-terrain vehicles; 3) motorcycles and mopeds; 4) the automotive-related industry; and 5) other transportation equipment.

The private-car sector includes automobiles designed for transporting passengers that have at least four wheels and at most nine seats, including the driver's seat. Microcars are not included in this sector. They are considered mopeds because they do not have engines larger than 50 cc and have a maximum speed of 45 kilometres per hour. This sector is characterized by suppliers that are highly integrated with the activity of the end clients, a supply-simplification process, the globalization of the activity, and a rapid and intense process of reorganization and concentration of worldwide manufacturers.

The industrial, commercial and all-terrain vehicles sector can be divided into two clearly differentiated segments. The first segment is industrial and commercial vehicles, which are used for production-related activities in general and, more specifically, for transporting goods or a large number of people. This segment includes capital goods such as light and heavy industrial vehicles, commercial vehicles (such as vans and trucks), tractor trai- lers, buses and coaches. The other segment of this sector is all-terrain vehicles. This category mainly includes vehicles driven by end consumers for personal transportation, therefore making them essentially consumer goods. Like the private-car segment, this segment is undergoing a production-simplification process and is using subcontractors for most manufacturing processes. Production in this segment is also becoming globali- zed and companies are becoming concentrated through mergers and buyouts involving the largest manufacturers.

The motorcycle and moped sector includes all two-wheeled vehicles, with or without power assistance, that are basically used for the private transportation of people. This category includes motorcycles, mopeds, bicycles, vehicles for disabled people, sidecars, quads, etc. Within this sector there are two main segments: motorcycles and mopeds. The moped segment includes two-wheeled vehicles with an engine smaller than 50 cc. The motorcycle segment includes two-wheeled vehicles with an engine larger than 50 cc. A related industry specialized in the production of parts and accessories for these vehicles has developed around the motorcycle and moped sector. This industry includes activities such as metallurgy, electrical and electronic equipment, plastics, textiles, rubber, etc. The motorcycle and moped sector is adapting to changes that have taken place at the international level in recent years. The globalization of the economy and industry has recently caused companies from this sector to carry out mergers, takeovers, etc., to create better conditions to compete with major multinational corporations and new Asian manufacturers. The solution to the sector's recent crisis mostly affects the moped segment: manufacturers are restructuring and focusing on the production of models with larger engines.

The automotive-related sector supplies products to two different markets. The first is the OEM market, which buys the parts used to manufacture vehicles. This market is made up of manufacturers of private cars, industrial and commercial vehicles, and other types of vehicles. The second is the spare-parts market, which is made up of independent distri-

157 2. Local industrial production systems in Catalan industry

butors and, especially, auto-repair shops. These two markets behave very differently. For example, a decrease in the number of vehicles registered has a negative impact on the OEM market and a positive effect on the spare-parts market, because it means that the vehicles on the road are older overall and, therefore, require more spare parts. There has been a process of simplifying the supplies provided to client companies. This has caused a notable change in the supply chain and the adoption of a pyramid-shaped supply structure, which has reduced the number of companies that directly supply products to vehicle manufacturers, known as first-tier suppliers. The rest of the companies in the segment (lower-tier suppliers) depend on the first-tier suppliers. Automotive-related companies have also been progressively integrated into the vehicle-manufacturers' plants. In fact, vehicle manufacturers have gradually been focusing more on design and the integration and coordination of assembly. Subcontracting and components have therefore become more important. Logically, the globalization process affecting the automotive industry is also influencing the automotive-related industry. Globalization forces the companies in the industry to have a certain level of production, technical and financial capacity in order to serve their clients. At the same time, they are forced to relocate to areas close to decision-making centres and their assembly plants. As a result, demand in the automotive-related industry is increasing in new geographical areas, which is reducing its specific weight in areas that have traditionally consumed the industry's products.

The sector of other transportation equipment can be divided into two segments: railway equipment and aerospace equipment. The railway-equipment segment includes the production of locomotives; railcars; and any mechanical, electrical and electronic equipment incorporated into the main units. The demand for railway equipment is basically influenced by public investments (by regional governments and public-sector companies) and, to a much lesser extent, by private-sector orders (by transportation companies). Renova- tion activities make up a major part of the market and lead to marked cyclical fluctuations. The aerospace-equipment segment can be divided into the aeronautics segment and the space segment. Aeronautics includes the production, maintenance and repair of aircraft; interior design; aviation software; engineering; engine manufacturing; fusela- ges; tools; and on-board parts. The aeronautics industry is very technologically advanced and is characterized by major growth. The industry offers highly skilled jobs; invests a lot in research, development and innovation; and acts as a driving force in the economy because of the amount of services it subcontracts. The demand for aerospace equipment is also heavily influenced by public and military spending.

Catalonia is very important to the Spanish transportation-equipment industry. At the national level, the region generates close to 6% of the gross domestic product, directly or indirectly employs 10% of the labour force and exports close to 80% of its production. Furthermore, Catalonia is responsible for close to 20% of all Spanish investment in research, development and innovation and generates over 20 billion in revenue for the Spanish government every year through different taxes. In Catalonia the transportation- equipment industry accounts for approximately 4% of gross value added at factor cost, 3.5% of employment and nearly 20% of industrial exports.

In the private-car sector, SEAT is currently Catalonia's most important manufacturer in terms of turnover. The company directly employs around 13,000 people and provides jobs indirectly for over 40,000 more. It also plays a fundamental role in Catalan exports – it is the leading Catalan company in terms of volume of sales in foreign countries. Because of the high level of international competition, Catalonia is not expected to open any new automobile factories; investments are more likely in Eastern Europe or China.

158 SEAT is also highly involved in research and development. Its technical centre in Marto- rell employs around 1,200 more people and is integrated with the Volkswagen design centre in Sitges. In fact, Catalonia currently has more centres dedicated to advanced automotive design than any other region in the world except California (US), even bea- ting out countries like Italy, which has major centres in the cities of Turin and Milan. Today, Barcelona is home to design centres for such companies as Volkswagen, Renault (Renault Design Centre) and Volvo (Volvo Strategic Design Barcelona). Subaru and Fiat have also decided to open design centres in Barcelona. These centres are fully active and participate in designing the most important new features introduced by their respective brands.

Catalonia has traditionally held a leading position nationwide in the segment of industrial, commercial and all-terrain vehicles. However, not all kinds of industrial, commercial and all-terrain vehicles are manufactured in Catalonia. The main category lacking in the region is the production of light, medium and heavy industrial vehicles (trucks). Of the three companies operating in this sector in Catalonia, the most important is the Japane- se group Nissan Motor, which is partially owned by Renault. The company produces all- terrain vehicles, vans and minivans at its factory in Barcelona's Zona Franca. It also has a stamping factory in Montcada i Reixac that supplies exterior bodywork parts. The majority of this group's activity in Spain is concentrated in Catalonia, as are many of its vehicles and models, which generate the largest proportion of its turnover. In terms of turnover, Nissan Motor is one of the ten most important companies in Catalonia. The second most important company in this sector is Irisbus, which is owned by Iveco-Pega- so. The Irisbus headquarters was located in Barcelona until 2001, when it was relocated to Lyon, France. This company manufactures chassis for city and inter-city buses at its facilities in Barcelona's Zona Franca. Iveco-Pegaso used to use these facilities for manufacturing buses. The company also has a research and development centre in Barcelona. The third most important company is the German firm Mercedes-Benz. This company has a factory in Barcelona's Sant Andreu district that manufactures parts and components used in the production of vans and minivans, which are later fitted to the vehicles at the company's main plant in Vitoria. The Barcelona factory also supplies spare parts for different affiliates of the company.

Catalonia's motorcycle and moped sector is also very traditional. The region is a leader in Spain in terms of production and sales on foreign markets. Today, more than 80% of the sector's production activity in Spain is concentrated in Catalonia. The rest is divided between the autonomous communities of Madrid and Asturias. Catalonia's relative weight in the sector's nationwide production has increased in recent years. This increase is due more to the closure of the Piaggio factory in Arganda del Rey (Madrid) than with an improvement in the sector's performance in Catalonia with respect to the country as a whole.

Catalonia is home to the production facilities of three of Spain's major motorcycle and moped manufacturers. These companies – Montesa-Honda, Yamaha Motor España and Nacional Motor (Derbi) – are all located within five kilometres of each other in Vallès Occi- dental and Vallès Oriental Counties. The first two are subsidiaries of large Japanese multinationals and are mainly specialized in the production of mopeds and motorcycles with small engines (up to 250 cc), although in recent years they have been introducing more models with larger engines. Nacional Motor (Derbi) is a Catalan company that was bought out by the Italian group Piaggio in 2001. This manufacturer is specialized in the moped segment, although it also aims to produce models with larger engines. Two sma-

159 2. Local industrial production systems in Catalan industry

ller companies in this sector are also located in Catalonia. The first is Gas Gas, which located in Salt and produces trial and motocross bikes. The second is Riera i Juanola (RIEJU), which is located in Figueres and specializes in producing mopeds with gearshifts.

Today Catalonia's automotive-related sector directly employs around 80,000 people and provides a similar number of jobs indirectly. More than 70% of this sector is made up of small and medium-sized companies (with less than 250 employees). These manufacturers fall into two main categories. The first category consists of around eighty first-tier suppliers – medium-to-large companies with their own line of products, which they supply directly to vehicle manufacturers. Within the sector, this group accounts for approximately 80% of production activity and about 60% of employment. Affiliates of multinational corporations are very common in this group – approximately two thirds of these companies are foreign-owned and they are responsible for 81% of employment in this sector. Because of the small size of most Catalan-owned companies, only a small percentage of them are able to meet the challenges presented by the sector at the international level. Most Catalan manufacturers fall into the category of second-tier suppliers. This means they depend on first-tier suppliers, which are usually foreign-owned. Nevert- heless, several comparative studies of the situations in different countries have indicated that the Spanish and Catalan sectors have high levels of quality and productivity – higher than their competitors – and low labour costs that are still competitive.

In the sector of other transportation equipment, Catalonia has traditionally been a leading Spanish region in the railway-equipment segment. This segment has been active in Catalonia since the mid-19th century. Alstom, a French- and British-owned firm that is a world leader in this segment, currently operates in Catalonia. This company bought out Barcelona's Maquinista Terrestre y Marítima in 1989 and has a factory in Santa Perpètua de Mogoda that manufactures passenger railcars. The Siemens factory in Cornellà de Llo- bregat is also important in this segment. It specializes in the production of electrical engines and equipment for trains manufactured by the group.

Catalonia was a leader in the Spanish aeronautics segment in the early 20th century, with such companies as Elizalde and Hispano-Suiza. Today, the region is home to just 5% of the Spanish sector overall, but 18% of the companies certified by the new EN9100 aerospace quality standard. Catalonia is in fourth place in this segment nationwide, where the autonomous communities of Madrid, the Basque Country and Andalusia occupy the leading positions.

The Barcelona Aeronautics and Space Association (BAIE) was created as an attempt to help the region regain some of its past importance in the aeronautics industry. This segment is very productive – it is certainly among the most productive segments of all Cata- lan industry. The aeronautics segment is responsible for close to 80% of total sales for the sector of other transportation equipment in Catalonia. The segment consists of only a few companies in Catalonia, all of which work in specific and specialized niches. Some of these companies produce small components for aircraft. In this activity, manufacturers have been able to create synergies with the automotive-components industry – which is very traditional in Catalonia – in areas such as plastics, electronics and tools, which have all seen intense growth recently.

160 Local industrial production systems in the transportation-equipment industry in Catalonia

This industry has 5 local industrial production systems in Catalonia. Together, they include 450 industrial establishments, employ close to 50,000 people and generate turnover of around € 12 billion. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages.

Vall d'Aran Bodywork

Pallars Sobirà Selva Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera MAPA Selva Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vall ès Occidental

Garrigues Railway Equipment Conca Barcelon de Barberà ès Alt Pened Barcelona M.A. ès Baix Llobregat Alt Camp Baix Motorcycles Penedès Garraf Barcelona M.A. Priorat

Tarragonès Ribera Baix Camp Automotive Industry d'Ebre Terra Alta Aerospace Barcelona I.B. Equipment Barcelona M.A.

Baix Ebre

Montsià Number of Establishments Employees

Barcelona M.A.=Barcelona Metropolitan Area Up to 50 Up to 1.000 Made up of Vallès Occidental and Oriental, Barcelonès and Baix Llobregat. 50-100 1.000-3.000 Barcelona I.B.=Barcelona Industrial Belt Includes the counties in the Barcelona M.A. plus More than 100 More than 3.000 Maresme, Selva, Bages and Alt Penedès Counties

161 2. Local industrial production systems in Catalan industry

Map of the Local Industrial Production Systems in the Transportation-Equipment Industry in Catalonia (*)

Manufacturers of coaches Associations and Guilds LPS Moulds and Engineering die makers Firms RAILGRUP, BAIE, SERNAUTO (Madrid) ANESDOR (Madrid)

Automotive manufacturers Suppliers Transport of plastic companies, components LPS Public operators First-tier suppliers (**) - components Motorcycle Suppliers of - systems and manufacturers metal modules GRÀFIC Logistics Licensees components LPS Operators

Manufacturers Suppliers of misc. of locomotives materials and railcars (textile, etc.) LPS Public operators

Machinery Shipbuilders manufacturers

Navig. comp. and individuals

Aerospace

(***) LPS

Universities Technology Centres and Training Centres

IDIADA, ASCAMM UPC LGAI, CENIT (*) The local industrial production systems is made up of the entire value chain (including suppliers, etc.) characterized by the end product. (**) Although some specialized suppliers exist, most work for different industries (***) The aerospace local industrial production system does not include any end-product manufacturers in Local industrial LPS production system Catalonia.

162 Name of local industrial production system: The automotive industry in the industrial belt of Barcelona

Location: Alt Penedès, Bages, Baix Llobregat, Barcelonès, Maresme, Selva, Vallès Occidental and Vallès Oriental Coun- ties Number of establishments:18 226 Number of employees: 35,188 Turnover (estimated): € 9.6 million Exports/production (%): 66 Specialization index: 1.47 Weight in its sector in Catalonia(%): 76.9 Weight in all Catalan industry (%): 0.50

Main establish- Name of company City or town ments19 in the local Seat, SA Martorell and Barcelona industrial production Nissan, SA Barcelona and Montcada i R. system Frape Behr, SA Barcelona (and Montblanc) Delphi Diesel Systems, SL Sant Cugat del Vallès Gearbox del Prat, SA El Prat de Llobregat Trety, SA Maçanet de la Selva Autoliv Kle, SA Granollers Bosch Sistemas de Frenado, SL Lliçà de Munt Kostal Eléctrica, SA Sentmenat Mercedes – Benz España, SA Barcelona

Description of the This local industrial production system's main line of business is the local industrial production of motor vehicles, including private cars, commercial production system vehicles and all-terrain vehicles. There are three manufacturers in this local industrial production system that manufacture final products (Seat, Nissan and Irisbus). The local industrial production system also includes around eighty first-tier suppliers – medium-to- large companies (normally owned by foreign multinationals) with their own line of products, which they supply directly to vehicle manufacturers. A third group of companies in this local industrial

18 We have used the data for the 226 establishments listed in the Register of Industrial Establishments of Catalonia (REIC) with CCAE codes 34100 (motor vehicles) and 34300 (non-electrical parts and accessories for motor vehicles and their motors). However, there are also many companies working in the automotive-related industry that have codes for moulds and dies, plastics, metal products, etc. Therefore, we estimate that this local industrial production system actually has close to 500 establishments, employs around 100,000 people and generates turnover of around 19 billion. .

19 For this local industrial production system, we have opted to list the main establishments instead of the main companies because most are multinationals with several plants, which makes it difficult to ascertain the total number of workers.

163 2. Local industrial production systems in Catalan industry

production system is made up of numerous small and medium- sized companies, which normally act as lower-tier suppliers and generally specialize in a certain production process or a specific type of technology or machinery, rather than a specific product. For example, they may produce plastic or rubber elements; metal parts made by stamping, smelting, forging, machining or sintering; or electrical and electronic components. As a result, many companies in the local industrial production system have CCAE codes that do not in themselves reflect the fact that they work for the automotive industry. Furthermore, many of these companies also work for other industries, including electronics, motorcycles, rail- ways, construction, etc.

This local industrial production system has a very large market and encompasses nearly all of the processes of the value chain in the production of motor vehicles. It also includes a strong network of suppliers and subcontractor workshops, making it one of Catalo- nia's most complete local industrial production systems. However, with eight counties, its geographical scope is perhaps larger than average for a local industrial production system. The individual counties are not specialized in specific types of components or materials – rather, suppliers of all types are generally found in all counties.

As for technology, although most of the large companies in the local industrial production system are foreign multinationals, many of them have R&D centres in Catalonia. Furthermore, in recent years this local industrial production system has become a prefe- rred destination among the world's leading automobile manufacturers for setting up industrial design centres. In fact, Catalonia currently has more centres dedicated to advanced automotive design than any other region in the world except California.

The production of vehicles has long been traditional in the industrial belt of Barcelona. The region gained some experience in the industry before the Spanish Civil War. Later, in the 1940s, the publicly owned company Empresa Nacional de Autocamiones (Enasa-Pegaso) was created as the successor to Hispano-Suiza, which was formed in 1904. SEAT was created in 1953 and Nissan Motor Ibérica and Mercedes-Benz emerged later. A large and varied network of supplier companies developed in the ensuing decades. At the same time, the structure of this network was transformed in response to changes taking place in the industry at the international level. This sector – Catalonia's automotive-related industry – has a very high specific weight, accounting for 41% of turnover and 38% of the total number of companies nationwide.

164 Other agents that - LGAI technological center (TEC) http://www.lgai.es collaborate with - Institut d’Investigació Aplicada de l’Automòbil, with headquar- the local industrial ters in l’Abornar (Baix Penedès County) (TEC) http://www.idiada.es production system - Universitat Politècnica de Catalunya (TRA) http://www.upc.es - Centre de Visió per Computador de la UAB (TEC) http://www.uab.es/investigacio/cvc.htm - Centre CIM (TEC) http://www.centrecim.com/main.htm - Centre Tecnològic d’ASCAMM (TEC) http://www.ascamm.com/ct/cat/ct-home.asp - Centre de Recerca de Motors i Instal·lacions Tèrmiques (TEC) http://www.ascamm.com/ct/cat/ct-home.asp - Asociación Española de Fabricantes de Equipos y Componentes para Automoción (IND), with headquarters in Madrid http://sernauto.azertia.biz/scripts/home.asp - Asociación Española de Fabricantes de Automóviles y Camiones (IND), with headquarters in Madrid http://www.anfac.com/global.htm - Saló Internacional de l’Automòbil de Barcelona (OTH) http://www.salonautomovil.com/homec.htm - Centre d’Estudis i Assessorament Metal·lúrgic (OTH) http://www.ceam-metal.es - Circuit de Catalunya (OTH) http://www.circuitcat.com/catalan/index.asp

165 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Bodywork in Selva County

Location: Selva County Number of establishments: 23 Number of employees: 1,276 Turnover (estimated): € 250 million Exports/production(%): 20 Specialization index: 5.78 Weight in its sector in Catalonia (%): 15.65 Weight in all Catalan industry (%): 0.05

Main companies in Name of company City or town the local industrial Sun Roller, SA Fogars de la Selva production system Arbúcies Industrial, SA Arbúcies Beulas, SA Arbúcies Industrial Carrocera Arbuciense, SA Arbúcies Noge, SL Arbúcies Carrocerías Ayats, SA Arbúcies Metàl·lics Casa Nova, SA Arbúcies Autoline, SL Arbúcies Riudacarr, SCCL Maçanet de la Selva Bus Elèctric, SL Arbúcies

Description of the This local industrial production system's main line of business is the local industrial production of motor-vehicle bodywork. Most of the companies in production system this local industrial production system make bodywork for buses and coaches in the town of Arbúcies, although some companies in other towns in the county make other related products (bodywork for caravans, etc.). These companies normally buy the chassis and engine from multinationals in the industry (such as Iveco) and carry out custom projects for their clients, although they have also recently begun to introduce mass production.

This local industrial production system dates back to the year 1888, when Francesc Queralt opened the first cart and carriage factory in Arbúcies. He chose this town because the raw material (wood) was available nearby and because the locals had a degree of tradition and technical knowledge in forestry and ironworking, which was useful for building carriages. Joan Ayats, an employee of this factory, opened his own company in 1905. The bodywork industry developed as technology advanced. Wood was gradually abandoned in favour of iron and later aluminium, plastic and polyester.

166 Many of the bodywork companies in Arbúcies were formed as spin-offs of Ayats' company. Today, this local industrial production system is rather complex, as it includes many companies that supply products such as metal, wood, textiles and polyester. The design phase, however, still tends to take place outside of the local industrial production system. Most clients are also located outside the local industrial production system.

The geographical scope of the local industrial production system extends beyond the county line, into northern Maresme County and Osona County, where the manufacturers have affiliates that carry out certain parts of the process, such as welding. Some work is carried out in the hidden economy, especially the parts of the production process that involve the most manual labour.

This local industrial production system accounts for 90% of Cata- lonia's bus-production industry and 60% of Spain's. These companies mostly export products to EU countries and, to a lesser extent, to North Africa, the Middle East and Asia. One company even has production facilities in Morocco.

Other agents that - LGAI technological center, with headquarters in Bellaterra collaborate with (Vallès Occidental County) (TEC) http://www.lgai.es the local industrial - Institut d’Investigació Aplicada de l’Automòbil,with headquarters production system in l’Albornar (Baix Penedès County) (TEC) http://www.idiada.es

167 2. Local industrial production systems in Catalan industry

Name of local industrial produc:tion system: Motorcycles in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental County Number of establishments20: 37 Number of employees: 2.500 Turnover (estimated): € 900 million Exports/production (%): >50 Specialization index:21 1,35 Pes sobre el sector (%): 62,96 Pes sobre la indústria (%): 0,04

Main companies in Name of company Municipi the local industrial Montesa Honda, SA Santa Perpètua de M. production system Yamaha Motor España, SA Palau-solità i Plegamans Nacional Motor, SA (Derbi) Martorelles Showa Europe, SA Martorelles Manaut, SA Martorelles AJP Industrial, SA L’Hospitalet de Llobregat J. Juan, SA Gavà Fabricació de Components Lliçà de Vall de Motocicletes, SA Clipterplast, SA Les Franqueses del Vallès Leonelli, SA Sant Cugat del Vallès

Description of the Catalonia's motorcycle-production industry emerged in the 1920s local industrial and 1930s and has a long tradition in the region. In 1922, a bicy- production system cle repair, sales and rental shop opened in Martorelles that would later become the company Nacional Motor (Derbi). In 1936, the company Riera i Juanola (RIEJU) was created in Figueres. This boom in activity in Catalonia remained strong in later decades as a business community developed that included manufacturers of parts, accessories and components and motorcycle producers. The community gained a significant international representation with such companies as Montesa, Bultaco, Sanglas, Ducati (an Italian company) and Ossa.

However, in the late 1970s, the industry experienced a recession that caused many companies to shut down due to lack of technology and because Japanese and Italian products were invading the markets. Other companies were bought out by Japanese manu-

168 facturers. For example, Montesa was bought by Honda and San- glas was bought by Yamaha.

The motorcycle manufacturers in the local industrial production system are located in Vallès Occidental and Vallès Oriental Coun- ties. Their suppliers, however, are also located in the other two counties because many of them also work for other industries and, furthermore, the four counties of the local industrial production system are very close to each other.

Historically, this local industrial production system has benefited from the existence of a large number of both racing and off-road motorcycle enthusiasts (Barcelona is known as the "city of motorcycles") and knowledge and skills related to mechanical production in the Barcelona area.

For an idea of the importance of this local industrial production system, 83% of Spain's motorcycle production takes place in Cata- lonia. There are two small manufacturers located outside of the local industrial production system: RIEJU (Figueres) and Gas Gas (Fornells de la Selva), which specialize in the trial segment. Catalo- nia is one of the leading regions in the trial segment worldwide.

As for the value chain, certain components (20% overall) come from foreign countries (engines, electrical systems, etc.), while chassis, tubes, cables, wheels and tyres are all produced by local suppliers. The local industrial production system exports over half of its production, mainly to EU countries (Italy, France, Germany, the United Kingdom, etc.).

Other agents that - Asociación Nacional de Empresas del Sector de Dos Ruedas, with collaborate with headquarters in Madrid http://www.anesdor.com (IND) the local industrial - AFAMOTO (IND) production system - Institut d’Investigació Aplicada de l’Automòbil, with headquarters in l’Abornar (Baix Penedès County) http://www.idiada.es (TEC) - Asociación Española de Fabricantes Moto & Bicicleta (spare parts and accessories) http://www.gecys.com (IND) - Centre d’Estudis i Assessorament Metal·lúrgic (OTH) http://www.ceam-metal.es - Circuit de Catalunya (OTH) http://www.circuitcat.com/catalan/index.asp

20The Register of Industrial Establishments of Catalonia (REIC) only lists 17 establishments with CCAE code 35410 (production of motorcycles and their parts and components), which together employ 1,484 people. Many of the companies that work for the motorcycle industry have codes for automotive components, plastics, electrical equipment, etc. Therefore, the figures that appear for the number of companies, employment and turnover are estimated.

21However, in order to calculate the local industrial production system's specialization index, weight in its sector in Catalonia and weight in all Catalan industry, we used only the data for the 17 establishments with CCAE code 35410.

169 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Railway equipment in the Barcelona metropolitan area

Location: Barcelonès, Baix Llobregat, Vallès Occidental and Vallès Oriental Counties Number of establishments:22 120 Number of employees: 11,000 Turnover (estimated): € 1,100 million Exports/production (%): 20 Specialization index:23 1.34 Weight in its sector in Catalonia (%): 62.50 Weight in all Catalan industry (%): 0.02

Main companies in Name of comapny City or town the local industrial Alstom Transporte, SA Santa Perpètua de Mogoda production system Siemens, SA Cornellà de Llobregat Temoinsa, SA Granollers Draka Cables, SA Santa Perpètua de Mogoda Emte Sistemas, SA Esplugues de Llobregat Fainsa, SA Martorelles Telstar Industrial, SA Terrassa Aunde, SA Sant Celoni Metall Malgrat de Precisió, SA Caldes de Montbui Constr. Modulares y Comp. de Santa Perpètua de Mogoda Interiorismo, SA

Description of the This local industrial production system's main line of business is the local industrial production of railway equipment (locomotives, railcars, subsys- production system tems, signalling, maintenance and services). In Catalonia there is only one manufacturer of finished railway rolling stock (Alstom, which has a plant in Santa Perpètua de Mogoda). However, there is a strong network of first- and second-tier suppliers, engineering firms and related companies. As a result, the local industrial production system includes almost all of the processes involved in the value chain for the production of railway rolling stock.

The local industrial production system also includes numerous companies that build railway infrastructure (civil works, engineering, electrification, signalling) and railway operators (Ferrocarrils de la Generalitat and TMB), which do not, however, form a part of the strictly industrial local industrial production system. Naturally, the local industrial production system also sells many products to operators in other parts of Spain and in other countries.

170 As for technology, although most of the large companies in the local industrial production system are foreign multinationals, many of them have R&D centres in Catalonia.

Catalonia has traditionally been a leading Spanish region in the production of railway equipment. This activity dates back to the Industrial Revolution of the second half of the 19th century, when the company La Maquinista Terrestre y Marítima was formed, followed by Material para Ferrocarriles y Construcciones (which in 1947 would become Material y Construcciones – MACOSA). These companies no longer exist, as they became part of Alstom in the late 1980s. The Siemens factory in Cornellà de Llobregat is also important in this segment. It specializes in the production of electrical engines and equipment for trains manufactured by the group.

Other agents that - Centre d’Innovació del Transport http://www.cenit.es (TEC) collaborate with - Railgrup http://www.railgrup.net (IND) the local industrial production system

22Not all companies in this local industrial production system have CCAE code 35200 (production of railway equipment). Some have codes for other activities such as automotive components, metal products and plastics. The number of companies, number of employees and turnover are therefore estimated. The estimates refer only to industrial companies and not construction companies, operators, etc. Most of these companies also work in other industries (automotive, motorcycles, aerospace, construction, etc.).

23However, in order to calculate the local industrial production system's specialization index, weight in its sector in Catalonia and weight in all Catalan industry, we used only the data for the 10 establishments with CCAE code 35200.

171 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Aerospace equipment in the Barcelona metropolitan area

Location: Baix Llobregat, Barcelonès, Vallès Occidental and Vallès Oriental Counties Number of establishments: 43 Number of employees: 750 Turnover (estimated): € 125 million Exports/production (%): 25 Specialization index: undetermined24 Weight in its sector in Catalonia (%): undetermined Weight in all Catalan industry (%): undetermined

Main companies in Name of company City or town the local industrial Serra Soldadura, SA Barcelona production system GTD Ingeniería de Sistemas Barcelona y de Software, SA TMS Aritex Cading, SA Badalona Rücker Lypsa, SL Cornellà de Llobregat Indra Espacio, SA Barcelona Cimsa Ingeniería de Sistemas, SA Les Franqueses del Vallès Mier Comunicaciones, SA La Garriga NTE, SA Lliçà d’Amunt Ultramàgic, SA Òdena Turco Española, SA Barcelona

Description of the This local industrial production system's main line of business is the pro- local industrial duction of materials for the construction of aircraft (79.4% overall) and production system for satellites and spacecraft (20.6% overall). Most of the local industrial production system's production is exported or sold in other parts of Spain, since there are no end-product manufacturers in Catalonia.

This local industrial production system includes companies specialized in products of many different kinds (software, electronics, metal products, engineering, machinery, etc.) but which have the same final destination. The suppliers are also very diverse and are located both inside and outside of Catalonia.

Catalonia was a leader in the emerging Spanish aeronautics industry in the early 20th century, with such companies as Elizalde and Hispano- Suiza. Naturally, the region's high specific weight was substantially reduced after the Spanish Civil War because the leading airplane manufacturers, located in Barcelona's Eixample district and the Sabadell area, lost influence to Madrid. In late 2003, Catalonia was responsible for

172 5% of the segment's total turnover nationwide, even though it was home to 18% of the companies certified by the new EN9100 aerospace quality standard. Catalonia is in fourth place in this segment nationwide, after the autonomous communities of Madrid, the Basque Country and Andalusia (which account for 60%, 15% and 15% of the segment nationwide, respectively).

The Barcelona Aeronautics and Space Association (BAIE) was created as an attempt to help the region regain some of its past importance and boost the Catalan aeronautics industry. This association has 87 mem- bers companies, universities and administrations (for example, GTD, Mier Comunicaciones, Nuevas Tecnologías Espaciales, Indra, Sener, Ingeniería y Sistemas, Atos Origin Gutmar, Edag, Enginyeria del Vallès, Rücker Ibérica, Roga, Ministerio de Industria, Generalitat de Catalunya, Ajuntament de Barcelona, Universitat Autònoma de Barcelona, Univer- sitat de Barcelona and Universitat Politècnica de Catalunya). Further- more, this segment is very productive. With turnover of € 142,000 per employee, it is certainly among the most productive segments of all Catalan industry.

Other agents that - Barcelona Aeronàutica i de l’Espai http://www.bcnaerospace.org collaborate with (IND) the local industrial - Fundació Parc Aeronàutic de Catalunya http://www.fpac.org production system (OTH) - Institut d’Estudis Espacials de Catalunya http://www.ieec.fcr.es (TEC) - Centre de Formació Ocupacional La Paperera http://www.lapaperera.es (TRA) - Centre Internacional de Mètodes Numèrics en Enginyeria http://www.cimne.upc.es (TEC) - Centre de Disseny d’Aliatges Lleugers i Tractaments de Superfície http://www.cdaltec.com (TEC) - Centre d’Estudis Superiors de l’Aviació http://www.cesda.com (TRA)

24 We were unable to calculate the specialization index and the concentration figures because most companies that work in this local industrial production system do not have CCAE code 35300 (production of aeronautics and space equipment). Instead they have others codes, such as automotive components, software, etc.

173 2. Local industrial production systems in Catalan industry

2.2.11 Local industrial production systems in other manufacturing industries

Basic characteristics of other manufacturing industries

AThis category can only be considered an entity in the sense that it does not fit with any conventional statistical treatments. The Catalan Classification of Economic Activities (CCAE-93) groups a wide variety of completely diverse activities in this category that, if considered individually, have little significance in an industrial context and are sometimes considered residual activities.

The following are the activities that the CCAE-93 classification includes in this category:

• Furniture • Jewellery, gold, silver and similar items • Musical instruments • Sporting goods • Games and toys • Costume jewellery • Recycling

However, for the purposes of this study, we have included furniture manufacturing with the wood and cork industry because there are obvious links between the wood and furniture local industrial production systems.

Of the other activities included in this category, we have only detected a local industrial production system for the jewellery industry. We have also included another local industrial production system – decorative ceramics – in this category. The CCAE-93 classification includes this activity under other non-metallic mineral products. We have decided to include it in this residual sector there are no other non-metallic mineral local industrial production systems and because the decorative-ceramics industry is really a craft, much like the other activities included in this category.

Due to the peculiar nature of this diverse category, we cannot describe its general characteristics. We can, however, briefly describe the two segments that have a local industrial production system in Catalonia.

In general terms, the jewellery and costume-jewellery segment includes all products that are totally or partially manufactured using precious metals and target end consumers. This segment does not include scientific instruments, dental prosthetics, medical tools or musical instruments made from or coated with precious metals. The production of the different items that make up the jewellery and costume-jewellery segment requires precious metals, such as gold, silver, platinum, palladium and all of the alloys of these metals that can be made with non-precious metals.

However, we must distinguish between jewellery on one hand and costume jewellery and gold-filled jewellery on the other. Jewellery is produced using only precious base metals and is sometimes complemented by gemstones. In contrast, gold-filled jewellery and costume jewellery are produced using an inexpensive base metal that is coated with layers of precious metal. The difference between gold-filled jewellery and costume jewellery is the number of layers of precious metal covering the base. Gold-filled jewellery has at

174 least six layers, whereas costume jewellery has just one layer of a precious metal, generally gold.

Jewellery, strictly speaking, can be divided into two segments:

• Middle-low segment: This segment features more highly mechanized production processes than the other segments. These products are not differentiated by their design but rather by their price, which is the key factor in their competitiveness. This segment includes, for example, companies that produce gold chains, many of which are from Italy. • Middle segment: In this segment, some phases of the production process are mechanized and others are manual. The products in this segment tend to incorporate a certain level of design at an average price. The margin of profit is therefore greater than in the middle-low segment. • Middle-high segment: This segment produces a small volume with very little mechanization. The products tend to include many precious stones and most of the production process is manual. As a result, the prices are higher.

According to the Statistical Institute of Catalonia, the segment of jewellery, sporting goods and toys (the greatest degree of specification available) has 841 establishments in Catalonia, which make up 2.4% of all industry in the region. The segment employs 9,200 people, which amounts to approximately 1.4% of employment for Catalan industry overall. It has turnover of 1.022 billion, which is less than 1% overall.

The ceramics industry can be divided into four segments according to the purpose of the products:

• Packaging for the food industry: These ceramic containers are used for food products such as ice cream, junket and Catalan crème brûlée. These containers are sold directly to the food producers. They are produced in large batches with a high level of automation in order to keep prices low and delivery times short. • Ceramic products for tourism: These decorative items are usually sold in souvenir and gift shops. They are usually handcrafted and need to be marketed in as many shops as possible in order to reach potential consumers. • Construction materials: This segment includes mostly flooring and tiles, which are produced in large batches in order to achieve economies of scale and have an important design and fashion component. These products are sold to construction companies but can also be sold to consumers through specialized shops. • Ceramic household objects: This segment includes decorative and utilitarian household objects with a large fashion component. These products are usually sold in department stores, household-object chains or independent shops, but the manufacturer must also give good service to the distribution channels.

According to the Statistical Institute of Catalonia, the glass and ceramic products segment (the greatest degree of specification available) has 513 establishments in Catalonia, which make up 1.4% of all industry in the region. The segment employs 12,600 people, which amounts to approximately 2% of employment for Catalan industry overall. It has turnover of 1.811 billion, which is close to 1.6% overall.

175 2. Local industrial production systems in Catalan industry

Local industrial production systems in other manufacturing industries in Catalonia

This industry has 2 local industrial production systems in Catalonia. Together, they include more than 240 industrial establishments, employ close to 1,400 people and generate turnover of around €160 million. However, it is important to note that the companies involved in the main business of each local industrial production system are surrounded by numerous companies that act as clients, suppliers, subcontractors and service providers, which makes the total employment and turnover levels even higher.

The main data on these local industrial production systems are presented on the following pages. We have made two independent functional maps because the jewellery and ceramics local industrial production systems are not related to each other.

Vall d'Aran

Pallars Sobirà Alta Ribagorça

Cerdanya

Alt Urgell Alt Empordà Ripollès

Pallars Jussà Garrotxa Pla de Berguedà l'Estany

Solsonès Osona Gironès Baix Empordà Noguera

Selva

Bages Segarra

Vallès Pla d'Urgell Oriental Urgell Anoia Maresme Segrià Vallès Occidental Decorative

Garrigues Ceramics MAPA Conca Barcelon de Barberà ès Alt Baix Empordà Pened ès Baix Llobregat Alt Gironès Camp Baix Penedès Selva Garraf Priorat

Tarragonès Ribera Baix Camp d'Ebre Terra Alta Jewellery Barcelonès

Baix Ebre

Montsià Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000

More than 100 More than 3.000

176 Map of the Local Industrial Production Systems in the Decorative Ceramics Industry in Catalonia

Industry Educational and Associations Training Centres

Associació Ceramistes Escola de Ceràmica de la de Catalunya Bisbal d’Empordà

Food packaging Suppliers of Manufacturers clay and minerals of decorative Home decoration ceramic User industries products LPS Construction materials Souvenir shops

Suppliers of Importers of enamels, equipment for paints and the ceramics varnishes industry: ovens, presses, etc.

Local industrial LPS production system

Map of the Local Industrial Production Systems in the Jewellery Industry in Catalonia

Importers of machinery for Educational and working precious Training Centres metals

Escola Massana Importers Jewellery Jewellers Escola de Gemmologia (UB) of precious metals manufacturers Institut Politècnic FP and gemstones and Verge de la Mercè workshops LPS

Designers Wholesalers Industry Associations

Col•legi Oficial de Joiers, de Rellotgers i de Gemmòlegs de Catalunya Local industrial LPS production system

177 2. Local industrial production systems in Catalan industry

Name of the local industrial production system: Jewellery in Barcelones County

Location: Barcelonès County Number of establishments: 180 Number of employees 820 Turnover (estimated): € 100 million Exports/production (%): 10 Specialization index: 3,88 Weight in its sector in Catalonia (%): 66,18 Weight in all Catalan industry (%): 0,40

Main companies in Name of company City or town the local industrial D’Or Joiers, SA Barcelona production system Cunill Orfebres, SA Barcelona Talleres Alcudia, SA L’Hospitalet de Llobregat Bagués Masriera, SA Barcelona Rengay, SL Barcelona Druguet, SA Barcelona Joyador, SA Badalona Jayda, SA Barcelona Gaig-Tous, SL Barcelona National Gold, SA Barcelona

Description of the The main line of business of this local industrial production system local industrial is the production of jewellery, mainly using gold or diamonds, in a production system segment characterized by current design and fashion, although there are also goldsmithing and silversmithing companies and shops.

There are also major companies from this segment in the rest of the Barcelona metropolitan area and Bages and Osona Counties. However, the geographical demarcation of the local industrial production system is limited to Barcelonès County, mainly the city of Barcelona, because this is the area with the most interrelationships between companies, especially cases in which parts of the production process (melting, metal findings, setting stones, engraving, etc.) are subcontracted. In fact, there are very few companies that carry out the entire process internally. This is why the list of the main companies, which were selected according to the number of employees, does not include jewellers with high volumes of turnover.

178 This local industrial production system originated between the 10th and 13th centuries, when Barcelona began producing gold and silver objects for religious ceremonies. It truly began to develop in the 19th century in response to growing demand from the Catalan bourgeoisie.

In recent decades, the jewellery local industrial production system has undergone a major process of transformation. Production has decreased and imports have increased notably, both from Italy and Asia. Today, many of the local industrial production system's companies are jewellery importers that give added value to the product by incorporating design.

The local industrial production system is made up of many small companies that work for the local and national markets and a handful of medium-sized companies that export a large part of their production. There are also numerous workshops specialized in certain phases of the production process and independent designers that work for third parties or subcontract the production of their designs and then market them.

As for the value chain, the raw materials are imported and the products are sold through many different small shops (Catalonia has over 3,000 such registered shops), some of which make their own products. The machinery used in the local industrial production system tends to be imported.

Along with Valencia and Andalusia, Catalonia is one of Spain's leading autonomous communities in jewellery production.

Other agents that - Col·legi Oficial de Joiers, d’Orfebres, de Rellotgers i de Gemmò- collaborate with legs de Catalunya (IND – TRA – OTH) the local industrial - Escola de Gemmologia de la UB (TRA) production system http://www.ub.es/escgem/gemmo.htm - Institut Politècnic FP Verge de la Mercè (TRA) - Escola Massana, related to the UAB (TRA) www.escolamassana.es/

179 2. Local industrial production systems in Catalan industry

Name of local industrial production system: Decorative ceramics in the souhern counties of Girona province

Location Baix Empordà, Gironès and Selva Counties Number of establishments: 67 Number of employees: 579 Turnover (estimated): € 60 million Exports/production (%): 10 – 15 Specialization index: 6,75 Weight in its sector in Catalonia (%): 51,54 Weight in all Catalan industry (%): 0,15

Main companies in Name of company City or town the local industrial Industrias Cerámicas Brancós, SA La Bisbal d’Empordà production system Arcillas de Breda, SA Riells i Viabrea Porcelanas del Ampurdán, SA Forallac Ceràmiques Graupera, SA Breda Gres Breda, SA Riells i Viabrea Ceràmica Ferrés, SA Corçà Terra i Tradició, SCCL La Bisbal d’Empordà Ceràmica Puigdemont, SL La Bisbal d’Empordà Ceràmiques J. Torrent, SA Breda Cerámicas Sir, SA Breda

Description of the This local industrial production system's main line of business is local industrial producing and marketing ceramic products. The local industrial production system production system mostly produces items for household or decorative use, but it also makes food packaging, flooring and gardening supplies. Although they belong to different segments, the companies in this local industrial production system all have the skills involved in making ceramics.

In terms of geographical scope, the local industrial production system is basically concentrated in the towns of La Bisbal d’Empordà (Baix Empordà County) and Breda (Selva County) and the immediately surrounding area.

This local industrial production system dates back to the Middle Ages, when a series of crafts flourished in the area thanks to the presence of clayey, alluvial soils rich in aluminium and calcium car- bonate, which were perfect for making earthenware goods.

This local industrial production system is made up of around sixty small companies, 80% of which have turnover of less than 1

180 million a year. However, these companies are complemented by nearby suppliers of raw materials such as soils and minerals, gla- zes, paints and varnishes, and manufacturers of equipment such as kilns and presses. There are also about fifty shops that sell the products, especially decorative ceramics, in nearby tourist destina- tions. Skilled labour is also abundant in the area, which has a centuries-old tradition of working in this trade. As a result, this local industrial production system is quite complete, despite the small size of its market.

The products produced by the local industrial production system that are not sold in the area's shops (some of which are owned by manufacturers) are sold through wholesalers, which distribute the products to specialized shops, buying chains, food companies, etc. Despite the fact that the local industrial production system's export level is not very high, it is considered a traded local industrial production system because it exports indirectly by selling products to tourists and also competes with imported products

Other agents that - Escola de Ceràmica de la Bisbal d’Empordà i Centre d’Artesania collaborate with http://www.esceramicbisbal.com (TRA) the local industrial - Terracotta Museu production system http://www.labisbal.info/terracotta/index.php (OTH) - Fira - Mercat de la Terrissa Catalana, Quart http://www.firesifestes.com/Fires/F-Terrissa-Quart.htm (OTH) - Associació Ceramistes de Catalunya, with headquarters in Barcelona http://www.ceramistescat.org (IND)

181 182 3

Overview

183 3. Overview

Catalonia is home to 42 traded local industrial production systems, which together include 9,000 industrial establishments, employ close to 235,000 people and generate turnover of more than € 45 billion. Within Catalan industry as a whole, these local industrial production systems account for 26% of establishments, 36% of employment and 39% of turnover, which is the equivalent of an estimated 10% of the region's GDP. However, the influence of these local industrial production systems is certainly even greater than this data suggests, because it only refers to the main activity of each local industrial production system. Numerous companies located near the local industrial production systems act as clients/suppliers and provide services. They, too, form a part of local industrial production systems.

Table 1. Local Industrial Production Systems in Catalonia * in millions of euros

Industries Establishments Employees Turnover* Food and Drink Industry Pork products in the counties of Girona province and Osona County 222 8,289 2,000 Mineral water in Selva County 11 634 400 Penedès wines and cavas 214 2,478 575 Olive oil in Southern and Western Catalonia 129 887 500 Textile, Clothing and Leather Industry Clothing manufacturers in the Barcelona metropolitan area 500 7,894 700 Wool spinning and weaving in Vallès Occidental County 88 2,616 275 Cotton spinning and weaving in central Catalonia 153 2,945 325 Recycled-cotton spinning in Garrotxa County 22 738 100 Knitted fabrics in Anoia County 129 2,611 225 Knitted fabrics in Maresme County 196 2,231 200 Narrow fabrics in Bages County 28 820 100 Bovine leather in Anoia 46 791 175 Sheepskin in Osona and Vallès Oriental Counties 28 1,918 300 Wood, Furniture and the Cork Industry Lumber industry in Osona and Selva Counties 227 1,228 100 Cork in the Costa Brava area 83 1,130 225 Household furniture in Vallès Oriental County 95 942 100 Household furniture in Montsià County 36 938 100 Paper, Publishing and Graphic-Arts Industry Production of paper and cardboard in the Anoia, Bitlles and Llobregat River basins 31 1,673 400 Graphic arts and publishing in the Barcelona metropolitan area and central Catalonia 1,025 19,208 2,250 Chemical Industry Consumer chemical products in the Barcelona metropolitan area 205 8,056 2,100 Raw chemicals in Tarragona and the surrounding area 47 4,891 5,600 Pharmaceutical products in the Barcelona metropolitan area 132 12,523 3,300 Plastics Industry Plastic products in the Barcelona metropolitan area 803 28,182 3,800 Metallurgy and Metal-Products Industry Metal products in the Barcelona metropolitan area and central Catalonia 2,680 39,018 4,250 Machinery and Mechanical-Equipment Industry Machinery for the food industry in Vallès Occidental County 38 500 80 Machinery for the food industry in the counties of Girona province and Osona County 77 939 125 Agricultural machinery in Western Catalonia 85 615 75 Packaging machinery and equipment in the Barcelona metropolitan area 54 1,443 300 Machinery for the textile and clothing industry in Bages and Vallès Occidental Counties 61 790 100 Handling and storage machinery in the Barcelona metropolitan area 139 4,400 925 Valves and taps in Baix Llobregat and Vallès Occidental Counties 66 1,700 250 Moulds and dies in the Barcelona metropolitan area 278 3,691 300 Electrical- and Electronic-Equipment Industry Electronics in the Barcelona metropolitan area 125 7,656 2,200 Electrical switchgear in the Barcelona metropolitan area 133 5,222 750 Lighting in the Barcelona metropolitan area 125 2,500 300 Transportation-Equipment Industry The automotive industry in the industrial belt of Barcelona 226 35,188 9,600 Bodywork in Selva County 23 1,276 250 Motorcycles in the Barcelona metropolitan area 37 2,500 900 Railway equipment in the Barcelona metropolitan area 120 11,000 1,100 Aerospace equipment in the Barcelona metropolitan area 43 750 125 Other Manufacturing Industries Jewellery in Barcelonès County 180 820 100 Decorative ceramics in the southern counties of Girona province 67 579 60

Total for all industries 9,007 234,210 45,640

184 Table 1 shows that companies included in the traded local industrial production systems are present in nearly all industries. The only activities that do not have local industrial production systems are the extractive, power and non-mineral industries because they do not tend to be open to foreign competition and, in some cases, are dominated by a handful of large companies. The precision machinery and instruments industry is an exception. It has geographical concentrations, but they are not coordinated enough or do not have a large enough market to be considered geographical local industrial production systems.

The largest local industrial production systems, in terms of the number of establishments, are metal products, graphic arts and publishing, and plastics. All three are located in the Barcelona metropolitan area and neighbouring counties. Furthermore, they are all cross- cutting local industrial production systems in that they support other local industrial production systems and industries (automotive, electronics, construction, machinery, etc.).

In terms of the number of employees, the three largest local industrial production systems are metal products, automotive and plastics. All three are located in the Barcelona metropolitan area and neighbouring counties. The automotive local industrial production system plays a central, linking role for the other two local industrial production systems, which work largely for it. In fact, as mentioned in the section on the automotive industry, an estimated 100,000 people work directly or indirectly in this activity. The importance of the automotive industry is also made clear when the local industrial production systems are listed in terms of volume of turnover – the automotive local industrial production system takes first place. The raw-chemicals local industrial production systems in Tarragona and the surrounding area comes in second and the metal-products local industrial production system appears in third place.

The large markets of these local industrial production systems are in stark contrast with the markets of the more modest local industrial production systems. The smallest local industrial production systems, in terms of the number of establishments, are the mineral-water local industrial production system in Selva County, which has 11; the recycled- cotton-spinning local industrial production system in Garrotxa County, which has 22; and the bodywork local industrial production system in Selva County, which has 23. Howe- ver, the smallest in terms of the number of employees and turnover are decorative ceramics in the southern counties of Girona province; machinery for the food industry in Vallès Occidental County and agricultural machinery in Western Catalonia.

Geographically speaking, the largest local industrial production systems are the automotive local industrial production system, with eight counties; the metal-products local industrial production system, with seven, and the olive-oil local industrial production system, also with seven. In a way, the geographical extension of these local industrial production systems reduces the local nature of the phenomenon we are studying. However, we decided that each of these local industrial production systems formed a continuum that could not be subdivided into smaller or more specialized areas. In any event, they are all smaller than a province, which, as mentioned in the methodology section, is the maximum size limit according to most authors.

At the other end of the spectrum, the smallest local industrial production systems are classified in this study as occupying one county. However, some are actually limited to a single town or city, such as the bovine-leather local industrial production system in Anoia

185 3. Overview

County (concentrated in Igualada) and the bodywork local industrial production system in Selva County (concentrated in Arbúcies).

One important aspect not addressed in Table 1 is the question of which Catalan local industrial production systems are the most complete, meaning that their geographical area contains companies that carry out most of the phases of the production process, suppliers of technology, associations, technology centres, training centre and other agents, and that the companies included are linked through cooperation and subcontracting.

The local industrial production system dedicated to pork products in the counties of Giro- na province and Osona County is especially complete. Its geographical area includes animal-feed manufacturers, pig farms, processing facilities, slaughterhouses, cutting plants and, most importantly, another local industrial production system that manufactures machinery for the meat industry, which includes some of the world's most technologically advanced companies in that segment. For methodological reasons, the machinery local industrial production system was identified separately, but it actually forms a part of the pork local industrial production system. Several industry associations, technology centres, training centres and fairs are also present, and subcontracting and cooperation are very common among the companies.

The automotive, motorcycle and railway-equipment local industrial production systems in the Barcelona metropolitan area are also very complete, because they include almost the entire value chain as well as associations, technology centres, training centre, fairs and other agents. Important technology suppliers in that area include the moulds and dies local industrial production system and the handling and storage machinery local industrial production system, which work largely for the transportation-equipment manufacturers.

The ages of the local industrial production systems vary. Some emerged before the Indus- trial Revolution and can almost be considered crafts, like the jewellery, ceramics and leather local industrial production systems. Others were formed only a few years ago (or are still being formed) and are technologically advanced, like the aerospace-equipment local industrial production system.

In terms of origin, there are two kinds of local industrial production systems in Catalonia. Some were formed close to the natural resources they needed to operate (wine and cava in Penedès County, mineral water in Selva County, cotton spinning and weaving in central Catalonia, wood in Osona and Selva Counties, cork in the Costa Brava area, paper and cardboard in the Anoia, Bitlles and Llobregat River basins, etc.). Many others – the majority, in fact – established themselves close to Barcelona in order to take advantage of the proximity of suppliers, clients and/or the port. Others owe their creation to investments by large companies that sought proximity to the Port of Tarragona (the raw-chemicals local industrial production system in Tarragona and the surrounding area). Others began to form after SEAT invested in the area (automotive, handling and storage machinery, moulds and dies, etc.). Others were formed over time as spin-offs of a single company were created (household furniture in Montsià and Vallès Oriental Counties, bodywork in Selva County, etc.).

There are also local industrial production systems that we know to exist but were unable to identify in this study for methodological reasons (see Chapter 2). We have instead

186 included them in other local industrial production systems. This was the case for the consumer-electronics and publishing local industrial production systems, for example, which we have included in the general electronics local industrial production system and graphic-arts local industrial production system, respectively.

The relationships between the different local industrial production systems are also very interesting. The most complete local industrial production systems interact with other local industrial production systems and the cross-cutting local industrial production systems (wood, metal products, plastics and graphic arts) interact with many local industrial production systems. There is also a highly emblematic case: the relationships that often occur between the local industrial production systems in the textile and clothing industry. Seven local industrial production systems that are related to one another and mutually strengthen each other are located within a 100-150 kilometre radius, and yet they cannot be considered a single local industrial production system.

Other cases of interrelationships between local industrial production systems that, to a certain extent, increase the competitiveness of their companies include: wines and cavas and cork; wood and household furniture; paper and graphic arts; and raw chemicals, consumer chemical products and pharmaceuticals. Furthermore, to a certain extent, the electrical-switchgear local industrial production system, the electronics local industrial production system and all of the machinery and mechanical-equipment local industrial production systems are also cross-cutting and therefore strengthen other industries.

Table 2. Local Industrial Production Systems in Catalonia by Industry * in millions of euros

% of % of % of % of Industries Number of LPS Establishments Employees Turnover* Total Total Total Total Food and Drink 4 9.5% 576 6,4% 12,288 5.2% 3,475 7.6% Textile, Clothing and Leather 9 21.4% 1,190 13,2% 22,564 9.6% 2,400 5.3% Wood, Furniture and the Cork 4 9.5% 441 4,9% 4,238 1.8% 525 1.2% Paper, Publishing and Graphic Arts 2 4.8% 1,056 11,7% 20,881 8.9% 2,650 5.8% Chemical Industry 3 7.1% 384 4,3% 25,470 10.9% 11,000 24.1% Plastics Industry 1 2.4% 803 8,9% 28,182 12.0% 3,800 8.3% Metallurgy and Metal Products 1 2.4% 2,680 29,8% 39,018 16.7% 4,250 9.3% Machinery and Mechanical Equipment 8 19.0% 798 8,9% 14,078 6.0% 2,155 4.7% Electrical and Electronic Equipment 3 7.1% 383 4,3% 15,378 6.6% 3,250 7.1% Transportation Equipment 5 11.9% 449 5,0% 50,714 21.7% 11,975 26.2% Other Manufacturing Industries** 2 4.8% 247 2,7% 1,399 0.6% 160 0.4% Total industries 42 100% 9,007 100% 234,210 100% 45,640 100%

Table 2 shows that the industry with the most local industrial production systems is the textile, clothing and leather industry, which has nine. However, in terms of the number of industrial establishments, it is second to the metallurgy and metal-products industry, and is even less important in terms of turnover and employment. The machinery and mechanical-equipment industry comes in second with eight local industrial production systems, although it is much less important in terms of number of establishments, employment and turnover.

In terms of employment and turnover, the transportation-equipment industry has the most important local industrial production systems in Catalonia. The metallurgy and

187 3. Overview

metal-products industry is second in terms of the number of people employed by local industrial production systems. The chemical industry is second in terms of turnover because it is less labour-intensive.

As mentioned above, local industrial production systems account for the following proportions of Catalan industry as a whole: 26% of establishments, 36% of employment and 39% of turnover. However, Table 3 shows that these proportions vary considerably from one industry to the next. The local industrial production systems in the transportation-equipment industry are particularly important, with two thirds of the establishments, 90% of employment and 85% of turnover for the industry. The transportation-equipment industry could therefore be considered the industry with the greatest number of local industrial production systems.

The second industry in terms of the number of local industrial production systems is plastics, whose local industrial production system accounts for over half of the establishments, over three quarters of employment and 70% of turnover for the industry.

Table 3. Weight of the Industry in Local Industrial Production Centres out of all Catalan Industry 2003 Data % of the % of the % of the Establishments Employees Trunover* Entire Industry Entire Industry Entire Industry Industries in LPS in LPS of the in Catalonia in Catalonia LPS in Catalonia Food and Drink 576 20.4% 12,288 16.4% 3,475 19.5% Textile, Clothing and Leather 1,190 20.2% 22,564 26.4% 2,400 28.5% Wood, Furniture and the Cork 441 10.5% 4,238 12.6% 525 17.0% Paper, Publishing and Graphic Arts 1,056 25.9% 20,881 35.6% 2,650 29.7% Chemical Industry 384 33.8% 25,470 40.5% 11,000 59.6% Plastics Industry 803 52.3% 28,182 76.2% 3,800 70.0% Metallurgy and Metal Products 2,680 36.3% 39,018 42.8% 4,250 40.3% Machinery and Mechanical Equipment 798 30.1% 14,078 27.9% 2,155 33.2% Electrical and Electronic Equipment 383 32.8% 15,378 38.7% 3,250 39.5% Transportation Equipment 449 64.6% 50,714 90.5% 11,975 84.8% Other Manufacturing Industries** 247 - 1,399 - 160 - Total industries 9,007 26% 234,210 36% 45,640 39%

* in millions of euros ** comparative calculations are not possible in these residual, multi-sector industries.

Mapa

188 Number of local industrial production centres in each county

Vall 0d'Aran

Pallars Sobirà Alta 0 Ribagor0 ça

Cerdanya0

Alt Urgell Alt Empordà 0 Ripoll1 ès 0

Pallars0 Jussà Garrotxa3 Pla de Bergued1 à l'Estany2 0 Solsonès Osona Gironès 6 4 Baix2 Empordà Noguera1 Selva7 Bages6 Segarra0 Vallès Pla d'Urgell1 Oriental17 Urgell2 5 Anoia4 Maresme Segri1 à Vallès Occidental20

Garrigues1 Conca Barcelon de Barber0 à ès Alt Pened 3 ès Baix 17 Llobregat18 Alt0 Camp Baix Penedès 1 Garraf Priorat1 1

Tarragonès Ribera Baix 1 1 Camp2 d'Ebre Terra0 Alta

Baix1 Ebre

Montsi2 à Number of LPS (*) 0

1 - 2

(*) A single local industrial production 3 - 10 system may extend beyond more than one county 11 - 20

As the map shows, the geographical distribution of the local industrial production systems coincides with the distribution of industry in general, with strong concentrations around Barcelona (Vallès Occidental, Baix Llobregat, Barcelonès and Vallès Oriental Counties) and in a second concentric ring around the city (Maresme, Selva, Osona, Bages, Anoia and Alt Penedès Counties). However, many local industrial production systems are also located in the counties of Girona province (Gironès, Garrotxa, Baix Empordà and Pla de l’Estany Counties).

Local industrial production systems are distributed throughout industrial Catalonia – the counties without a single local industrial production system are also the region's least industrialized counties, with the exception of Alt Camp and Alt Empordà Counties.

This geographical map shows the 42 industrial local industrial production systems in Catalonia, with a detailed map of the Barcelona metropolitan area.

189 3. Overview

Summary Map of the Local Industrial Production Centres in Catalonia

Recycled cotton Machinery Cotton Narrow spinning for the foof spinning fabrics industry Vall d'Aran

Wood Pork Pallars Sobirà Decorative Alta industries meat Ribagorça ceramics

Cerdanya

Alt Urgell Alt Empordà Ripollès Bovine leather Pallars Jussà Garrotxa Pla de Cork Berguedà l'Estany

Knitted fabrics Solsonès Osona Gironès Baix Empordà Noguera Agricultural Mineral machinery Selva Bages water Segarra Automotive Vallès Pla d'Urgell Oriental Urgell bodywork Anoia Maresme Segrià Vall ès Sheepskin See Occidentalexpanded

Garrigues version Conca Barcelon de Barberà ès Alt Pened ès Baix Llobregat Alt Camp Baix Penedès Garraf Priorat

Tarragonès Ribera Baix Camp Wine and cava d'Ebre Terra Alta

Raw chemicals Olive oil Baix Ebre

Montsià Number of Home furniture Establishments Employees Up to 50 Up to 1.000 50-100 1.000-3.000

More than 100 More than 3.000

190 Graphic Arts Electronics Metallurgy and Publishing and Metal Products

Machinery Railway Equipment for the Textil Wool Spinning and Weaving Clothing Industry Household Furniture

Aerospace Equipment

Packaging Knitted Machinery Fabrics and Equipment

Light and switches

Plastic Motorcycles Products Handling and Storage Paper and Equipment Carboard Pharmaceutical Manufacturing products

Clothing Automotive Electric Consumer Jewellery Switchgear chemical products Moulds and dies Valves and Taps Food-industry machinery Number of Establishments Employees

Up to 50 Up to 1.000 50-100 1.000-3.000

More than 100 More than 3.000

191 192 4

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197 Joan Miquel Hernández Gascón Alberto Pezzi is the Manager of the is the Director of the Observatori de Analysis and Foresight Area of the Prospectiva Industrial , which forms part Observatori de Prospectiva Industrial of of the Ministry of Employment and the Catalan Government's Ministry of Industry of the Autonomous Government Employment and Industry. He has a degree of Catalonia. He has a degree in in Economics and Trade from the Economics from the University of University of Bologna and a Master's Barcelona, has written numerous articles Degree in Law, Economics and European on industrial economics for specialized Union Policy from the European College journals, and is the author or co-author of Parma. He is specialized in regional of the following books:L'empresa catalana development and knowledge davant la CEE (1985), Estructura industrial management and has worked in the de Catalunya (1987), El sector de consulting firms Competitiveness and productes farmacèutics a Catalunya McKinsey & Co. He is also Secretary (1990), Les infrastructures de transport General of The Competitiveness Institute, a Catalunya (1992), Canvi estratègic an international professional association i clusters a Catalunya (1997), with headquarters in Barcelona that Les multinacionals industrials catalanes promotes the methodology based on (1998), Les empreses gasela a Catalunya clusters as a tool for regional development (1999) and Les multinacionals industrials catalanes 2001 (2001).

Jordi Fontrodona Francolí is the Study Department Manager of the Observatori de Prospectiva Industrial of the Catalan Government's Ministry of Employment and Industry. He has a degree in Economics from the University of Barcelona and is specialized in economics and industrial statistics. In addition to several articles for specialized journals, his publications include the following books, of which he is co-author: Les infrastructures de transport a Catalunya (1992), Canvi estratègic i clusters a Catalunya (1997), Les multinacionals industrials catalanes (1998), Les empreses gasela a Catalunya (1999) and Les multinacionals industrials catalanes 2001 (2001).