The Spanish economy has benefited in recent years from substantial infrastructure investment from the European Union. Since it joined the EU in 1986, Spain has received more than Euro 100bn ($125bn) in support. The result has been a booming economy since the mid 1990s and many industries have prospered, particularly construction. Gross domestic product is forecast to grow by 3.0% in 2005, following growth of 2.7% and 2.4% in the previous two years. Such has been the construction boom since 1997 that Spain is now Europe’s second largest market for mobile cranes. At about 350 units a year, it is behind only Germany. The tower crane market, too, has positively thrived, consuming approximately 2,500 new units a year. In tourist regions, the skyline is still peppered with tower cranes, putting up new villas and apartment blocks. All this has activity has benefited the EOT crane market too, and a significant domestic EOT crane producing sector has developed, competing alongside the major international players. The market for EOT, process and gantry cranes is in the region of about 4,000 units a year, according to industry estimates.
However, Spain is now embarking on a period of transition, where it has having to learn to stand on its own feet. EU support will not be focused on the new member states to the east. Investors that were once drawn by Spain’s low labour cost and good productivity and now looking to central Europe, or even to Asia. Spain’s image as a place with low labour costs faded further when the Socialist José Luis Rodrîguez Zapatero was elected prime minister in March 2004 and among his reforms was an increase in the minimum wage.
‘It is true that there have been some bonanza years recently, but now uncertainty is rising,’ confirms Víctor Guerra, Sales Manager of GH, one of Spain’s largest producers of EOT cranes. ‘The construction crane sector is experiencing fairly good activity still, but the property boom is fading and the EU Cohesion Funds are disappearing. Therefore the future seems complicated.’
He adds: ‘The situation is different in the industrial sector. Shipbuilding is in deep crisis, dragging down auxiliary industries. Machine tool manufacturing, very important in our country, is also experiencing a grave crisis and in some cases investment programmes have been halted midway through.’ The automotive industry is declining too, says GH, with investments having been diverted to lower cost countries, although Demag appears not to have noticed. The German giant cites the automotive sector as an area remaining strong in Spain, along with steel trading and processing, paper and combined cycle power stations.
GH, along with Jaso, is Spain’s leading producer of special application and process cranes. Its turnover in 2004 was Euro 65m. It has factories in Guipúzcoa and Navarre, and a broad sales and aftersales network across the Iberian peninsular. It is a major player in standard cranes too, where it competes with the likes of Demag, KCI, Verlinde and Abus, as well as Spanish companies such as Ausió, Vicinay and Hidrat. Balkancar of Bulgaria is active in the market too. GH’s major projects at home in 2004 included supplying and installing 57 standard EOT cranes and cantilever cranes in the new factory that tower crane manufacturer Comansa is building in Pamplona.
Ausió managing director Ramon Ausió agrees with GH about the downturn in the market, but says that everything to do with construction, such as granite and marble production and metallurgy, remain strong crane markets and Ausió was able to increase its turnover significantly in 2004 to about Euros 9m.
Ramon Ausió estimates that foreign manufacturers hold about 25% or 30% of the EOT crane market. Here, it seems, Demag leads the way. Demag is well established in Spain, having set up a subsidiary there in the 1960s. Today Demag Spain has 175 employees, with a head office near Madrid and seven regional offices and service centres. Its sales in the financial year 2003/04 were Euro 32.7m, an increase of 10% on the previous year.
Demag Spain sales manager Jan Olivier Timmich claims that his company has more directly-employed service technicians in Spain than any other crane company, and as a result the after-sales business has grown dramatically. Ramon Ausió says that it seems to be a trend across the industry to prioritise maintenance and after-sales service before manufacturing.
Export drive
Part of the growing up process that the Spanish economy is now going through means that its crane manufacturers are seeking to compete more on the international stage, in world markets, rather than just rely on the home market. But it will be tough. They are decreasingly able to offer themselves as the low cost option, but in general they do not (yet) have the distribution and market support infrastructure in place to challenge the established majors.
An exception is perhaps GH, which has been exporting its products for more than 20 years already. Today exports account for 35% of its Euro 65m turnover. It has manufacturing branches in Poland, Mexico and Portugal and sales branches in France, Brazil, USA and Argentina. In all, it is represented in more than 40 countries across five continents.
However, faced with the prospect of a declining market in 2005, GH is putting special efforts into its export efforts, to maintain its overall sales at a steady level.
In general, however, few Spanish producers have yet to make an impact internationally. Ausió exports account for approximately 9% of its sales, mainly to France and Belgium, where it supplies kits and components. Having developed a new hoist and reorganised its internal structure, Ausió is looking to increase its exports and is forecasting a 10% rise in sales volume in 2005, driven by exports rather than domestic sales. ‘We are ready to start fighting on the international market,’ says Ramon Ausió.
