Spain's car industry at heart of nascent recovery

Deep in the bowels of Ford's vast manufacturing plant outside Valencia, a chorus line of industrial robots is performing a piece of high-precision ballet. A brightly painted robot picks up a chunk of metal bodywork, spins it around and comes to a halt. The next robot swivels towards it, sending a shower of sparks in the air as it begins to weld at dizzying speed. The fiery pirouette is repeated dozens of times as the slice of metal, now visible as the side of a passenger van, glides through the hissing and stamping chain of 52 robots.

Completed less than two months ago, the new assembly line is a symbol of Spain's nascent industrial recovery, and a powerful illustration of the confidence spreading through the country's car industry. It forms part of a €1.5bn expansion of Ford's flagship plant in Spain that saw the US group install an additional two assembly lines, build a massive paint shop, buy 262 industrial robots and - most importantly for the people of this recession-plagued region - hire 1,420 new workers.

Outside the car industry, such investments remain the exception in a country that has only just emerged from recession and where one in four workers is without a job. Business and political leaders hope, however, that the resurgent car plants are the vanguard of a broader industrial renaissance in Spain. The industry's success also goes some way to allay concerns that the strength of the euro will damage the eurozone's exports.

"The car industry has become one of the solutions to the Spanish crisis," says Jose Manuel Machado, Ford's president in Spain. Like many Spanish business leaders, he sees the recent wave of investment, production and job creation in the motor industry as a sign that the Spanish economy is finally rebalancing: "When the crisis started in 2008, the construction sector was so big - and we just lost it. The question then was: 'What are the other sectors that can help the country get out of the crisis?' "

The group's decision to boost production in Spain was revealed in June 2011, at a time when the country was hurtling towards double-dip recession and a devastating banking crisis. In the two years since, makers such as Renault, General Motors and Volkswagen have followed suit, upgrading their plants in Spain and transferring production from countries such as Belgium and Korea. Industry leaders argue that it is hard-headed investment decisions such as these - taken far away from Spain - that offer a true test of the country's economic position in the world.

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"We are working on the re-industrialisation of Spain," says Mario Armero, the vice-president of Anfac. "Spain has become more competitive in the last five years. There has been wage moderation and in some cases wage decreases. And the flexibility is now much higher than in other sectors."

The government has been quick to claim credit for the recent investment boom, boasting that the car industry's newfound competitive strength is a direct result of Madrid's economic reforms. In truth, however, the seeds of recovery were sown long before the government of Mariano Rajoy took office.

Car executives and union leaders point out that the shift towards wage moderation and flexible working practices was enshrined in a series of collective deals in the early years of the crisis. Ford, for example, struck a five-year deal with its unions in 2009 that Mr Machado believes was instrumental in luring more production to Valencia: "That was the moment when people outside the country started to look at Spain as an opportunity for Ford."

<>Across Spain's car industry, factories are now much better able to adapt to the production peaks and troughs. They send their staff home when there is little to do, and make them work longer hours when assembly lines are humming. Working hours can even be shifted between different years. In Valencia, for example, workers were given five additional days off in 2012, but instead had to come in and work a shift on five Saturdays this year. "We are constantly adapting production to demand," says Alejandro Monlleo, a bodywork superintendent at the Ford plant.

Such flexibility, Mr Armero says, was "unthinkable" a decade ago. No less striking have been some of the recent wage deals. The new employees in Valencia receive 16 per cent less pay than their colleagues. Unusually for the car industry, where nine out of 10 work contracts are permanent, the new workers have been hired on temporary contracts. According to union calculations, wages across the industry are now at the same level as in 2008.

For union leaders, such concessions have not always been easy to swallow. But Mariano Cerezo, the federal secretary of Spain's MCA-UGT metal workers' union, argues that the decision to strike long-term labour deals with the motor industry has served companies and workers alike. "There are no workers' rights without work," he says.

<>"We are not afraid to make sacrifices as long we can maintain jobs and secure pledges to create more work in the future," says Mr Cerezo, who is keen to export the co-operative model pioneered in the car industry to other sectors.

Indeed, it is hard to overlook the fact that the success of Spain's car sector has yet to be mirrored elsewhere. Outside the motor industry, there have been few headline-grabbing new investment and factory expansions. More worrying still is that Spain's industry continues to shed labour at an alarming pace. Since the start of the year, more than 100,000 industrial jobs have disappeared, dwarfing the 2,400 new posts created in the automobile sector since January.

Spain's government has made clear it sees the car industry as the vanguard of a new economic model for the country. For now, however, other sectors are struggling to match the thumping dynamism embodied by Ford's dancing robots.

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