Jesus Sainz, Promomadrid
Release Date: 2009-12-08
Jesús Sainz Muñoz, Chairman of PromoMadrid, has been interviewed by EuropeAvia.com to talk about Madrid as one of the most competitive European FDI destinations and the opportunities that Madrid offers as an investment cluster.What have been the factors of success behind the rapid increase of FDI in Spain in recent years?
The Spanish market provides with direct access to over 1.200 million potential customers. It has become a key entry point to the rest of Europe and other Mediterranean countries, and is also an ideal platform towards Central and South America.
In addition to its strategic geographic location, the Spanish market offers labor costs well below the EU average, competitive rental prices for offices and factories and excellent transport infrastructures. These are the main reasons why more than 11,100 foreign companies are established in Spain.
Also contributing to the attraction of foreign investments to the country is the fact that some Spanish corporations have become reference multinationals for certain industries.
According to Invest in Spain’s “2009 Barometer of the Business Climate in Spain” foreign companies located in Spain specially appreciate the quality of transports, communications and utilities as well as the business environment. Despite the global crisis, their overall valuation remains at 3.1 (out of 5) and none of the specific areas enquired is valued below 2.8. A significant majority (65%) of their executives plan to increase or maintain their investments in our country.
What are the competitive advantages for foreign companies setting up their European headquarters or R&D centres in Madrid?
Madrid Region is the political and economic centre of the country and most of Spanish multinationals, as well as the main foreign companies established in Spain, are headquartered here, It also offers a large, multicultural and wealthy population, with some 6.2 inhabitants, 17% of whom are foreigners, earning the highest income per capita in Spain (32,047€).
In addition, the region has highly-qualified professionals at competitive costs when compared with other EU countries, like United Kingdom, France, Germany, Belgium, the Netherlands, Luxembourg or Ireland. Office space is also available at competitive costs when compared to other European capitals.
Madrid Region also offers a very stable political context, very proactive in creating a business-friendly environment for foreign companies -eliminating bureaucratic obstacles and applying liberal policies- where possible, like reducing taxes or promoting innovation and high value-added industries. That’s the reason why the region leads domestic R&D expenditure, with 2% of GDP dedicated to innovative projects, implementing since 2009 a 3-year R&D&i regional plan and setting up Madrid Network, a regional clusters and scientific parks network, under public-private collaboration. This network accounts already with 4 Science and Technology Parks, with 140 companies installed which have created more than 6,000 jobs, and 11 clusters for strategic industries, among which we can find Aerospace and Renewable Energies.
The region is also the ideal platform for markets in Latin America and the Maghreb, to which we are linked by strong cultural and business ties (Madrid is the main Spanish region investing in Latin America) and represent a market of more than 700 million consumers, emerging markets for which some financial aids are available. Also many people from these areas have chosen Madrid to work, live or study, making those ties even tighter.
How would you define PromoMadrid success in raising Madrid’s international investment profile since its instauration?
Very high, in recent years the Madrid Region concentrated more than 60% of FDI into Spain, reaching an 82& market share in 2008. Despite the global downturn in cross-border investments this trend continues and Madrid attracted 740€ million during the first quarter of 2009, almost six times higher than Catalonia.
To promote further these investments PromoMadrid recently published “Doing Business in the Madrid Region”, a practical guide providing answers to the main questions business people raise when considering several locations for their investment project. This guide includes information about the region, its business activity and the way of life.
What is the current and potential contribution of the aviation sector to the economic performance of Madrid Region?
The aviation sector is one of the most important engines of the economy in Madrid.
In the case of Air Transport, Madrid-Barajas airport is the main airport in the Iberian Peninsula, the 4th in Europe in terms of passenger traffic (50.8 mill. people in 2008) and the 1st in Spain in Cargo moving (54% of Spanish Cargo). More than 100 airlines are currently operating from Madrid-Barajas. Moreover, with the new Terminal 4, airlines can improve their flight strategies and increase the number of operations because current airport’s capacity is 70 million passengers per year. Madrid-Barajas is growing with the region and it is one of the main drivers of the economy and employment. Currently, more than 40,000 employees work directly at the airport, and according to a study by NERA, it generates indirectly more than 170,000 jobs, representing almost 9% of employment and 11% of regional GDP.
Regarding the Aerospace industry, the sector in our region represents more than 60% of the consolidated turnover (2.8 € billion) and direct employment (19,627 employees) of the Spanish Aerospace Industry, accounting 3.3% of the European Aerospace business. That percentage rises an 80% if only the Space Sector is considered. As Madrid is growing faster than the rest of regions in this rank, it is expected to climb positions in the ranking during next years. The Aerospace Sector is the more intensive industry in R&D with an average investment between 12% and 15% in terms of consolidated turnover. Innovation is the central link of the Madrid hub of excellence, and for that reason the Government of Madrid is completely committed to the Aerospace industry.
How would you define Madrid’s current competitiveness as a centre of excellence for aviation and what are the region’s ambitions in this sense?
Madrid-Barajas is the main airport in Southern Europe and the 10th worldwide. It is also the main hub in Europe connecting Latin America, concentrating more than 30% of direct flights from our continent to that area. It is expected that Madrid-Barajas will generate more than 300,000 jobs by 2020 and the Government of Madrid is completely aware about the importance of global air connectivity for the economic development of the region. For that reason, we are currently very involved in the promotion of new international routes from Madrid-Barajas.
Moreover, general aviation and cargo air transport are also strategic for us. We are planning 2 new airports promoted by the Madrid Region, one for general aviation to start operations in 2013 and other one mainly focus in cargo operations which is planned for 2020.
On the other hand, Madrid has a long tradition in Aerospace, always leading and trailing the industry in Spain. Its main actors, both national and international, have a big presence in Madrid (EADS, Airbus, Boeing, Indra, Iberia Mantenimiento, ITP, Aernnova, ThalesAlenia Space, Hexcel Composites, CAE) and a significant number of R&D centers are located in the region (INTA, ESA, NASA, FIDAMC, Boeing R&T Europe).
Madrid Region is the 7th Aerospace cluster within Europe in terms of direct employees, just over Aquitaine in France (Bourdeaux) and very close to Gloucs, Wilts and N Som in UK (Bristol). The importance of the Aerospace Industry in the Madrid Region encourages regional authorities to launch specific plans in order to support the sector, including R&D incentives and promoting the entrance of FDI in aerospace. The Aerospace Cluster of Madrid was launched 2 years ago. Main companies, private research centers, universities and the Regional Government are members, consolidating the image and the position of international leadership of the Aerospace Industry.
In addition, the region has developed a powerful network of Scientific and Technological Parks. Currently there are working 10 Technological Parks, and several of them are Aerospace-oriented, outstanding Tecnogetafe which is completely focused in Aerospace.
How important is China’s booming aviation sector in Madrid’s internationalisation of its economy and what are Madrid’s ambitions in this sense?
Estimations of Airbus show that China's aviation market will grow 7.9% annually for the next 20 years. China and India, together with other countries in the Asia Pacific region, will buy an estimated 31% of the 25,000 planes Airbus plans to produce between 2009 and 2028, more than either Europe or North America.
Total Chinese air traffic turnover increased 7.4% month on month and 30.6% year on year. Passenger traffic turnover rose 7.6% month on month or 41.6% year on year, and cargo traffic turnover grew 8.6% month on month or 18.1% year on year, according to statistics released by the Civil Aviation Administration of China.
Madrid is very aware of such situation, and it is working very closely to Chinese airlines to promote new routes connecting Madrid-Barajas with the main cities of China.
On the other hand, Madrid is the main location of Airbus in Spain, so China is the largest market in relation to commercial aviation for Madrid. Business opportunities for Madrid’s aerospace companies will naturally appear from this demand, so we are closely working with them in order to support those companies in their plans in China. In addition, we are very expecting to the internationalization of the Chinese aerospace industry, as they are already developing very interesting programs in regional and large commercial aviation.
What is PromoMadrid’s development and marketing strategy in raising Madrid’s profile in China?
China’s potential growth makes it one of the two leading emerging markets from FDI perspective, together with India. Our main challenge is to provide Chinese decision-makers with enough quality information about Madrid, so they can have a clear picture on the region’s performance during the last years and also on its potential development for the near future.
Initially our strategy will be focused in Shanghai, Beijing and the Pearl River area. Actually, we are currently developing an international Business Centres network in a joint effort with other regional institutions, and Shanghai is one of the first 5 offices we have open abroad. This network serves both for attracting FDI into the region and assisting companies from Madrid when expanding overseas.
What is your final message for our readers in Europe, China and worldwide about Madrid’s excellence?
Madrid enjoys and offers some unique attributes which have made it one of the most competitive destinations for FDI in Europe, as shown by the fact that in 2008 Spain ranked 6th among OECD countries as destination of FDI, and Madrid concentrated 82% of all FDI received by Spain.
| Company: | Promomadrid |
| Position: | Chairman |
| Country: | Spain |