Navarre, Spain Investment Guide

The Automotive Industry:
A Well-Paved Road to Success

With a major VW assembly plant in Pamplona, automotive is the most important sector in Navarre. But several companies supply nothing to Volkswagen, instead exporting their production throughout Europe and around the world. For example, U.S.-based companies like Eaton makes axles for several truck makers, and Lucas produces for the global automotive market but not for VW Pamplona.

Photo: Auto welding Spain has the biggest automotive, truck and off-road vehicle network in Europe-- the largest number of vehicle assembly plants, which attracted a large network of suppliers. All the major manufacturers are represented, including GM, Ford, VW, Citroen, Renault, Mercedes and Nissan.

"In terms of base production, we have French, German, American and Japanese," says Jésus Zabalo of SODENA, who was formerly managing director of a foreign-owned automotive components plant in Pamplona. "That means the suppliers are here and the automotive technology is here. It was clear 20 years ago, but now it is more and more clear."

Photo: Volkswagen plant

Volkswagen is the biggest employer in Navarre, with over 5,000 workers. Its factory at Landaben is one of the most modern in Europe and can produce 1,500 cars a day.

Of course, quality and cost enter into the location equation. A study five years ago demonstrated that, after the Japanese, Spanish-built auto parts were by far the best in cost, quality and flexibility. The study caused a particularly big shock in Germany, whose costs, working practices and inflexibility were out of line.

"When the decision is made about where to invest to produce the car, it is clearly not in Germany," says Zabalo. "The Spaniards, on the other hand, are among the most flexible people in the world. This puts us in a very good position to attract additional investment."

Though the automotive industry is sprinkled throughout the Iberian peninsula, there are concentrations around the major auto makers -- for example, most of the industry in Barcelona is related to SEAT, in Valladolid to Renault and Zaragoza to GM. But, interestingly, in Pamplona most of the automotive industry is not related to VW passenger cars. Lucas Varity, for example, is an export-oriented company, producing for Rover, Ford and Nissan in the UK. Eaton produces for truck makers throughout the world.

Unlike the rest of Spain, the Navarre components industry began before there was a vehicle assembly plant. Companies operating under license agreements with parts makers supported vehicle assembly plants throughout southern Europe. That's why Navarre's automotive industry has an independent economic life and does not depend on a local car manufacturer.

In the immediate region, besides VW cars and Nissan fork lift trucks in Navarre, Mercedes-Benz produces vans for the European and North African markets in Vitoria (Basque Country) and GM makes cars in Zaragoza (Aragón).

Another difference in the automotive industry in Navarre and the rest of Spain is that Navarre did not have basic industries such as were found in the Basque Country, Catalonia or Madrid, so the automotive sector did not start through casting, forging or steel-making. From the start, Navarre's automotive sector has produced such high value-added parts and components as gears, brakes, shock absorbers and cables.

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