SPAIN is already a significant investor in Slovakia, but many untapped investment opportunities remain. Yet, recession-hit Spanish companies have realised that firms active abroad are better able to cope with the crisis in Spain, which could bring more investments this way.
“Trade and economic relations between Slovakia and Spain are traditionally good, without any problematic issues and with a potential of a significantly bigger volume of trade, manufacturing cooperation and investments, especially at the level of small and medium-sized entrepreneurs,” Jaroslav Bobrík, from the department of bilateral commercial cooperation at the Slovak Economy Ministry, told The Slovak Spectator.
Bobrík added that Spain’s economy has been contracting and that its GDP in 2013 is estimated to have declined by 0.5 percent. Forecasts indicate a revival only in early 2014, when Spain’s economy should start to grow moderately.
“With regards to the current economic situation of Spain, which has been undergoing a long-term recession, and under the decline of domestic demand and investments, Spanish companies are also starting to realise that it is necessary to make their activities more international,” said Bobrík. “It has been showing that companies which have part of their [exports or investments] activities abroad, manage to cope better with the impacts of the current crisis in Spain. Because of this we can expect … continuing interest of Spanish companies in investing in Slovakia in various sectors of industry, especially mechanical engineering, and trade.”
Richard Dírer from the Slovak Investment and Trade Development Agency (SARIO) told The Slovak Spectator that while Spain is among the top eurozone investors in Slovakia, Latin America remains its top foreign investment destination. According to him, Spanish investors see the common currency, the euro, as the main advantage of investing in Slovakia.
Bobrík added that Slovakia’s business environment and government investment stimuli remain attractive to Spanish investors. For those interested in production and exports, Slovakia’s position in the middle of Europe is another benefit. In this respect he noted that a 300-million person market exists within a 1,000 km radius of Bratislava. Spanish investors are also attracted to the flexible labour market, the qualified labour force, the level of income and payroll taxes, membership in the EU and the country’s transport infrastructure. Last but not least, the positive experiences of Spanish investors in Slovakia help to bring new investments and extend existing ones. In this respect, Bobrík mentioned Cortizo in Nová Baňa, Fundería Condals in Prešov and Grupo Antolin in Žilina.
There are approximately 70 Spanish companies in Slovakia, which vary in size and are active in different sectors, such as subcontracting for the automotive industry, telecommunications, the metallurgical industry, construction and development, consultancy and trade and distribution, among others, Milan Klačman, market analyst of the Spanish Commercial Office, told The Slovak Spectator.
In terms of the number of jobs created, Klačman cited Telefónica O2 (600 employees), Cikautxo (production of heating and cooling ducts for the automotive industry, 450 employees), Cortizo Slovakia (aluminium profiles, 200 employees) and Fagor Ederlan (aluminium foundry, 170 employees) as the most important Spanish investors in Slovakia. Another important company present in Slovakia is OHL. Klačman added that although it is not one of the major Spanish employers in Slovakia, it is one of the most important construction companies in Spain.
With regards to extending investments, Klačman mentioned that a Fundería Condals is contemplating a €20 million investment project in Prešov, which could create as many as 450 jobs.
The Spanish foundry arrived in Prešov back in 2011 with a €300,000 investment in metal forming, said Bobrík.
Slovakia could attract additional Spanish investments this year in December, when a group of potential Spanish investors is slated to convene in Bratislava as part of a business mission co-organised by the Spanish Commercial Office, Klačman told The Slovak Spectator. The mission will be focused primarily on three sectors: IT technologies, automotive industry suppliers and electronics. In addition to participating in a seminar on the Slovak business environment, the Spanish entrepreneurs will meet with their potential Slovak business partners with an eye on new investment opportunities.
Bobrík also recalled the roadshow of investment seminars in Bilbao, Barcelona and Madrid held last year in May 2012. SARIO organised the roadshow in cooperation with the Spanish-Slovak Chamber of Commerce (Cámara de Comercio Hispano Eslovaca) from Bratislava, the Spanish Institute for Foreign Trade (ICEX), chambers of commerce in Bilbao, Barcelona and Madrid and the Slovak Embassy in Madrid.
Moreover, a seminar on business and investment opportunities in Slovakia was held in Madrid on the occasion of Slovak Prime Minister Robert Fico’s visit to Spain in April 2013. Bobrík added that the Slovak Embassy in Spain has organised, in cooperation with regional chambers of commerce and business organisations, presentations in various regions of Spain on trade and investment opportunities in Slovakia.
According to Bobrík, Slovakia invests in Spain, too. The steelmaker Železiarne Podbrezová acquired in July 2008 100 percent of Transmesa, with production units near Barcelona, where it manufactures steel tubes. In April 2012 Železiarne Podbrezová extended its investment and opened a new production line in Sant Ramón, Catalonia. In December 2012 it acquired storage facilities in Barcelona.
Bobrík cited the statistics of the National Bank of Slovakia, according to which the volume of direct Spanish investments and re-invested profits in Slovakia amounted to €236 million as of the end of 2011. This ranked Spain 18th among the countries which invest in Slovakia.
In 2012, Slovakia placed 19th among the countries that export to Spain, whereas Spain ranked 15th among countries that export to Slovakia. Expressed in other terms, Spain accounted for 1 percent of all Slovak imports, while Slovakia had a 0.42 percent share of the Spanish market, said Klačman. For almost a decade, Slovakia has been registering a surplus in the bilateral commercial exchange, and last year Slovak exports to Spain were nearly double that of Spanish exports to Slovakia.
“There have been no significant changes in the bilateral economic cooperation in the last five years,” said Klačman. “Spanish exports to Slovakia have been lagging behind imports. However, the situation may change in the near future in favour of Spain, if Spanish companies interested in participating in Slovak tenders succeed in winning some of the important ones.”
According to the Slovak Economy Ministry, the recession, unemployment and austerity measures of the Spanish government have reduced domestic consumption and public investments. This has resulted in a moderate reduction of demand for consumer goods like cars and electric appliances, which make up the biggest share of Slovakia’s exports to Spain. Reduction of domestic consumption brings about a need to export, which was also reflected in recent years in the growth of Spain’s exports to Slovakia.
Between 2006 and 2012, 2007 was the strongest year in terms of mutual trade, with Slovakia’s exports to Spain worth €1.455 billion and imports worth €705 million. In 2012 Slovakia exported to Spain goods and services worth €1.072 billion, while imports amounted to €637 million. During the first five months of 2013 trade between Slovakia and Portugal increased by 3 percent year-on-year, and the trade balance remains positive for Slovakia.