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Spanish EPC: Going Global

Spain’s world-class engineers, forged in its demanding university system and developed in the boom period of 1986 to 2006, are now taking their expertise abroad via both MNCs and SMEs. Though pushed into internationalization by the global financial crisis of 2008, Spanish firms look set to remain globally-minded, with limited opportunities at home and bountiful prospects in regions at an earlier stage of infrastructure development.

World-Class Engineers

“[Spain has] a very diverse geography, with geographically very complicated areas and therefore we have learned to respond to complex problems.”

Fernando Illanes Alvarez, ICEACSA

Fernando Illanes Alvarez, president of engineering and consultancy group ICEACSA, posits that Spanish engineers’ global reputation for excellence is due to their “capacity for adaptation and accumulated experience,” as well as the fact that Spain has “a very diverse geography, with geographically very complicated areas and therefore we have learned to respond to complex problems.” For Manuel Moreu, chairman of naval engineering specialists Seaplace, the Spanish academic system plays a key role in preparing world-class engineers, explaining, “Having personally earned an engineering degree at ETSIN in Madrid and a Masters from MIT, I can say that it was much harder to obtain my Spanish degree than my MIT degree! All Spanish engineers are survivors of that tough system.”

Joan Franco Poblet, chairman of BAC Engineering Consultancy Group, pinpoints the period of 1986 to 2006 as the window in which Spanish engineers began to develop to the level they occupy today; highlighting that, in 1986 “the announcement of the 1992 Olympic Games in Barcelona and the Seville Expo ’92 … provoked the construction of great infrastructure of a scale and style that had never been seen before in our country. Major, iconic works were produced during this period including the Madrid-Seville high speed train line, the upgrade and reconstruction of our airports in places like Barcelona and Madrid, new motorway construction and much more. Not only was the international spotlight upon us, but our engineering and construction firms were exposed to the very latest techniques and methodologies.”

Expanding Abroad: The Crisis Push

Although Spain’s major engineering companies, such as SENER, IDOM, TYPSA and AYESA have long held international footprints, it was not until the global financial crisis of 2008 that the country’s myriad SMEs began to internationalize. BAC’s Franco Poblet points out that “It was the financial crisis, the housing bubble crash and the onset of recession that enticed many of [Spain’s smaller, family-run engineering consultancies] abroad and triggered mergers and consolidations.” ICEACSA’s Illanez Alvarez describes the crisis as the push his company needed to look outside of Spain’s borders; “when you get to a point where it is hard to hire qualified people and start projects and works, you need to deal with the situation and take a risk to go and sell goods abroad.”

This strategy of internationalization, though mostly borne of economic necessity, has seen many Spanish companies able to turn their profit sources on their head and become much more focused on international activities in a relatively short period of time. Juan Ignacio Lema, president of Tecniberia, the Spanish association of engineering companies and consultancies, describes how, “at the end of 2016 the members of Tecniberia had made EUR 5.050 million (USD 5.650 million) in total, of which EUR 3.730 million (USA 4.172 million) (74% of total) came from the activity in international markets, and EUR 1.320 million (USD 1.476 million) (26% of total) from domestic activities. In 2007, just before the crisis, this percentage was the opposite.”

International for Good

ICEACSA’s Illanzez adds that this internationalization has also been necessary because of Spain’s stage of development: most infrastructure is already existent and therefore engineering companies are not needed in the same way as previously: “the infrastructure is already done. Now we continue to diversify and expand abroad. In Spain, for a couple of years now, our main service and growth driver has been infrastructure integrated management, which encompasses how to make transport more efficient and comfortable, as well as how to make the infrastructure more secure. However, in Latin America where we are also implanted, we are in an earlier stage of development and continue carrying out classic services.”

In terms of oil and gas focused engineering companies, Seaplace’s Moreu notes that Spain’s lack of natural resources, the complexity and cost of offshore extraction in Spain, and prevailing attitudes towards hydrocarbon extraction in Spain are also factors behind these firms going global. He declares that “Much of the easy resources to extract [in Spain] have already been exploited … Getting the rest out would entail thorough exploration and high-tech and costly solutions. Under the current conditions of austerity and a lack of liquidity it is hardly surprising that investment is instead flowing towards easier plays around the world.” In terms of societal pressure, Moreu adds that “you can drill in the North Sea without any problems but every time a project is proposed within Spain itself, there is considerable opposition from environmental groups … Private enterprise will always be wary of investing [in Spain] if they believe they are likely to attract a lot of negative publicity and not receive proper backing from the political class.”

Writer: Patrick Burton

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