Juan Ignacio Lema – President, Tecniberia, Spain
Juan Ignacio Lema, president of Tecniberia, shares his expert insights into the engineering sector of Spain and the challenges, as well as opportunities, that companies within the sector have seen in recent years. He also shares his thoughts on the unique qualities and expertise Spanish companies have that make them successful across the world.
As an introduction for our international readers, could you give us an overview of the mandate of Tecniberia and the current ambitions of the association?
“The engineering sector is strategically important for any country that aims for international prominence, as the engineering sector is the channel that transform technical and scientific progress into solutions which improve the quality of life for a country’s citizens.”
Tecniberia is the Spanish Association of Engineering, Consulting and Technology Services, and as an association we pursue many different goals. These include supporting the representation, promotion and defense of the common interests of the entirety of our membership base and their sectors, both in Spain and abroad. We form working relationships among our members, contributing at the same time to trade unions, defense and promotion of the economic and social interests as well as express a collective point of view of the associated companies, in issues of general interest to a particular sector.
How important of a role does the engineering sector play in the Spanish economy?
Currently, Spain´s engineering sector invoices around EUR 8.5 billion (USD 9.5 billion) and employs roughly 55,000 people. Quantitatively speaking, its weight over GDP is reduced in comparison with other industries. However, from the qualitative point of view, the engineering sector is strategically important for any country that aims for international prominence, as the engineering sector is the channel that transform technical and scientific progress into solutions which improve the quality of life for a country’s citizens.
Given the challenges that the industry has faced in recent years, notably due to the economic crisis, how did the sector perform in 2016?
All things considered, 2016 has not been a good year for the engineering sector. The situation with the government, and the suspension of public works last summer, caused the fall of public investment in tenders of engineering services in 2016 by EUR 344 million (USD 385 million), compared to EUR 437 million (USD 489 million) in 2015. That being said, after falling to a minimum of EUR 189 million (USD 211 million) in 2012, the investment levels have slightly increased. In any case, this increase does not compensate, even slightly, the fall during the crisis. In 2007, public investment in engineering projects was EUR 1,004 million (USD 1,123 million), which means we have experienced a 65% drop since before the crisis times until now. Due to these facts, Spain´s engineering sector is not yet seeing the light at the end of the tunnel.
How would you qualify the resilience of Spanish firms during the crisis and how have they managed to weather the storm?
The capacity of Spanish engineering companies to resist the crisis and turn it into an opportunity has been immense. Thanks to the competitiveness of our engineering, achieved by the excellence, quality and capacity that we have accumulated over decades, we managed to transform international markets into a “parachute” to overcome the crisis. The figures prove this: at the end of 2016 the members of Tecniberia had made in total EUR 5.050 million (USD 5.650 million), of which EUR 3.730 million (USA 4.172 million) (74% of total) came from the activity on international markets, and EUR 1.320 million (USD 1.476 million) (26% of total) from the local. In 2007 just before the crisis, the percentage was the opposite.
What are your projections for 2017, in terms of opportunities for investments as well as potential challenges to overcome?
One of the main challenges of this year is to help to implement the Building Information Modelling resource in Spain, and the Ministry of Development has established a calendar of the BIM implementation is Spain. The Ministry recommends using the BIM in all tenders starting from March 2018, so that its use could become obligatory later. This way, from December 2018 the BIM will be obligatory for all public edification tenders, and from July 2019 it will be compulsory for all public infrastructure tender. Tecniberia has constructed its own BIM Commission to deal with all the implementation aspects of this methodology, and it also collaborates with the BIM Commission created by the Ministry of Development.
Along with other challenges, Tecniberia defends and will defend, if they are not resolved, other demands which we have presented to Public Administration and political parties of any ideological sign. As a result, we continue asking for criteria of highest technical standard, just as it happens in more developed countries of our environment. Our other demand consists of making the engineering internalization be an issue the government recognizes. In this way, Tecniberia and engineering companies could compete in commercial missions of the Government across the world, on equal conditions as other associations and public companies. Finally, the reactivation of the internal market and having healthy competition, with equal conditions between private and public players, are key objectives of ours.
What is the importance of the energy sector, and more particularly the Oil & Gas segment, to the Spanish engineering and construction sector as well as to Tecniberia?
The work in this sector could be divided into three big areas: civil infrastructure, the environment and the energy industry. The energy industry represents almost a third; but if we consider turnkey projects where the whole cycle is being operated, from the design till the end, it reaches 50%.
Additionally, there are many long and short term opportunities in renewable energy, notably hydraulic, wind and solar. Governments from different parts of the world have established incentives for the promotion of the construction of these installations, so that they can guarantee the supply of electricity, and reduce emissions of polluting gases.
What has been the impact of the downturn in oil prices on Spanish firms, and what strategies have they put in place to overcome these challenges?
The drop of the oil price during the last years has been reflected especially for those engineering companies whose activity was more exposed to this sector. Such companies have however managed to soften the impact by diversifying their projects and business lines. They have reduced the weight of the activity in oil & gas, until the sector picks up again.
What are the specific areas of excellence of the “Made in Spain” label in engineering? What makes Spanish companies unique and great partners to work with?
When on international markets, engineering companies always act as an outpost for Spanish export. Given that the companies of this sector are usually the first ones to arrive to new markets, successful implementation of the projects in infrastructure has been, in many cases, a showcase of our prowess to those countries. This has shown that, in general, Spanish companies do things right, and our products and services are of a high standard.
Can you provide any specific examples of the prowess of Spanish firms currently in the international market?
There are many examples of this, including the Ave Mecca-Medina, the Stockholm underground, new projects in the Panama Canal, the Bogota underground, construction projects of refineries in Siberia, bridges in Hong Kong or the port in Vietnam!
Iberdrola Engineering and Construction, through its subsidiary companies, is a first level actor in construction of wind farms. Four of the main marine wind farms are being carried out by this company, such as East Anglia and West of Duddon Sands, both in the UK, Saint Brieuc in France and a marine wind park Wikinger in Germany. All these projects are examples of the cases where engineering intellectual work plays the main role in the successful implementation of the project.
Solar energy is another sector where our companies perform very well. This is the case of Abengoa that has been exclusively assigned the Solana Solar project in Arizona. Engineering and construction works of the main solar plant in the world – located in Morocco – are also carried out by Spanish companies, like Acciona and Sener. Moreover, in South Africa, Sener and Acciona have important term solar projects. These are just a few examples of Spanish excellence achieving success around the world!