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Interview

Mario Armero – Executive Vice President, Anfac (The Spanish Association of Automobile and Truck Manufacturers), Spain

Anfac’s Mario Armero discusses how his decades of experience in a variety of industries has allowed him to develop a depth of knowledge in internationalization and operational efficiency that he today brings to some of Spain’s leading corporations as a board member. He also shares his insights on the evolution of the business culture in Spain and how many Spanish industries in the country, such as energy and automotive, have developed strong international reputations for quality.

As an introduction for our international readers, could you provide a brief overview of your background and current professional assignments?

“If you look back 20 years, many things have changed, but what is especially striking is the high degree to which Spanish firms have internationalized.”

I am currently executive vice president of Anfac, an association representing the interests of automobile and truck manufacturers in Spain. This is a very important organization in the Spanish context given how strong the automotive sector is in our country. In addition to that role, I represent Global Infrastructure Partners and have sat on the board of directors of Gas Natural Fenosa since last October, as a result of the acquisition of 20 percent of their shares. I was also a board member of CLH for several years.

Prior to this, I spent more than 30 years with GE, where I eventually became chairman in Spain. As a conglomerate, GE has a lot of different businesses, and during my years in the company, the energy sector was booming. In addition to being very active in the areas of turbines, we also focused heavily on renewables, where we played a key role in the development of that sector within Spain 15 years ago. Now, I am on the other side of the table: I am a customer of the energy sector given my involvement in the automotive field.

Given your extensive and widely varied professional background, what do you believe you bring in terms of strategic guidance to the Spanish flagship companies?

I believe that I bring project knowledge in terms of internationalization, as well as both a knowledge and willingness to help develop operational efficiencies. This is essential, as Gas Natural Fenosa is continuously focused on efficiencies, exploring ways to improve the way things are done. Essentially, I am committed to making sure that Gas Natural Fenosa becomes the best gas company within all of Europe.

You mentioned that one of your areas of expertise is internationalization. What trends have you seen in this regard with Spanish companies, and how do you assess their capabilities internationally?

There has truly been a spectacular transformation in this regard here in Spain! If you look back 20 years, many things have changed, but what is especially striking is the high degree to which Spanish firms have internationalized. It is important to remember that Spain was a country that was historically not oriented towards exports, yet, right now, Spanish exports represent 33 percent of our GDP. Over a period of 10 years, exports rose from 23 to 33 percent of GDP, a very substantial increase. Many Spanish companies, such as Repsol, began some time ago to invest outside of Spain, and engineering firms were extremely intelligent in following some of these investments abroad. These actions have allowed them to grow their base of customers in a global manner.

We have an extremely good Spanish engineering sector, with many companies having more than 60 to 70 percent of their total income coming from abroad. Additionally, they are – in many aspects – not simply engineering companies, but construction companies as well, working on projects in a multitude of sectors: energy of course but also transportation, building, civil works and more. Furthermore, Spain has developed a strong reputation in the field of professional services (legal, consultancy…) over the past 15 years.

Spain has talent and excellent human resources, and companies have realized this. This is especially evident in the engineering and construction sector, as Spain ranks within the top two globally with concessions, whether that be highways, water plants or other sectors.

What is your assessment on the levels of international experience that Spanish business leaders have, and what qualities do you believe that they can offer the international business community?

It is true that 30 years ago, Spanish managers were not going abroad, but that has changed. New generations spend many years overseas and have international careers. Being internationally focused is about being open minded, it does not require spending years living in different countries. It is an attitude, not a CV.

Spanish executives in general are well known for having a high degree of talent and being well trained, as Spain has developed very good business schools. They are hardworking, value inclusive and diverse. I believe the biggest evolution for Spanish professionals is that they have developed into global professionals, which is why you see Spanish executives at the top of many multinational companies (MNCs). France and Italy used to be the leaders in this respect, but now Spain is at their level.

How influential do you believe foreign investment in Spain has been both in terms of building the domestic economy, but also in terms of allowing Spanish firms to look abroad as well?

The internationalization of our human resource base has to do with the fact that Spain has long been open to foreign investment, even before deindustrialization. Spain has long been a receiver of foreign investment, with the first waves coming in the 1980s, 90s and 2000s, during which time companies such as Ford, GM, GE and others invested in the country. We have always had an open economy and are not nationalistic in terms of foreign investment. This allowed us to forge strong relations with international companies as well as develop the skills to work with international professionals.

After receiving these waves of international investment, the opposite then happened. Rather than receiving investment, Spanish firms began to invest abroad, and did so before we started exporting. Banks, telecommunication companies, oil and gas players, electricity and utility corporations… all invested abroad, and then in parallel they began to export. As a result, we today have a base that is substantial, consisting of over 80,000 companies in Spain who export on a recurrent basis.

Spain is currently recovering from a very serious economic crisis. However, if you compare the Spanish growth rate to that of other European countries, Spain is actually doing quite well. How competitive is the Spanish economy today?

We are living in a positive environment with positive inertia, despite recent financial hardships. This crisis has been extremely abrupt and severe for everyone, but there has been an impressive recovery. Spain has gone through some tough, but necessary reforms effecting many sectors, including the energy and financial sectors, and many others. The country went through this with courage and resilience, and now recovery has been fundamental and has been brought on mainly by our strong level of exports.

Considering the political instability seen recently in Spain, how has the country been able to accomplish such a strong recovery?

Our recovery has taken place in spite of the political instability. Our hope is that in the coming years, politicians will join together to continue to bring the reforms that are necessary, because with reforms you cannot stop, you must remain engaged. There is a battle between countries around the world to attract investment and business, and for that you continually need to transform and reform your business environment.

We see that the challenging financial times actually caused many EPC companies to look outside of Spain. Was this perhaps a silver lining of the economic crisis?

Yes, you can view it as a silver lining, and right now many of these companies are familiarizing themselves with business abroad, and they have been able to export to the international business community the quality of the Spanish brand. We know that the touristic offering in Spain is excellent, however, now we rank high in many industries. four out of the top ten cars sold in Europe are Spanish and we continue to grow in the energy sector and business services sector as well.

Looking more broadly at the entire Spanish economy, how important of a role does the energy sector play?

This sector is extremely important in several ways. Firstly, it is important in terms of the fact that we have excellent global players. Secondly, the auxiliary industries which are related to the energy sector, such as engineering, construction and infrastructure, are important. Thirdly, the energy sector is important in terms of the overall growth of Spain, and keeping the country competitive regionally and globally. Additionally, gas is fundamental for the future of Spain, and we need to continue with the gasification of the country. We have exceptional companies which have been bringing the best technology into the country, and we have to continue paving the way for energy to become more competitive in Spain.

Are there any specific weaknesses that you see in the energy sector that you believe need to be addressed?

Let us take the car industry as an example of an area where there some changes need to take place. When it comes to energy, we know that we are going to a new future in transport, a future very much linked to electricity and natural gas. Right now, Spain is performing very low in terms of the utilization of electrical cars, and there has to be an effort to develop this further. Anfac is therefore working to accomplish this.

To do this, there needs to be an awareness that all new technologies are valid. Additionally, we need to foster the renewal of the car fleet, as the average age of a vehicle today in Spain is 12 years, much higher than it should be. We need to promote the renewal of the car fleet so that people can buy cars with the expected new quality standards, and we need to compliment these efforts with subsidies for electrical cars. Lastly, we need to develop an infrastructure for electrical cars.

We have seen the government and policy makers as being very receptive in these efforts as they understand that something needs to be done. The time is right for this shift, as the automotive industry is going through a disruptive period at the moment in terms of technological and electric advancements.

Do you have a final message that you would like to share with our international readers?

Spain was in deep trouble in the years 2008-2013, and the problems are not over yet. We still need to address the major challenge of unemployment, especially for the youth. We need to continue to follow the track of being a competitive country that is open to the global economy, and the good news today is that Spain is performing well. To continue on this path, politicians need to be able to come together, especially with regards to education, as this should be the number one priority in Spain. That will be the key for succeeding in the future.

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