One bright spot in the struggling European car industry has been Spain. Assembly plants in Spain are increasing production now and gaining more new model builds in the near future. Industry officials say that local manufacturers have to increase their R&D budgets and the Spanish government must improve transportation infrastructure if that country is to keep its position as the #2 car making country in Europe and fend off competition from lower cost producers in eastern Europe.
While unemployment in general in Spain is about 25%, production rose 7% at plant at Martorell, where Volkswagen's Seat unit has its headquarters. In the first six months of 2013, the auto industry in Spain created over 2,400 jobs there as Ford and PSA started up assembly lines, investing 3.5 billion euros over the past year or so. Since VW bought Seat from the Spanish government in 1986, there have been no domestically owned Spanish car makers. However, the industry employs 9% of the Spanish workforce and produces about 10% of the country's GDP.
Spanish labor unions have been flexible, which has kept costs low. However, there are other factors weighed in deciding on assembly locations. Labor costs represent only about 10% of the cost of building cars. Spain would like to increase the amount of value added work done for the auto industry. Turning Spain into an automotive R&D center would have economic spin off value as well.
"Infrastructure in Spain has been geared more towards the transport of people rather than goods," said Citroen's head in Spain, Alfredo Vila. Citroen recently awarded the production of the new C4 Picasso to its factory in the northwestern Spanish city of Vigo. The government has pledged 112 million euros to integrate seaports with road and rail links, but the state is expected to make big budget cuts to meet tough budget deficit targets.
from The Truth About Cars http://www.thetruthaboutcars.com
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