Bizkaia’s economy has undergone a complete facelift in the past few years, as the government and business have focused their efforts on areas such as telecommunications, bio-science and electronics. The Basque government’s Plan for Science, Technology and Innovation contemplates an investment this year of E2.2bn. Money spent on R&D projects this year will account for about 1.7% of the region’s GDP. The showpiece of this turnaround is the network of technology parks.

Bizkaia’s Zamudio Technology Park, inaugurated in 1985, was the pioneer location for hi-tech companies. The other two parks are located in the Basque Country’s Guipuzkoa and Álaba provinces. The three were the first technology parks in Europe to be awarded ISO certification and they now provide facilities for 230 companies and yield an annual turnover in excess of E2bn.

Tech boom

The technology parks carry out more than 1500 research projects each year and their R&D expenditure is more than E200m, about 30% of the total for the Basque Country. The development of the parks has helped to boost the region’s R&D expenditure per inhabitant to E250, compared with a national average of E150. However, this still lags behind the EU average of E350 per inhabitant.

Zamudio, a 20-minute drive from the centre of Bilbao, is home to R&D operations of major multinationals such as Vodafone, Rolls-Royce’s Spanish partner ITP, Alcatel and Air Liquide. The park is 75% owned by the regional government, with the rest in the hands of the local Bizkaia administration.

“Until recently, we were strongly focused on telecommunications and software,” says Julián Sánchez Alegría, Zamudio’s general manager. “Over the past two years, we have begun to support bio-technology companies and we would like to promote that area. In fact, we are constructing a second building that is designed specifically for bio-technology companies. This sector provides employment for 4% of Zamudio’s staff, a level we would like to boost to 15% in thenear term.”

Campaign plan

Two new facilities will be commissioned this year, one for the energy sector and another for hardware and software distribution in Spain and abroad. The park plans to invest E44m in the next two years to help promote new companies and infrastructure in these areas. “The next stage of development will involve a promotional campaign abroad,” says Mr Sánchez Alegría.

“We have to tell the outside world that we are a home for bio-science and not just steel and heavy industry. We plan to set up a foundation to identify and attract researchers. And another objective is to stop the brain drain that until now has been depriving the Basque Country of a number of high quality scientists,” he says.

The EU has recognised the importance of Bizkaia’s technology park by choosing Zamudio as the headquarters of the European Software Institute (ESI). Bilbao was shortlisted along with Pisa and Dublin and in 1994 was awarded the mandate to develop software research projects on a worldwide scale.

“Our objective is to help software manufacturers to improve quality and efficiency levels,” says Manu Prego, ESI’s managing director. “We now have 21 international companies working with us and when I say international, I am referring to every aspect of our work. The official working language here is English, although we can provide services in several other languages. Our work takes us into areas of R&D and we provide advice and services on quality standards, product improvement and competitiveness.”

Vodafone has been a client for almost two years and its R&D department is located at ESI, which has advised its client on software process quality and productivity. “Many of the 400 software companies operating in the Basque Country are our clients,” says Mr Prego. “About half of the companies we work with are not manufacturers, but rely on software systems, such as steel mills, banks and some agribusiness operations.”

ESI is now diversifying into new areas and is conducting trials to provide technology accreditation to companies. “Accreditation is particularly important for software companies that want to export,” says Mr Prego.

ESI provided advisory and technical services to 244 companies in 20 countries last year. The institute has also set up centres in five locations around the world to provide clients with on-site support. One of its major projects was eSF (e-Software Factory), designed to increase the productivity of small and medium enterprises (SMEs) in the information technology industry. The aim of its initiative is to increase the level of automation to its client companies by reusing software in applications such as Java, Visual Basic and programmable automata. ESI used its own software in developing the project, which has a budget of E813,000.

Bio-science initiative

One of the major initiatives to help the government to achieve its objectives in developing bio-science industries is Biobask 2010, an agency set up in 2002 to promote the sector that was, until recently, alien to the Basque Country’s industrial tissue. María Aguirre, Biobask 2010 manager, says the agency’s task is to create 3000 jobs and set up 40 bio-science companies by 2010.

“The regional governments in the Basque Country and Bizkaia have always been the most active in promoting technological development,” she says. “We must prepare ourselves for the future and this means opening our economy to new areas in which until recently we had very little experience. We have identified a wide range of programmes to help develop new companies. We have set up 13 so far, bringing the total in this sector to 30 firms engaged in pharmaceuticals, healthcare products, genome projects, biotechnology and information technology, to name a few sectors.”

Ms Aguirre says that Biobask plans to start seeking contracts abroad. “We want to present the Basque Country as a scientific centre. Companies will be able to set up facilities in our technology parks. We recognise that we are small in this field and that we need to set up alliances with foreign producers.”

Research centres

Biobask plans to operate two research centres in Zamudio Technology Park and has also set up a healthcare research institute called Fundación BIO, which works with hospitals to organise their research programmes. The first centre is already operational and houses research facilities, a biotechnology incubator and five companies.

The first company to set up was the newly-created bio-pharmaceutical group Dominion-Pharma-Kine (DPK), which aims to develop and market products and services for research into and treatment of metastasis in cancer patients. This was followed by Porgenika, a functional geonomics company; Kina Biotech, specialising in evaluating natural resources in the Andean region of the pharmaceutical, cosmetics and food industries; the pharmaceutical R&D group Litaphar; and others engaged in related activities. Ms Aguirre says she has set her target to make Biobask 2010 a “Silicon Valley on a smaller scale”.

Infrastructure work

The Bizkaia regional government has embarked on an ambitious plan to update the province’s roads, ports and other facilities to support the development of these new industries, as well as more traditional activities, including tourism. The Bizkaia Accessibility Plan aims to upgrade the road network into and around Bilbao, with a E480m programme due for completion in 2008.

A public sector company, Interbiak, has been set up to operate the A-8 motorway between Basauri and Ermua, with projects for various relief roads to alleviate congestion in the Greater Bilbao area. Next year, the most ambitious segment of the plan will begin: a E300m, 14km motorway section designed to free Bilbao’s southern ring-road from freight and long-haul traffic.

Bilbao’s new Loiu airport, a daring, gull-wing design by architect Santiago Calatrava, will add eight international flights this year with new or increased frequency services to Oporto, Brussels, Stockholm, Dublin, Stuttgart, Frankfurt, Milan and Zurich. This will bring the number of regular international flights up to 31, with a total of 16 destinations, in addition to domestic flights to all major Spanish cities.

Port expansion

Bilbao’s historic port, located in what is referred to as the European Atlantic Arc, contributes almost 2% to Bizkaia’s GDP. The port is undergoing a major expansion programme entailing a E500m investment over 10 years. It provides 18km of wharves, 1855 hectares of berth area and 205 hectares of quayside. It has four ro-ro loading ramps, nine container gantries and 40,000sqm of bonded warehouse and refrigerated storage facilities. This year marks a watershed in the programme with regard to

container traffic: the first two new container terminals contemplated in the plan became operational less than a year ago, with a combined surface area of 668,000sqm and 1.5km of berth line.

The first stage of development was completed in 1998, with the construction of a vast sheltered harbour of more than 5kmsq. This included a breakwater stretching 3150m out from Zierbena and a sea wall that extends out from the end of the Santurtzi breakwater. Apart from these features, a wharf 850m in length, with a

20m draft and a surface area of 425,000msq has been built inside the harbour. In all, 150 hectares of new land has been reclaimed from the sea. With the completion of the first phase of development, the Port Authorityis constructing new wharves in anticipation of greater demand from port or industrial operators.

The second phase got under way in 1999 with the construction of Wharf 2: 736m in length with a draft of 20m and a surface area of 270,000msq. On completion, the second stage will provide 7km of wharves with drafts of up to 25m and 200 hectares of surface land area. Dock A1 is operating with two new terminals; one for vehicles and a second for containers. A second dock was built in the next stage and the third is under construction, with work soon to commence on Dock AZ1, which is designed to handlesolid cargo.

“We need to overhaul the port every century or so and the latest programme was started in 1992,” says José Ángel Corres, chairman of the Port of Bilbao Authority. “We have so far reclaimed 6kmsq of sea, which should give us ample capacity to confront traffic volumes over the next 25 years or so. The port of Bilbao represents the spinal column of Bizkaia’s economic progress.”

The port handled 28.3m tonnes of cargo last year, an 11% increase on 2002. More than 70% of this was unloaded cargo, mainly crude oil, coal, petrol, natural gas and other energy products.

Evolving role

“Our tradition is that of an industrial port and, more recently, a commercial port, and now we are called upon to add leisure to our range of activities,” says Mr Corres. “Last year, 17 cruise ships called at Bilbao and port authorities are expecting this figure to grow to at least 21 in 2004. This May, the port authority plays host to the annual meeting of Cruises Europe, attended by officials from 83 ports of northern Europe.

“Bilbao will soon have a major new maritime trade route linking the port to France, following a decision by the French government to set up a trade line by sea between Bizkaia anda French port, yet to be selected,” he says.

Shipbuilding PPP

Under these plans, a public-private partnership will build up to five special vessels for three daily crossings of what is being called a “freeway of the seas”, which is designed as an alternative to the congested road connection between the two countries.

The one major problem left to resolve is the bottleneck from the port to road and rail connections, which the authorities hope to relieve with the eventual construction of a Y junction to link the three Basque capital cities with Madrid and the European high-speed railway system. The Basque Y, as it has been designated, has become a priority project in trans-European transport networks and will receive a large chunk of the E973m in funding that the Basque government has earmarked for its rail network.

Exhibition space

One of the major commercial projects that is under way in Bilbao is the soon-to-be-inaugurated Bilbao Exhibition Centre (BEC), a E440m construction programme that will stand as Europe’s most advanced exhibition complex, according to its promoters. Each of the centre’s six halls could hold two Jumbo jets plus another small aircraft, and the absence of columns provides a unique open plan space with a total exhibition areaof 1.1sqm.

“Bizkaia has a long tradition of hosting industrial and commercial exhibitions. The very first one in Spain, in 1954, was held in Bilbao,” says José Miguel Corres, BEC’s chief executive. He says the pavilions currently in use have become obsolete because they lack sufficient space and central heating. “We were unable to satisfy our exhibitors’ demands,” he says. “The BEC will have a multiplier impact on the local economy. It has been shown historically that for every monetary unit spent on a fair, 10 find their way into the local economy, in hotels, restaurants, leisure pursuits and so on.”

BEC has already signed up exhibitors for this year in the construction industry, food and machine tools, among others.

Tourist trade

The growing influx of foreign visitors to Bilbao, attracted primarily by the Guggenheim Museum and the BEC, has prompted the regional government to look at ways to enhance and diversify its tourism offering, using the city as a base of operations.

One way is to link Bilbao with attractions of other parts of northern Spain. The city hall authorities and regional chambers of commerce have teamed up with their counterparts in the neighbouring regions of Navarre and La Rioja in a joint agreement with Rioja wine exporters, offering wine tours for visitors to Bilbao as part of their holiday activities in the Basque capital.

The Bilbao-Rioja project has brought the Basque city into Europe’s Network of Capital Cities and Leading Vineyards, that has already integrated cities such as Bordeaux, Santiago de Chile, Melbourne, San Francisco and Florence.

Focus on Bilbao

“We are looking to diversify and, at the same time, strike the right balance in our tourism industry,” says Koldo Narbaiza, the Bizkaia government’s director general for tourism. “The big challenge is to encourage visitors to spend more time in Bilbao. There are a lot of attractions within easy reach of the city that make it an ideal point of departure. For instance, we are only an hour-and-a-half from Biarritz and from the prehistoric cave paintings of Santillana del Mar.

“The port offers cruises to Bordeaux and Oporto and tourists can fly directly from Bilbao airport to several Caribbean holiday resorts. One of the world’s eight top surfing waves is 40km from Bilbao in Mundaka. The city has two symphony orchestras and a biosphere reserve within a short drive. So our offering is a highly diversified one, to say the least,” says Mr Narbaiza.

The figures reflect a slow pace of growth in Bilbao’s tourism industry, with a moderate increase in the number of visitors in the past five years, from 425,155 to 451,953, despite a 30% growth in the number of hotels from 18 to 25. One of the major problems facing the tourism authorities is to encourage visitors to spend more time in the city, with the average stay now 1.86 days compared with 1.82 days five years ago.

Mr Narbaiza says that the challenge will be met by spreading the word about Bilbao’s “unknown attractions” and promoting the city as a “base camp” destination for excursions to other sites in Bizkaia and beyond.