Three times the size of Belgium, more inhabitants than Switzerland, a higher GDP than Poland, five international airports and an equal number of seaports. Andalucía, the largest of Spain’s 17 autonomous regions, is making a big push to attract investment in the aeronautics industry, renewable energy, information communications technologies (ICT) and biotechnology.

The Agency for Innovation and Development of Andalucía (IDEA) acts as a co-ordination centre for all of the incentives for innovation offered by the regional Ministry of Innovation, Science and Enterprise. In the past four years, IDEA has contributed to the start-up of more than 8000 new business projects with incentives in excess of E700m. The five-year incentives programme for 2008/13 aims to build on the success already achieved. It focuses on increasing funding capacity for business projects, agility and efficiency in receiving and processing applications for incentives, encouraging job creation, equal opportunities and the integration of youth in the workforce.

New instruments

The plan has incorporated a number of new instruments, such as repayable incentives, participatory loans (in which interest is related to company results), official contributions to the share capital of business projects, loans from the European Investment Bank and interest rate subsidies on loans from Spain’s Official Credit Institute.

IDEA supports projects to create, consolidate and modernise companies and to encourage business co-operation, R&D and innovation. Priority is given to projects that contribute to the creation and maintenance of quality jobs; those promoted by young people and women; which contribute to the integration of productive sectors or areas; which form part of strategic sectors; those which generate knowledge or technology transfer.

The incentives are funded by the budgets of the regional Ministry of Innovation, Science and Enterprise and the Andalusían Global Subsidy for Innovation-Technology-Enterprise 2007/13, co-funded by the European Regional Development Fund (ERDF).

This is part of the ERDF Operational Programme Andalucía 2007/13. The incentives granted within the framework of the InnoEmpresa Programme are to be funded by the central and regional governments, with co-funding from the EU, through the ERDF Operational Programme Andalucía 2007/13.

Despite its status of a region within a country, Andalucía accounts for nearly 20% of Spain’s population; it has 10 universities with more than 250,000 students, of which 41% are enrolled in technical degree courses. Andalucía’s transport network is unrivalled in Spain. The region offers flights from Seville to destinations in Italy, the UK, Germany, Belgium and France, and Seville is also the home of Spain’s first high-speed train, with daily two-and-a-half-hour services to Madrid.

The regional government’s incentives and support for the aeronautical industry has yielded spectacular results. Last year, the 150 companies of this sector and its supplier industries registered a 50% increase in turnover to E1.2bn. Jacinto Cañete, IDEA’s director-general, says that Andalucía “can and must be a leader in the European carbon fibre market”. Mr. Cañete adds that the regional government will lend its political and financial support to achieve this objective. The recent creation of Alestis, a joint venture with the government and private enterprise to set up a regional supplier of aeronautics industry components, was a step in this direction. Earlier this year, Alestis was awarded a E700m contract to build the tail cone for the Airbus A350 XWB, Spain’s largest order ever in the aeronautics supply sector. Alestis has also been awarded a contract by Brazil’s Embraer to supply the tail for its Phenom 100 executive jet.

Commitment to build

IDEA has also committed €25.3m to build an office complex for engineering and design companies. The building is located in La Rinconada Aerospace Technology Park near Seville, known as Aerópolis. Nearly 40 Spanish and foreign companies have acquired space in Aerópolis, which is located next to San Pablo airport and the EADS-CASA factory, which is engaged in assembly of the A-400M military transport aircraft.

Andalucía has made great strides in renewable energy, which now accounts for more than 20% of the region’s electrical energy generation. A number of foreign companies have taken an active interest in participating in Andalucía’s renewable energy programme. Germany’s Schott, for instance, has built a factory to manufacture sunlight absorbing tube parabolic cylinder collectors in the Environmental Activities Industrial Park in Aznacóllar.

Schott, along with Israel’s Solel, are the sole world producers of these components. “We are thoroughly satisfied with the progress of our investment and the plant,” says Luis Alberto Solá, director-general for Schott in Spain. “People see Andalucía as a series of stereotypes, but this has no bearing on reality. We had no trouble whatsoever finding highly skilled workers, and we truly broke records in building and commissioning the factory. The time elapsed from our request for permission and start-up was barely a year and a half. The support we received from the regional government through its IDEA agency was absolutely essential.”

Solel is working on a major project in two locations, focused on the production and assembly of all elements of a solar farm for solar thermal plants. This will be the world’s first factory to produce all the components for the construction of the thermoelectric solar site with parabolic technology. Solel is also developing, in conjunction with the Spanish group Valoriza, three solar thermal electricity plants with a combined 150-megawatt capacity

Abengoa, Enertol-Santana and Isofotón are also involved in solar power projects in the region. As a result, Andalucía is Spain’s leader in solar power generation, with more than 500,000 square metres of panels installed in the region. Andalucía is the European region with the highest number of solar hours per year, and it also generates large amounts of biomass, mostly from its large agricultural industry. In quantitative terms, biomass is the region’s main renewable energy resource. There is a long tradition of using biomass in the olive oil and agro food industries, and new sectors such as residential services and domestic consumption can also use this source of renewable energy. Andalucía has plans to use biomass to provide air conditioning for swimming pools, hotels, schools and domestic residences. There are 15 biomass plants in operation, providing 30% of Spain’s biomass generating capacity. In addition, Andalucía has seven biofuel production plants, with another four under construction, and the region also has 84 hydroelectric plants generating 594MW.

Solar and wind advancement

Wind power registered a remarkable level of growth in generating capacity last year, with output in excess of 2000MW. This represents more than 60% of all renewable energy sources and 12% of total electricity production in Andalucía. The regional government expects the renewable sector’s workforce to grow to 105,000 by 2013, with 68% of these workers employed in the wind power and solar energy industries.

The regional government’s Advanced Technological Centre for Renewable Energy (CTAER) has four corporate centres set up to support the requirements of R&D. CTAER’s main activity is the promotion of public and private initiatives aimed at economic development in the field of renewable energy. The Andalusían Institute of Renewable Energy is also devoted to R&D within the context of the government’s research plan. It is made up of all research groups involved in renewable energy at the region’s 10 universities.

ICT growth

ICT is an up-and-coming sector in Andalucía, with foreign companies such as Oracle, the world’s largest business software company, and the Chinese telecom solutions provider Huawei Technologies, having set up facilities in the region. Oracle has opened a service-oriented architecture (SOA) excellence centre in ATS Spain Delivery Centre of Coritel in Málaga. The main focus of the centre is to increase SOA technology capacities, and it includes an SOA server installed with Oracle Suite, workstations for development, practical cases of SOA-based projects, assigned specialist teams, an SOA technology-based pilot, service package definitions, courses and technical seminars, technological innovations, events organisation and group collaborations. This centre plans to expand its capacities towards other Oracle areas such as business intelligence.

Huawei has opened a technical support centre to serve its growing number of carrier customers in Spain and Latin America. The Chinese group has invested some €10m in the ‘global technical assistance centre’ located in the technology park near Málaga. The initial focus is to provide technical support for Huawei’s Spanish-speaking customers, especially Telefónica, Spain’s former monopoly operator, which is Huawei’s biggest customer in Spain.

These investments have boosted Andalucía to third place, behind Madrid and Catalonia, in terms of the number of ICT firms operating in Spain. The region has nearly 1400 companies in this sector, about 10% of the Spanish total. Most of the region’s ICT activity is concentrated in Málaga and Seville, and more than 62% of these firms are engaged in R&D and innovation.

The regional government is making great efforts to promote the biotechnology industry, which it considers an essential tool for improving the competitiveness of leading regional industries such as agribusiness, health and environmental sciences. The government has set up technology parks to attract investment from abroad, as well as within Spain. A number of major international firms have responded to this initiative, including Montsanto, Syngenta Seeds, Pioneer Hi-Breed International, Dow, Braun Medical, Pfizer and Merck and Co. There are nearly 60 biotech companies operating in the region, about 19% of all those located in Spain.

Spanish companies also play a role in Andalucía’s biotech industry. Laboratorios Farmaceúticos Rovi specialises in R&D, the manufacture and sale of small molecules and specialised biological medical products. Rovi has selected Granada to establish the country’s largest industrial and biopharmaceutical research facility. The company plans to export its products to more than 35 countries and will soon be present in the US market as well. The company has invested €18m in the plant and €21m in R&D. Juan López Belmonte, president of Rovi, thanks the regional government for its support “to enable us to patent and market our products worldwide and create wealth and generate employment in Andalucía”.

The regional government is developing a plan to stimulate the interaction of the biotech industry in Andalucía, with hospitals, scientific and technological centres and industries. The mission of this biotech and life sciences cluster is aimed at extracting the maximum scientific and business potential through the use of biotechnology, and to apply these benefits to society. Andalucía BioRegión is part of the country’s network of bio-regions, working in close co-operation with clusters in Madrid, Catalonia, Valencia and the Basque Country. The objectives are to develop multi-disciplinary and emerging technologies, technological services synergies, to establish co-operation with other agencies and the integration of the cluster in technology platforms.

Maximum effort

The regional government is sparing no effort to provide the environment and infrastructure required to develop the sectors in which it wants to promote investment. The region has a world-class network of industrial and technology sites devoted to science and technology clusters to promote these strategic sectors. There are 10 technology parks, 16 technology centres, 15 centres of innovation and technology, three European centres of enterprise and innovation, as well as a large network of business offices with modern infrastructure at competitive costs.

Andalucía offers world-class transport infrastructure, with flights to 70 international destinations, including a direct connection to New York. Foreigners working in the region have access to 10 international schools for their families and three main regional capital cities – Seville, Granada and Córdoba – less than one-and-a-half hours from one another.

As for port facilities, South Korea’s Hanjin Shipping selected Algeciras for its initial investment in the western Mediterranean region. The company is investing €374m to build and operate the port’s third container terminal, which will create 455 jobs. This is part of the first stage of an expansion programme for Algeciras. Young Min Him, the company’s executive vice-president, says: “We chose Algeciras not only for container ship traffic but also for imports and domestic exports.” Hanjin’s investment in Algeciras will ensure that Andalucía retains its leadership position in Spanish port facilities.

Algeciras is Spain’s leading seaport for its location as a world crossroads for cargo. The Andalusían port has become the hub for the western Mediterranean for container traffic. It has a wide range of specialised facilities for all types of cargo and traffic and ranks as the sea bridge between southern Europe and north Africa. This is reflected in the 5 million passengers and 1.5 million vehicles that crossed the Strait of Gibraltar in 2008.

The cost of this report was underwritten by IDEA. Reporting was carried out independently by fDi.