General Electric, with its portfolio of diverse businesses, has been in Spain for more than 70 years, where it has a dozen plants, 40 business units and 3400 employees. All told, the company has invested more than €2bn in Spain. Last year, its turnover there was €17bn and it now exports more than €500m-worth of products from Spain.

At an fDi forum in London in February, Mario Armero, president of GE for Spain and Portugal, explained why GE is so bullish on Spain. The Spanish economy continues to outperform those of most of its fellow EU members, Mr Armero points out, and demographics are on an upswing with a population of 44 million. Plus the country has a business-friendly environment and a reasonable tax and employment regime, he added. “Spanish players are becoming global players,” he said. “They are our customers and we want to accompany them as they expand.”

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But Spain still needs bigger, better infrastructure of all kinds, which presents opportunities for many of GE’s businesses. “There is room for growth in Spain in energy, healthcare and consumer finance – these are our three lines of penetration,” said Mr Armero.

Praise for Murcia

If GE views Spain favourably as a whole, it seems to have a particular affinity for the region of Murcia. Mr Armero applauded the “spectacular growth and development” in this region of about one million inhabitants.

GE Advanced Materials (Plastics) has three industrial plants in Murcia. The first arrived in 1985, another followed in 1999 and the third, a hydrocarbon plant, was inaugurated early this year in Cartagena.

There was heavy internal competition for this latest investment and a lengthy decision-making process. GE considered everywhere from London, to Moscow, to the US. “Everybody was in the mix,” Mr Armero said.

 

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Cost was an important consideration. Regional incentives came into play but were less of a factor “because everyone is offering them”, Mr Armero said.

More important for GE was the ability to attract engineers easily because of the quality of life in Murcia, plus the fact the company already had infrastructure there.

“It has been a success story,” Mr Armero said. “It was the largest GE greenfield investment in the past 15 years and is now the most competitive plant GE has in the world.” The Cartagena facility has been named by the EU as the fifth best place to work in Europe.

In Murcia, GE has found a talented workforce and employees who are willing to learn and easy to train, said Mr Armero. Labour costs are rising but are still low compared with much of western Europe.

The company has also found adequate infrastructure to run its supply chain. And Mr Armero is happy with the level of support GE receives from the Spanish and Murcian governments and the easy access to regional government officials. “They call and ask how we are doing,” he said.

Playing to strengths

Patricio Valverde, regional minister of economy, industry and innovation for Murcia since 1995, who was also present at February’s roundtable, listed the region’s strong points as cost-effectiveness and strong financial support, as well as the workforce, infrastructure, quality of life, and easy access to government administration.

On the first point, although Spain faces increasing competition on the cost front from locations in central and eastern Europe, it remains cheaper than many parts of western Europe. And the cost of living in Murcia, in particular, is 30% lower than the rest of Spain.

 

 

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On the second issue, financial support, Murcia receives some of the most generous EU grants in the country, although that will change as funds are diverted to areas in the 10 new EU member states. Companies locating in Spain can also benefit from financial incentives, such as subsidised lines of credit; development-agency financing for technology transfer, research, development and innovation programmes, and international marketing; and financial support systems such as public consultancy services, a business angels/private investors club, a venture capital society and project financing.

Mr Valverde noted that Murcia’s infrastructure has been “very carefully planned” and has created a wide distribution system for companies locating there. It has a modern road and motorway network and two international airports, Alicante and San Javier – the latter is due to expand its facilities this year.

The government is cognisant of the importance of high-tech infrastructure as well and is therefore working to offer broadband to all companies in Murcia.

Changing focus

The Murcia economy has traditionally been based on agriculture and the export of primary products, but services currently account for 63% of the region’s GDP. This is followed by industry, construction and agriculture.

And Mr Valverde named as “emerging sectors” fine chemistry and pharmaceuticals, plastics, aeronautics, high technology, call centres and shared services centres. The government has drawn up a Science and Technology Plan for 2005/2006 intended to position the region as a science and innovation hot spot by 2010.

The government would also like to see tourism play a larger role. The Regional Department for Tourism, Trade and Consumer Affairs is promoting the Murcia Turistica brand both at home and abroad. Minister Ruiz Abellán has been travelling around the world talking up the region – not least at the roundtable.

Regional authorities, in their tourism-boosting efforts, like to draw attention to Murcia’s 250km of coastline and its average 315 days of sunshine a year. Its tourism brochure proudly declares Murcia to be “home of the sun”.

“We are located at the best geographic point in Spain, weather and temperature wise,” said Mr Abellán.

Much of Murcia’s coast had remained undeveloped because it was too far removed from main motorways and air connections. “But that has changed and we are now well connected. We have great highways and flights in and out have increased enormously,” Mr Abellán said.

New infrastructure

In 1998, the regional government decided to get serious about growing its tourism industry and since then has been hard at work beefing up the infrastructure. Under construction are four new highways, new hotels and recreational areas, and a third international airport. A Madrid-Murcia motorway has cut the distance between the centre of the peninsula and the Murcia coast to about three hours, and the region has been incorporated into the new Madrid-Levant high-speed train link.

Murcia is also working to create what Mr Abellán calls “the best tourism offer in Europe”: golf courses, hotels, shops and sports facilities, plus a marina, a medical centre, a desalination plant and a purification plant, on 2100 hectares of land bordering the coast of Lorca and Aguilas. A management consortium was set up late last year to oversee the project and an international tender put out for designs. The project should be completed in 12-15 years’ time and is expected to cost more than €4bn.

“It will be a very large investment and a number of international investors are interested,” Mr Abellán said. If these international investors turn out to be as happy in Murcia as GE then the government would have done very well indeed.