Some 50 years ago, Abengoa ventured beyond Spain’s borders for the first time and established its first subsidiary in Argentina. The world and Spain have evolved greatly since then, as has Abengoa, and a significant number of Spanish companies are now global benchmarks in their respective sectors.
This business development has been possible thanks, firstly, to in-house merits and their ability to understand and tackle market challenges with innovative solutions. But, Spain has also been the best training camp for these companies, making them more dynamic and flexible, enabling them also to address foreign markets and grow. And the simple fact of the matter is that whenever the Spanish economy has opened up to the world, its companies have also come out stronger. This happened in the 60s, mid-eighties and again in the mid-nineties, when the Spanish economy took a quantum leap in macroeconomic stability and structural reforms to make it more competitive. Thus, Spanish companies benefited greatly from the country’s participation in the founding of the Euro, the lowering of interest rates and resulting access to international financial markets. The international activity of our companies has been extremely dynamic since then: if in the mid-90s, their foreign assets accounted for only 3 % of Spain’s GDP, this figure had, in net terms, risen to more than 46 % by the end of 2012.
Throughout the entire opening up process, these companies have gone from being, simply, international companies capable of selling their goods and services from Spain, to being true multinationals; a very select group are now true global companies with a well-defined strategy and unified message for all the countries where they operate. The benefits of this evolution have been, and are, undeniable: economies of scale, reduced costs and access to resources at a lower price, diversification of risks by investing in denominated assets in various currencies and based on high growth countries, and even their ability to sell in the same in the low phase of the domestic cycle, improved access to international investors to strengthen their capital structure, greater availability of international funding for projects, which is extremely useful in these times of major “unbanking”, exposure to the best practices in each of the markets they operate in, etc.
And thank goodness they had strengthened their foreign projects and structures, because the Spanish economy has been in deep crisis for more than six years now, but at the same time the global economy has recovered more speedily from the recession caused by the international financial crisis. This improved performance has been essential to allow Spanish companies with an international presence to tackle the crisis in better condition. And this is revealed in a recent study by the Institute for Family Business on the “Model to support the internationalization of Spanish companies: analysis and proposals” which highlights the fact that Spanish companies enjoy a strong presence in terms of exports and investments in developed markets of the importance of the United States, Germany and the United Kingdom, as well as in other emerging and extremely dynamic countries like Brazil, Mexico and Peru. But it also reveals that there are other markets such as China, India and Japan that, despite them being highly attractive, have a lower presence of Spanish companies, a situation Spain’s leading companies are now tackling with ever-increasing success.
In the next five years the world economy could grow at an average of 4 %, and the United States could once again experience a growth rate of around 3 %. This is particularly important because the American market is the most competitive in the world, subjected to constant change and innovation. While gaining entry to it is difficult, maintaining and expanding the presence of our companies in this market is a guarantee of excellence and strategic vision. The emerging countries, which are experiencing significant population growth and development of their middle classes, will also play a key role in global growth. This growth will bring significant business opportunities, for example those associated with energy, the development of infrastructures, water, and also the introduction of new technologies that contribute to generating the necessary growth, and will, of course, also result in greater competition, and ever more so from multinationals with their origin in these “new” emerging countries.
To take advantage of these opportunities and, at the same time, cope with strong competition, our companies are facing a significant set of challenges that forces them to be in constant evolution and transformation, from their current status of global companies towards the more complex models of transnational companies: an operations center, but with assignment of decision making and activities worldwide in pursuit of opportunities to create value, gradual opening up of corporate governance bodies, greater presence and criteria in different forums and institutions worldwide. This is also, of course, the case with the R&D+I development model since, as we are seeing, to be at the forefront one has to be present in the markets with the greatest technological development, in their universities, laboratories and centers of excellence. Once again, the evolution of Abengoa is a very good example of commitment to these new challenges.
And while the focus on overseas business by companies has been and continues to be very positive, it is obvious that the more robust the domestic economy and the stronger its industrial base, the more it will be able to contribute to the strength and international competitiveness of Spanish companies. Right now, at last, the Spanish economy seems to be showing clear signs of improved performance, with the foreign sector being, once again, the main driver of economic activity. Compared to the delicate situation Spain was facing a year ago, the evolution of the GDP, the recovery of foreign investment, and the different indicators of activity and confidence published in recent weeks tend to confirm that the crisis has now bottomed out. However, the high level of public and private debt, the lack of credit and an unemployment rate of 26 % are an indication that the Spanish economic situation remains complex. And that is why it is essential that reforms, that help us to leave the crisis behind once and for all and make the Spanish market a highly competitive environment, continue
The ability of Spanish companies to forestall global changes is a cornerstone of their ability to compete abroad, as is the competitiveness of the domestic economy and its perception overseas. In the past year, at international presentations, companies had to dedicate all their time and efforts to acting as macroeconomists and explaining Spain’s economic situation, with no room to outline their plans and business projects. The noticeable improvement in our situation is enabling companies, on their visits to foreign markets, to meet their business function by explaining and selling their projects. They will now be able to continue to forestall global changes, as many are doing with great success, and take advantage of the opportunities to create value that global growth offers, wherever they are.