1. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo UNIT 8: INDUSTRIAL SPACESIndustrialization requires the presence and exploitation of a series of elements such asraw materials and energetic resources. Prior to begin analysing the characteristics ofindustrial development, we are going to analyse some essential elements involved andtheir characteristics. 1. Raw materialsThough Spains mining sector, including the coal-mining industry, employed only80,000 persons and was responsible for only about 1 percent of the countrys GDP inthe late 1980s, Spain was an important producer of minerals.Spanish mineral production was of particular significance to the EC because Spain wasits sole producer of mercury, natural sodium sulphate, and tantalite. Moreover, Spainmined approximately 9 percent of all EC copper, and important percentages ofantimony, gold and pyrite, silver, lead and magnetite, iron ore (38 per cent) andtungsten, and fluorspar and zinc. In addition to mining, Spain was an importantprocessor of raw minerals, both those produced domestically and those imported fromabroad. Although Spain was the most self-sufficient member of the EC with regard tominerals, imports were needed to meet about 30 percent of its needs.In the mid-1980s, Spains mining industry suffered from the depressed state of theworld minerals market, and the production of most substances had declined. The dropin the value of the dollar, the dominant currency in the mineral trade, further reducedthe sectors profits, which had already been damaged by declining sales. Spanishproduction of copper, tin, and wolfram all declined by more than 75 percent in 1987.The production of iron, pyrites, and fluorspar also dropped significantly in the sameyear. Zinc, potassium salts, uranium, and lead production remained steady during thisperiod, however.1

2. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite FresnilloThese mineral resources were used in the following way: a) Metallic minerals: Found in the sides of the Herzinian base, they are used inbasic industries such as iron and chemistry. b) Non-metallic minerals: Linked to Palaeozoic formations, they are used inconstruction and chemistry. c) Industrial stones: They can be found in different places and their main use is inconstruction.Mineral production is not enough to supply Spanish industry so they have to resourceto the foreign market. Some of the products are exported but the value ofexportations is always below that of importations.Since the entrance in the EU the mine policy has these targets: - increase the competitiveness of interior mining - improve environment and mines habitats - encourage research and technical development.As a result of this policy several mines have been closed due to their lack ofcompetitiveness. 2. EnergySpain is poor in energy resources, with the exception of coal. Rapid industrial growthhas intensified the problems caused by insufficient oil reserves, dwindling supplies ofeasily accessible high-quality coal, and inadequate water for power generation. Untilthe early 1980s, Spain depended increasingly upon imported petroleum, and overallenergy consumption continued to grow in the 1973-79 period. Following adjustmentto a slower rate of economic growth and to the changed energy market of the 1970s,Spanish energy consumption declined in the early 1980s.The National Energy Plan (PlanEnergetico Nacional--PEN), thebasic statement of official energypolicy, was first formulated in1978. Revised in 1983 to cover the1984-93 period, the new PENaimed at a rationalization ofenergy consumption and areduction in Spains dependenceon imported energy. It pressed, inaddition, for a reorganization ofthe oil industry and for a financialreorganization of the electricityindustry. In contrast to the 1978-87 plan, it reduced the role of nuclear energy. 2 3. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo2.1. Main energy sources2.1.1. CoalSpains coal reserves are found primarily in Asturias, with smaller deposits located nearsouth-western Seville, Cordoba, and Badajoz, and in north-eastern Catalonia andAragon (Spanish, Aragon). Most of the countrys lignite is located in Galicia. Domesticcoal is generally of poor quality, and, because of the structure of Spanish deposits, it ismore expensive than imported coal.Higher oil prices havespurred domestic coalproduction.Annualproduction in the early1970s amounted toabout 10 million tons ofcoal and 3 million tons oflignite. By the mid-1980s,the industry produced 15million tons of coal and23 million tons of ligniteannually. This higher rateof production was insufficient to meet domestic needs because coal had come tosupply about 25 percent of Spains needed energy, compared with about 16 percent inthe early 1970s. About 5 million tons of foreign coals were imported per year.Over the years, there had been little change in patterns of coal consumption. Hardcoal, used mainly for the generation of electricity, accounted for 65 percent of totaldemand. The steel and cement industries were the two next-largest consumers.The main problems of coal production are:- Some of the richest mines are exhausted or of low quality- Many mines present problems to be exploited- Business size is small- Demand has been reduced- With the entrance in the EU the prices liberalisedFrom the thirteen regions in which coal is produced the main is that of Asturias, Leonand Palencia but it can not supply the internal demand.The main use of coal production is for generating thermal electricity, but these centralsare not used unless there is deficit in hydro electrical production. The problem ofthermal centrals is that they can be highly pollutant, for instance, creating acid rain. 3 4. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite FresnilloCoal is also used in iron industries and for concrete fabrication.In line with the energy rationalization policies set by PEN, the government sought toincrease the efficiency of the coalmining sector by closing down high-cost mines andby providing financial aid for the industrys modernization. To encourage the cementand other industries to convert from oil to coal, the government allowed them toimport duty-free coal. The government also made efforts to substitute the use of oilfor coal in urban areas.2.1.2. PetroleumAlthough oil continued to be Spains major source of energy, it had diminished inimportance significantly since 1973. Oil consumption grew steadily between 1973 and1979, reaching 50 million tons in that last year, but by 1985 it had declined to 39million tons. Oil accounted for two-thirds of the countrys primary energyrequirements throughout the 1970s, but by the mid1980s the figure had dropped tojust over half. In 1985 alone, Spanish industry saved 40 billion pesetas (US$260 million)by replacing 500,00 tons of oil consumption with coal and natural gas.In 1985 Mexico, responsible for 19.7 percent of Spains petroleum imports, was thelargest single supplier of Spains energy needs, and in the mid-1980s Latin Americancountries provided Spain with about one-quarter of its imported oil. Africas share--Nigeria being the most important supplier dropped. Middle Eastern countries provided27.4 percent in 1985 and 29.6 percent in 1987. Western Europes share rose. Effortswere under way to lessen Spains dependence on Middle Eastern oil and to increaseimports from Mexico.In the 1980s, imported petroleum entered Spain via eight ports. The three largest, interms of vessel capacity, were Algeciras (330,000 deadweight tons), Malaga (330,000tons), and Cartagena (260,000 tons).Spain possessed a small domesticoil production capability thatyielded only 1.6 million tons in1987. Despite a sizable explorationeffort, only a few small fields andtwo medium-sized ones werediscovered. The Casablanca oilfield, discovered in 1983, yielded90 percent of Spains domestic oilproduction in 1987, but it was not large enough to offset an overall decline in Spanishproduction. The fall in oil prices in the 1980s further reduced the countrys explorationefforts. 4 5. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite FresnilloThe Spanish oil industry imported and refined foreign crude petroleum; it distributedpetrochemical products within Spain; and, in the mid-1980s, it exported about 10million tons of finished petroleum products per year.As with some other sectors of the Spanish economy, the domestic oil industry hadbeen brought under state control. Distribution of petroleum products had been in thehands of the state monopoly, Compania Arrendataria del Monopolio de Petroleos(CAMPSA), since 1927, and large portions of the shipping and refining system werestate owned.To rationalize the petroleum industry and to make it able to withstand foreigncompetition, the National Institute for Hydrocarbons (Instituto Nacional deHidrocarburos--INH) was formed in 1981 in order to direct CAMPSA and those parts ofthe oil, gas, and petrochemical industry supervised by INI. By the mid-1980s, INH wasresponsible for more than 1 percent of the Spanish GDP, and it claimed 20,000employees. To prepare for Spains entry into the EC, after which state monopolieswere required to be phased out, all of INHs holdings, with the exception of the stategas company, Empresa Nacional del Gas (ENAGAS), were placed under a new holdingcompany in the late 1980s. The company, Repsol, which had a stock market listing, wasgradually to allow a greater role for private capital in the petroleum industry. By 1988Repsol had become Western Europes seventh largest petroleum company, and itsmanagement planned to continue to control about half of the Spanish market oncethat market was fully opened to foreign firms in 1992. EC membership renderedCAMPSAs future uncertain, for it would no longer be allowed its distributionmonopoly. The Treaty of Accession that brought Spain into the EC stipulated thatspecific amounts of nine groups of petroleum products from foreign suppliers wouldhave access to the Spanish market. In 1986 these products were to have a 5 percentshare of the domestic market--a share that was to increase by 20 percent (of this 5percent) each year thereafter.2.1.3. Natural gasIn order to reduce Spains dependence onimported oil, PEN encouraged natural gasconsumption. Efforts to redirect the use offuels were successful, and in the 1980s theconsumption of natural gas increased fasterthan that of any other fuel. Total natural gasdemand doubled between 1973 and 1984. Domestic production of natural gas began in 1984 with the development of the Serrablofield; two years later the Gaviota field went into operation. In 1987 domesticproduction supplied about one-sixth of Spains natural gas consumption, and observersanticipated that its share might rise to as much as one-third by 1990. Domesticproduction shortfalls were taken up by imports from Algeria and Libya under long-term5 6. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillocontracts. In 1988 it was agreed that Spains gradually expanding gas pipeline networkwould be connected to the European network, and Norwegian gas was scheduled tobegin arriving in Spain in 1992.2.1.4. Nuclear energyIt is produced by fission but research onfusion still being carried on.Fission produced nuclear power startedin 1975, as a consequence of petroleumcrisis. It has increased after 1984although public opinions opposition.Uranium is produced in Ciudad Rodrigo(Salamanca) and Don Benito (Badajoz).It is enough to supply the internaldemand of the product.The main application is electricityproduction but it also has other uses such as in medicine.The main problems of fission produced energy are:- dependency towards foreign technology- potential security risks- atomic waste elimination- dismantle centrals no longer in use.2.1.5. Hydraulic energyIt is produced using the energy generated by water in dams. When the water jumps itmoves a turbine and this mechanic energy is transformed into electricity. It was veryimportant from 1940 to 1972 but it was reduced later when thermal electricity startedbeing produced.The main production is located in the North of Spain and the Mediterranean coastwhere the slops make easier the production of the energy. The main use is electricityproduction.Its main benefit is the easiness to produce it. But it has problems as well: differentproduction depending on the water flows or the problems related to its use forwatering agricultural spaces of for home supplies.6 7. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo2.1.6. Alternative powersTheir consumption has increased since the beginning of petroleum crisis. Thanks tothem dependency has been reduced because these energies are locally produced.Their main advantages are: - they are inexhaustible - they are clean - they are not concentratedgeographically - they can be used even inregions of low consumptionSpain presents good conditions for the production of alternative energies, anyway,there is not too developed at the moment. The main use is produce thermal, electricalor mechanic energy.The alternative powers used in Spain are: a) Hydraulic mini-centrals: located in small rivers b) Wind power: used for mechanic or electrical power c) Biomass: it uses waste products of agriculture, livestock and forestry. Thepower is generated by combustion. From one of the varieties, the green one,bio-fuels are produced. d) Sun power: thermal and photovoltaic energy are produced e) Geothermal: it uses the internal heat of earth. It is use for heating.2.2. Electricity productionAlthough Spains mountainous terrain would appear to be well suited to hydroelectricpower production, the scarcity of water limited such potential and was the principalreason for Spains heavy dependence on thermal power. In 1986 only 27.2 percent ofthe countrys electricity came from hydroelectric plants, while 50.6 percent came fromconventional thermal plants, and 22.2 percent came from nuclear plants. The mostimportant fuel for the production of electricity was coal, which generated about 40percent of the total. In 1987 the production of electricity amounted to 132,000 millionkilowatt hours--about six times the amount produced in 1960 and twice theproduction level of 1970. The total installed capacity of the predominantly privatelyowned electrical system was about 40 gig watts--an amount large enough to meet thecountrys needs and to allow some exports. In the second half of the 1980s, the growthof the demand for electrical power was less than anticipated, and Spain had a supplyadequate to last until the mid-1990s. The Spanish level of per capita electrical powerconsumption was among the lowest in Western Europe, surpassing only those ofGreece and Portugal. 7 8. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite FresnilloA key element in the future of Spains electrical power industry was the role to beassigned to nuclear power. Nuclear power was an important factor because of scarcepetroleum reserves, the limited potential for hydroelectric power production, and thepresence of significant uranium deposits. The first PEN, drawn up in 1978, emphasizedthe role that nuclear power would play in meeting the nations ever-increasing needfor electricity. The revised PEN of 1984 postponed the opening of the Lemoniz NuclearPower Plant for political reasons, and it continued the mothballing of three othernuclear plants. The government decided, nonetheless, that if the demand forelectricity increased by more than 3 percent, work on one of the plants might berestarted. The new PEN also emphasized the benefits of increased natural gasconsumption. 2.3. Energetic policyWhen the petroleum crisis started a group of 21 countries created the InternationalEnergy Agency in order to establish the main lines for energetic policies, being themain points:- reduce consumption- substitute petroleum byother powers- encourage researchEnergetic policies started late inSpain. The Plan Nacional de laEnergia was designed to reduce dependency towards petroleum and, at the moment,a Plan de Energas Renovables is in force.The main lines of energetic policy are: a) EU energetic policy: it has started in 1983 with the following targets: a. Assure supplies and, for that, diversification is essential b. Reduce consumption and use of non exhausting energies c. Create an internal energetic market d. Control the negative influence on environment b) New EPN will last until 2010 so that: a. Consumption of gas will increase b. Non exhausting energies will increase, and petroleum too c. Continue with nuclear power and reduce coal c) Plan de Energas Renovables (1999-2006): The aim is to meet some of the datain relation to non exhausting energies. 8 9. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo 3. Spains industry 1855-19753.1. Historical development a) Beginnings of industrialization (1855-1900)This development started later than in other European countries. The reasons for it arerelated to the difficult conditions: - Scarcity of some raw materials and energetic products - Lack of entrepreneurship - Few capitals were available - Technological backwardness - Offer of limited products - Complicate foreign situation - Inappropriate industrial policyA majority of industrial production wasdependent on the high tariffs created forforeign products during the Restorationsettlement. b) First third of the 20th century (1900-1936)It was the time of industrial development due to:- development of coal mining, mainly during WW1- mineral exportations- developments of second industrial revolution- increase of national investments- public works were developed during Primo de Riveras dictatorship- industrial protectionism. c) Civil War and war aftermath (1936-1939)Industrial development stopped. Industries were destroyed and due to the autarky ofthe war aftermath industries could not get the energetic resources required. The crisiscontinued until the fifties. d) Between 1960 and 1975It was the period of developmentalism, due to these factors:- liberalisation of imports- expansion of capitalism economy- good situation of the country 9 10. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo - low energetic prices - Development Plans designed by the government.3.2. Industrial productionSince 1955 the innovations of first and second industrial revolutions had beenacquired. Thanks to that different sectors evolved.During the second half of 19 th century the industries that were significant were ironand cotton textiles. The first one was located in Andalucia and the North (Asturias,Cantabria) and the second in Catalonia.During the first third of 20th century the leading sector were related to basic andconsumption industries: a) Basic industries: iron, refineries, petro-chemistry were supported by thestate. The INI was created and pushed a sector that required stronginversions but had low profitability. These sectors were not appropriate forprivate investments. b) Consumption equipment industry (textile, shoe making) increased at thesame time as the citizens life conditions. Other products such as cars andelectrical appliances for homes developed too due to similar reasons. c) Industrial equipment industry (machinery) did not develop too much due tothe technological backwardness. Anyway some sectors continue beingimportant because they counted with natural resources and they requiredunskilled workers. 10 11. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo3.3. Industrial structureThe characteristic of industrial structure during the period 1855-1975 are: a) Production system acquired the characteristics of serial fabrication since thebeginning of 20th century. It was applied in big factories so that it was possibleto produce homogeneous articles at low prices. There were also numeroussmall factories working with traditional methods. b) Workers were abundant and given that the industry did not demand skulledpeople their situation was not regulated at the beginning. c) Size of enterprises: there were huge contrasts:a. Small factories and workshops: they required low investments, simpletechnology and, as a consequence, they were not competitive. Theywere specialised in consumption products and benefited fromprotectionism.b. Big factories were scarce and they were mainly linked to iron industry.They received the support of the State with the creation of the INI. d) Technological backwardness and dependency from foreign technology, capitaland energy. The main characteristics were: a. Technological backwardness was provoked by protectionism becausefactories were not forced to compete in order increase productivity. b. Technologically dependent because there were little attempts to renewindustries. c. Financial dependency because national inversion was scarce. 11 12. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo d. Energetic dependency because there was not enough ability to exploitcoal and hydrocarbons.All in all, Spain industrialised but due to its limits it was always located in a peripheralposition in the world.3.4. Trends and criteria to create industriesWhen an industry is created criteria such as the reduction of expenses are taken intoaccount. There are several factors. a) Traditional factors: a. Be close to raw material and power generation b. Existence of a wide market c. Abundant and suitable workers d. Good communication means for distributing the products e. Capitals or ability to attract them f. Supporting sectors, this is, other factories to create infrastructures andequipment g. Industrial policies favourable to industrial development.b) Industrial concentration trend:During the period considered industries trend to concentrate near cities because inthis way it was easier for them to obtain benefits: complementary industries,transports, workers, workshops, equipment, information and innovations.3.5. Industrial areas a) From the very beginning the periphery of Spain was the leading area forindustrialisation, including Basque Country, Catalonia and Levante, in additionto Madrid. The reasons for that concentration were: - Their location eased the obtaining of raw materials and normally they were located near mines - Port infrastructures available - Industrial regions: they were in cities where some of them could find their own markets, as in the case of Madrid. 12 13. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite FresnilloThere were other little industries sometimes linked to traditional agricultural productsbut without any concrete location pattern. b) During the first third of the 20th century and Francos time industries weredistributed to try to eliminate the disequilibrium between regions.- fix the hegemonic situation of former industrieso the region around Biscay was specialised in basic industrieso the Mediterranean region was more diversified, with light industriesand small industrieso Madrid was an area highly diversified.- creation of new industrial spaces: there were related to communicationaxis, such as the Ebro and Mediterranean, Galicias coast and OccidentalAndalusia, thanks to the state policy; or very located places devoted to aconcrete production, development hubs.- Rest of areas of Spain counted with scarce or none industries, with theexception of provincial capitals linked to traditional productions.3.6. Industrial policyIn this period the main industrial policy was the interventionism of State in industry.The measures taken were:a) Protectionist policy: Spanish industry did not have foreign competence becauseforeign products were not competitive. This measure was not good becauseeven if it provoked the development of industries encouraged by the goodperspectives at state level, it impeded the technical modernization.b) Creation of public industries in sectors that did not attract private capitals. 13 14. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnilloc) Measures to try to reduce the differences between different regions. These measures were put together in the Development Plans (1964-1975).In order to stimulate industries they realised a series of actions: - Promotion and development hubs were created following the French model. There were created to minimize the differences between regions, to develop those that had fallen behind. Industrial development hubs were created in cities with a certain industrial base (Corua, Vigo, Seville, Valladolid, Zaragoza, Granada, Cordoba, Oviedo, Logroo and Villagarcia de Arosa). Promotion hubs were targeted to underdeveloped regions. The result was not as good as expected because they did not generate so many jobs as expected and their influence in other industries was limited. - Especial treatment to some industries in concrete areas: regions with priority to create industries, in cases of areas appropriated for certain activities, industrial estates or parks distributed in the whole territory and big areas for industrial development created in the Third Development Plan. In those they try to create development axes, with good communications linking cities and industrial nucleus.4. Industrial crisis and restructuring4.1. Industrial crisisThe crisis affected all industrial countries since 1975. It was very negative for Spainthat lacked of a strong industry.Reasons for the crisis. There were exterior and interior.a) Exterior causes: a. Energy became more expensive, mainly due to the increase ofpetroleum prices. b. The former technological cycle was exhaustedi. Technologies were delayed confronted with the new ones such as microelectronics, computers, telecommunications ii. New economic sectors were above the previous ones.iii. New flexible production systems (decentralised, in small factories) c. New characteristics of the demand, which made necessarydiversification and continuous reforms. d. Globalization of economy and competence of the New IndustrialisedStates.b) Interior causes:14 15. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo a. Inadequacy of structures of Spanish industries: not very specialised,high energetic consumption, scarce modernization, dependency of theexterior, abundant debts, lack of self-financing. b. Historical situation: doubts about the future during the transition, afterFrancos death.Consequences of the crisisAs a consequence of the crisis many industries closed down, production reduced,results reduced and debts and unemployment increased. The amount of industry inGDP was reduced and the peripheral role of Spain in world economy was reinforced.4.2. Policy and crisis confronted: industrial restructuringTo answer to the crisis the Society for Development and Economic Cooperation wascreated in 1975. The restructuring had two parts: the rationalization and re-industrialization. State gave aids of different kinds: financial, fiscal and labour. a) Industrial rationalization or restructuring: in the case of industries that wouldre-adapt to the new characteristics of the market reforms were done. The mainmeasures were:a. Adjust offer and demand, eliminating over productionb. Regulation of staffc. Specialise in products of the highest demandd. Application of new organizational and management systems. b) Re-industrialization It affected two aspects: - Technological modernization in sectors that could develop in the future. - Introduction of new activities with better future perspectives. For that Areas of Urgent Re-industrialization were created. 15 16. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite FresnilloAs a consequence areas that were very specialised had a diversification ofindustries. Anyway, they were deficiencies too: creation of fewer work places thanexpected, the majority of the economic aids went to big industries and thedisequilibrium between regions enlarged. 5. Spains industry today5.1. Third industrial revolution and industrial recoveryAlthough industrial restructuring is not completely finished, some sectors are alreadyexperiencing the changes of a new industrial revolution.Changes of the third industrial revolutionThe basis of this phase of industrialization is innovation,this is, the use of new technologies in the productiveprocess. The new technologies are those of theinformation and microelectronic. a) Changes in industrial productionTechnological revolution has affected sectors linked tohigh technology: - Information technology: telecommunications, computers - Automation: robots, assisted design - Set up tools: equipment using abundant information b) Changes in industrial structure- Changes in the way of production: decentralization (factories with different plants, subcontracting, formation of enterprises nets) and flexibility of the production.- Changes in the size of the factories, they tend to be smaller.- Changes in the staff because they must be skilled but due to automatic processes other ways of hiring personal have appeared, such as temporary, free-lance, and others.- Outsourcing (terciarizacion) of the industry c) Changes in setting up industries- to reduce costs factories move to places where they can obtain higher benefits- as they demand qualified works and a lot of administrative work, they can be concentrated in areas with enough equipments. d) Changes in industrial policy 16 17. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo - limit of State intervention and open to foreign influence inside the globalization trend - endogenous industrialization is supported - environmental awarenessInfluence of third industrial revolution in SpainThanks to the third industrial revolution developed countries are recovering and as aconsequence factories and work opportunities have increased.In Spain this influence started in 1985 that only stopped in 1990-1994, as in othercountries. Since that moment it has evolved full of dynamism. All in all, problems havenot been completely eradicated and Spanish industry continues having difficulties inproductivity, structure and the link to the land and environment.5.2. Industrial production: sector structure.The industrial sectors involved in the restructuring process still being important. In themost dynamic there is foreign capital and sectors related to technology are a bitbackward.5.2.1. Traditional sectors in restructuring processThey have been negatively affected by:- reduction in demand- lack of competitiveness- European policies for limiting production and subventionsSectors affected are: a) Basic metallurgy and metallic transformation a. Iron industry: It has been united to other European factories. The results have been reduction of costs, diversification of production and improvement of quality. In Mediterranean, Basque Country and Asturias. b. Industries of metallic transformation: they make machines of any kind and are located in the triangle Barcelona-Basque Country-Madrid. b) Production of electrical equipment for houses: it is being changed in order to specialise the production, industrial concentration and enlarge and diversify market. As a result many factories have closed down and workers situation has been regularised. c) Shipbuilding: it is concentrated in Galicia, Cantabria, Basque Country and Andalusia. It has been limited and it tends to specialise, for instance, in repairing. d) Leather and shoemaking: it is important in Catalonia and Valencia. It has introduced new technologies and for that foreign capitals have been used. On 17 18. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo the other hand, there are a lot of small factories. It must compete with foreign cheap products so that they concentrate in quality and design.5.2.2. Dynamic industrial sectorsThey will have plenty of resources in the future due to: - high productivity and specialization - healthy enterprise structure - demand assuredIn this sector foreign investments are frequent. a) Car industry: it has suffered a strong restructuration because it wastechnologically backwards. It has improved but it needs technologicalinnovations. b) Chemistry: It is one of the basic industries in Spain, but its situation is not goodbecause it depends on foreign capitals, it has to face strong competence and ithas scarce investigation level. It has two sub-sectors: a. Petro-chemistry or basic chemistry, normally related to refine b. Transformation chemistry, in small factories: pharmacy perfumes, painting materials, paper. Exports have increased. c) Sector of agriculture aliments: it is small and disperse but multinationals havean important role in it. Their aim is to increase sales in the interior market anddevelop the export of transformed products. d) Building industry: it is subject to many changes. During the last times is quite ina crisis.5.2.3. Leading industrial sectors.High technologies have reached to Spain late and they have been faced with severalproblems: a) Dependency towards foreign countries for investigation and technology b) Factories are small, with few capacity for competitiveness c) Work force and studies have not been appropriated: high technologies are concentrated in innovative regions, where technological parks are created. These areas have some particular characteristics:a. Concentration of innovation and research centresb. Located in specific areas, are not very big but well linked with theenvironment around and telecommunicationsc. Located near metropolis or in medium cities with good qualityenvironment and services 18 19. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo d. Integrated with the region in which they are, they demand services andskilled workers.The results of these industries are: - They are attractive enough to attract other factories in areas known as parks. They can exercise their attraction over multinationals and they tend to be successful due to the high level of technology used. - Their influence in areas around is not clear because in many cases they are linked to foreign multinationals, being their direct impact in the region more limited. - Disequilibrium is bigger than before because they are concentrated in certain areas: Madrid, Catalonia, Basque Country, Valencia and Andalusia, near big cities or in dynamic axes.5.3. Present structure and problems of Spanish industrySpanish industry has some structural problems and as a result it is not well adapted tothe new technological cycles. a) Factories size is not appropriate: a majority of them are small (less than 50workers) or medium (from 51 to 500). They can adapt to the changes and theconflicts are scarce. Their problem is that they are not competitive becausethey are too small and they can not make great investments in research andmodernization. In addition to this, until recently they have been left apart fromthe industrial policy. b) Research is small because the investments in this concept are reduced. I+Dinvestments are concentrated in some sectors that are the most dynamic:electronics, computers, pharmacy, and chemistry. Anyway this has beenchanged during the last years in order to create more competitive factories. c) Technological backwardness and dependency: There is little technology inSpain and it tends to be imported and this is linked to the limited investmentsin I+D. As a result, quality and productivity are limited and they are notcompetitive, leaving Spain in a peripheral situation.5.4. Modern trends and factors for industrial location.They have been changed since the 1980s decade but they have maintained thetendency for industrial concentration.5.4.1. Present factorsThe classic ones have lost importance due to the industrial crisis and due to theinfluence of the third industrial revolution. The new factors are: - Natural resources availability is not as important as before: communications have improved, some means of transport such as ships are cheaper and thanks to new technologies there are synthetic raw materials.19 20. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo - Market size has enlarged - Means of transport and communications are better - Work force is an essential element, mainly in factories requiring qualified personnel - Innovation and ability for getting access to communication have become essential elements.5.4.2. Present trends for factory location: expansion and concentrationDue to the changes mentioned above, trends to locate industries have changed: it is ageneral trend to locate industries in peripheral spaces, but the regions moredeveloped continue exercising attraction. a) Industries were limited to peripheral region due to the following factors: a. Great concentrations create problems because the spaces are full and this makes more expensive infrastructures and conflicts are more common, in addition to damage environment. Due to that they tend to divert them to less conflictive areas. b. Technological improvements c. New capitalist strategies d. Endogenous industrialization b) Central spaces continue being attractive because they can offer infrastructuresthat are required by some technological sectors.5.5. Industrial spaces and disequilibriumIn Spain, industrial location presents disequilibrium between regions. There are verydifferent situations, with developed, developing and areas in crisis, or withindustrialised and non industrialised areas. The disequilibrium is more important in themost dynamic sectors, because they tend to locate in the most developed regions.The irregular distribution of industries influences in other disequilibriums linked tothem: - population distribution - richness - infrastructures, equipment andsocial services - political importance.This last factor can be negative for scarcelydeveloped regions because due to thisindustrial development can be a key factorin industrial policies. 20 21. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite FresnilloTaking into account industrial location, the following regions can be distinguished:5.5.1. Developed regionsThere are central spaces of metropolis, mainly Madrid and Barcelona. In the presentdevelopment trend we can find: - traditional sectors are in decay or have been restructured - industrial activity has recovered because many factories and firms havetheir offices or part of their factories in these big citiesIndustries are in a process of tertiarization and the result of that is the creation ofindustrial or enterprises parks.5.5.2. Areas and axes in developmentThere are the result of an endogenous industrialization. The following ones can befound: a) Around metropolis decreasing or restructuring industries, but there are others in progress: a. Industries coming from city centres have been established here. Thereare traditional industries that have found in these areas a cheaper spaceto develop. Normally they form industrial polygons with goodcommunications with the city. b. Innovative factories or technological parks. b) Around cities: there are a space in between the city and the agricultural spacearound, an area very attractive for industrial development. Factories tend to besmall, with scarce capital: intensive productions doing non skilled works,factories subsidiary of others. The main kind is that of polygons of industrialnaves that normally add to their small size some lacks in equipment orinfrastructures. c) Industrial development axes: they are located in the main communication nets: a. Ebros valley and Mediterranean (Girona-Cartagena). Motorways link the South of Europe with this area. They have attracted state and international multinationals. These areas have traditional industries and there is a connexion with the agrarian regions around so sometimes the industries are spread in the territory. b. Some axes have developed locally: the net around Madrid expands to the provinces of Castela-Mancha and there are other secondary axes along some main routes (Tordesillas-Valladolid-Palencia). d) Some rural areas have become the location for small companies and inversions,with simple technology and demanding non skilled work force. The mostcommon are traditional workshops. Anyway, sometimes innovative industries 21 22. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo may appear thanks to the solidarity between factories or animated by administrative advantages.5.5.3.Regions and axes in crisisThere are some regions such as Asturias, Cantabria or some specific places. BasqueCountry was included in this group for a time but nowadays its industry has recovered.The characteristics of these regions are: - There are regions specialised in sectors in crisis. Big factories are commonwhile medium and small have a smaller proportion and in the cases theyexist, they are linked to the big ones. - The preparation for the work market is medium or small: conflicts arefrequent and the presence of unions is permanent. - Environment has been affected for long.These regions have been affected by a deindustrialization process and as aconsequence are involved in a demographic crisis and their position is peripheral asdecision centres or industrial areas.Some of them have been recovered, such in the case of the Basque Country.5.5.4.Regions of inducted or scarce industryAreas of inducted industrialization are Aragon, Castile and Leon and Andalusia. Theybenefited from the decentralization policy of the 1960s and at the moment they havedeveloped industrial areas.Areas of scarce industry are Castile-Mancha, Extremadura, Baleares and Canaryislands. Their location is not competitive. In them important industries are notfrequent and sectors are traditional producing low value things. Castile-Mancha beginsto be the exception to the group thanks to its link with Madrid.5.6. Industrial environmental problemsIndustrial problems have an influence on environment if the following aspects aretaken into account: a) Natural resources are over exploited b) Some industries pollute the environment c) Industries deteriorate natural landscapes statically.5.7. Todays industrial policy 22 23. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite FresnilloNowadays it is characteristic of Spains industry the reduction of the role of the stateand the assumption of some measures to correct structure, location andenvironmental problems.5.7.1. Reduction of States interventionThe most characteristic forms of State intervention were: a) Openness to the exterior: it has been possible thanks to the entrance in the EUand due to world globalization.a. EU: Spanish protectionism was left apart, increasing competitiveness; inaddition to this, the tariffs of the EU are smallb. Imports and exports have developed at entering the world net. Foreigncapitals have been inverted in the most dynamic sectors. b) Companies of high profitability have become private. SEPI has been createdinstead of INI to try to make of these industries profitable and able to competein a global world.5.7.2. Policies to solve the structural problemsThey have followed the same policy of the EU and the aim is to increase Spanishproducts competitively. The main points are: a) Since 1991 re-structuring has improved with the aid of European funds b) Increase the competence of companies, mainly by supporting small andmedium industries. c) Develop research d) Reduce technological dependency5.7.3. Policy to correct regional disequilibriumUntil recently interest was addressed to some sectors, mainly towards the big onesthat were in crisis, forgetting other regions. Nowadays there are two main areas ofaction to correct those problems: a) Policies for promoting industriesThey are designed to take into account any kind of sector. The main objective is tocreate competitive industries. The activities designed for this purpose are: - Law for Incentivising Industry 1985. It helps not only to industries but alsoto any other activity that can reduce the differences between regions, suchas some services, touristy activities and others. - Regional Development agencies: they coordinate activities to supportindustries in Autonomous Regions. Their capital is public and they stressactivities including technologies and medium and small companies. 23 24. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo b) Policy of endogenous industrializationThey try to develop the potentialities of each region. The bases of this policy are: - micro-planning: more help of the regional governments - support for medium and small companies - promote innovation: to achieve these purposes there are two kinds of organizations: o Societies for developing industries o Promote industrial districts5.7.4. Environmental policiesAfter the 70s there is a general trend against the environmental problems created byindustries. The main activities for correcting them are: a) Sustainability as long as use of resources areconcerned b) About pollution: a. Protect spaces and soils b. Environmental impact must be studied inadvance c. Promote research to create green orecological industries d. Corrective measures such as analysis of Environmental Advisories c) Referring to the aesthetical value of landscape, renew areas formerly used forindustries that nowadays are out of use.6. Industrial spaces in the Basque CountryIn the Basque Country industry and tertiary sector have a notorious importance.6.1.Raw materials and energyThe most important areiron from mines andstones. Ironwasessential forthedevelopment ofindustry and in thecategory stones silica,ofita, lime, marble andslate.Other raw 24 25. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillomaterial is wood from the forests, in a time used for iron elaboration and nowadayspresent in paper industry.As long as energy sources are concerned, the Basque Country is dependent for it doesnot produce energetic minerals and hydroelectricity is not enough to supply all thedemand, the same as alternative energies. To face these problems a new energeticplan has been designed.6.2. Basque industry until 1975 crisis a) Beginning of industrialisationIt started quite early, at least earlier than in other regions of Spain. Several are thefactors that made possible this development:- skilled work force trained in hand work- commercial bourgeoisie- increase in population resulting in abundant work force and enlargement of markets for the productsDespite these factors, there were different situations: - Biscay: Industrialization started during the last quart of the 19 th century. The main reason for this development was the existence of iron mines appropriate for the production of steel. In 1868 thanks to some mine Laws connections with Britain started to export Biscayan iron. Thanks to this trade capitals piled and it was possible to invest in creating more industries and a bank that could help to develop the region. Production is based on iron, and metallic transformations. - Guipuzcoa: It started in the second years of the 19 th century thanks to the entrepreneurship of the bourgeoisie. New sectors and productions were introduced and for that foreign workers came. Production was diversified and it was spread along different valleys. - Alava and Navarre: It started later, at the end of 19 th century and beginning of the 20th century. In Vitoria metallurgic and agricultural industries were created but, in general, industry was traditional. In Continental Basque Country the traditional sector included shoe making and transformation of agricultural and fishing products. Scarcely were modern industries created in these areas. b) First third of the 20th century:Basque industry was influenced by the international situation, with moments ofexpansion (WW1) and moments of backwardness (1929 crisis). c) Civil War and aftermath (1936-1959) 25 26. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite FresnilloIndustrialisation process was stopped due to: - destructions during war operations - limits to importation of raw materials and energy - protectionist policy that eliminated any attempt of modernization.Thanks to protectionism several factories were created but their production was notappropriate. d) Development (1960-1975)Biscay and Guipuzcoa experienced a huge increase whereas Alava and Navarre startedtheir industrialization process. - Biscay: the main industrial concentration was settled around in Bilbao, around the outlet, in the left margin (Baracaldo, Sestao and Trapaga). Heavy industry was concentrated and so were the urban concentrations, expanding to other areas of the Ibaizabal valley (Basauri and Galdacano and Duranguesado). From there it expanded to Guipuzcoa: Donostialdea, Deva, Urola and Oria valleys. - Guipuzcoa: Industries concentrated in Deva, Urola and Oria valleys and the last one was connected with San Sebastian area. - Alava and Navarre: they started their development in this moment, thanks to local and central administration that backed the project (cheap soils, fiscal advantages, infrastructures). - Continental Basque Country: the industrialization was more limited and there were huge differences between the coast and the interior. The area known as BAB (Bayonne, Anglet, and Biarritz) is the centre of that economy and third sector is more important than industry.6.3. Crisis and restructuring6.3.1. Problems and consequencesThe causes of the 1975 crisis were: - increase of power prices (petroleum) - apparition of new sectors linked to the technologies of third industrialrevolution - competition of recently industrialised states to traditional industry becausetheir salaries were lowerThe crisis affected seriously Biscay and Guipuzcoa because industry had an importantrole in them.The consequences of the crisis were:26 27. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo - factories closed down or they reduced their workforce and were restructured - reduction of the importance of industry in the GDP - unemployment - reduction of family income - reduction of investments - deindustrialization - Basque Countrys industry lost weight in the Spanish industrial system.6.3.2. Policy for restructuring industryPolicies for confronting the crisis were put into practice with a double objective:restructuring and reindustrialization. a) Restructuring: it started in 1982 to adapt industries to the new technologicalcircle, management, production and improvement of jobs.- States aid was directed to iron industry but the results were not theexpected. Ten years later new programmes were designed.- Basque Government added other complementary measures: aids forfactories in difficulty in order to improve management and renew theprocess for the creation of new industries. These initiatives were the oneshaving the best results. b) Reindustrialization or policies for support industries: They were concentratedin space policies to promote industries and the modernization of others. Themost important were the policies to prepare land for industries using ZUR(Zones of urgent reindustrialization) and GBI (regions in crisis).- lands for industry allowed the creation of small and medium factories inindustrial polygons or technological parks (Zamudio).- Area of urgent reindustrialization in the Nervion: they were aimed atpromoting services, chemistry, and metallurgy of transformation.- ZUR affected to industries in crisis. The money used was limited so mediumand small industries were left apart. The investments were conducted toplastic, chemistry and machinery.Other policies were aimed at modernizing the industries or making them morecompetitive. In many cases they were conducted to new technologies or innovativeproductions.6.3.3. Territorial impact of the crisisThe influence of the crisis was not equal in all the Basque territories. In addition to this,industry initiated its recovery from 1994 and on.27 28. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo - Biscay: it was the most affected by the crisis. The big Bilbao lost part of its influence and new axes appeared (Plencia-Mungia, Txorierdis corridor). - Guipuzcoa: the restructuring reached different areas because industry was spread. The negative consequences were important. The Deva valley is the region where more modernising programmes have been put into work. - Alava: restructuring was not dramatic because the development of the region was reduced. It was centred in Llodio, Amurrio and Gasteiz. Nowadays it is one of the areas in development, at once with Navarre, because projects coming from the coast are developed in this region.6.4. Todays situationThe characteristics are: - production based on traditional activities (metal) - structure based on medium and small industries - I+D+I (investment-development-innovation) has managed to get a goodlevel, higher than in Spain - qualified work force, recycled in many enterprises - polarised localization and disequilibrium among zones - environmental problems - dynamic industrial policy6.4.1. Industrial productionThe most important is metal and, in a secondary level, construction, materials fortransports, plastic and electrical materials. This is, it is specialised in two sectors: - Traditional activities: their expansion is limited for they use traditional techniques. To be competitive they need to produce at low cost but they are not competitive. - Equipment industries require technology and intermediaries.The possibilities offered by new technologies are not well used. Some sectors have animportant added value and they have developed quickly but traditional sectors musttake advantage of renewal opportunities.6.4.2. Industrial structure a) The size of the factories is small (less than 50 workers). Due to this it is moredifficult to compete, get money loans, modernize, investigate and open tointernational competition. In many cases they depend on foreign decisioncentres because sometimes they are branches of multinationals. But the sizecan be sometimes an advantage because in this way they can adapt to changeseasier. Other important element is that the small size makes possible thecooperation between factories. In the Basque Country there are clusters, this 28 29. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillo is, groups of business of the same branch that, in this way, aim at being more competitive. b) Activities based on research, development and technological innovation aremore important in the Basque Country than in other regions. This is the resultof a series of factors:- Basque net of technology in the Regional Plan that puts special stress on theneeds of the factories and the National Plan has an active role in them.- Special interest devoted to technological parks- Availability of technological centres, linked to the demands of thosebusinesses. c) Work force: training and education are linked to the needs of the factories andworkers of factories involved in a process of restructuring have been recycled.6.4.3.Industrial localizationThere is certain resistance to changing the patterns for locating industries. In generalthey still being the same that were determinant in the 70s decade.Regionally, there is an inverted triangle which three vertices are the three provincialcapitals, and there is a contrast between the two coastal and the interior. Bilbao andSan Sebastian are linked through a corridor (it crosses the area of Durango and theDeva valley) and other corridor of smaller density following the coast. On the contrary,there is not a clear link with Vitoria.The Biscayan model is polarised, around the Big Bilbao, the case of Alava is macro-cephalic (Vitoria) and in Guipuzcoa the distribution is more balanced. In the threeterritories a majority of the industries and services are centred on the capital cities andthe links between industries are bigger each time.Alava and Navarre are developing their industries. There are very dynamic and theyare involved in a process of change, linked to European and Spanish development axes.The Atlantic axis has lost weight in favour of the Ebro. In this strategic location theBasque Country is in a favourable position: a lot of industrial projects come from theAtlantic area but due to the high prices of soil and its scarcity they find new locationsin this corridor. In addition to this, infrastructure and communications are good in thisregion, the same as life-quality. Due to all these reasons the Southern region hasknown an important development.29 30. GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo6.4.4.Environmental problemsThe main problems are:- pollution of atmosphere, water and soils- rubbish generation and their treatment- industrial waste6.4.5. Industrial policySeveral measures have been taken in order to solve the problems in the fields ofstructure, space and environment.a) Problems in production and structure: there are six lines: investment, innovation, international openness, knowledge, quality and cooperation. The main activities are:a. Development of new products, mainly in new sectors, such astechnologies and information.b. Aids to medium and small factories to modernize and foster cooperativeattitudes that can be basic for increasing quality, improving30 31. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillomanagement and becoming more competitive. In this order clusters areessential c. Improve research and development (I+D) to prepare companies to becompetitive internationally d. Support workers recycling in restructured companies.b) Policies related to disequilibrium between regions: a. Support the links between regions and develop industrial projects to develop depressed areas, by creating polygons and medium industries. b. Special attention to regions in crisis, such as the Bilbao outlet or Pasajess port. c. Policies to control environmental problems, controlling air, water and soils situation and controlling waste. There are several policies for recycling, such as those of Altos Hornos. In other cases degraded areas are being reconverted for other uses such as leisure centres, as is the case in some areas in Guipuzcoa. 31 32. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillomanagement and becoming more competitive. In this order clusters areessential c. Improve research and development (I+D) to prepare companies to becompetitive internationally d. Support workers recycling in restructured companies.b) Policies related to disequilibrium between regions: a. Support the links between regions and develop industrial projects to develop depressed areas, by creating polygons and medium industries. b. Special attention to regions in crisis, such as the Bilbao outlet or Pasajess port. c. Policies to control environmental problems, controlling air, water and soils situation and controlling waste. There are several policies for recycling, such as those of Altos Hornos. In other cases degraded areas are being reconverted for other uses such as leisure centres, as is the case in some areas in Guipuzcoa. 31 33. GEOGRAPHY AND HISTORY DEPARTMENTTeacher: Maite Fresnillomanagement and becoming more competitive. In this order clusters areessential c. Improve research and development (I+D) to prepare companies to becompetitive internationally d. Support workers recycling in restructured companies.b) Policies related to disequilibrium between regions: a. Support the links between regions and develop industrial projects to develop depressed areas, by creating polygons and medium industries. b. Special attention to regions in crisis, such as the Bilbao outlet or Pasajess port. c. Policies to control environmental problems, controlling air, water and soils situation and controlling waste. There are several policies for recycling, such as those of Altos Hornos. In other cases degraded areas are being reconverted for other uses such as leisure centres, as is the case in some areas in Guipuzcoa. 31