A new take on re-industrialising Euskadi

Imagine a scene from a typical Hollywood film set in a small city in the American heartland. The biggest company in town shut up shop and left, turning it into a ghost town: closed shops; semi-derelict and abandoned houses; tumbleweed blowing this way and that; dirty and littered streets; an ageing population and general gloom and doom. Although I may be exaggerating somewhat, it is, however, the sad scene of a service-based economy devoid of industry.

The scene depicted above is intended to make a point. I want to appeal for a renewed commitment to advanced industrialisation here at home in Baskland. There are a number of compelling reasons for us to undertake such an economic transformation with advanced manufacturing at the forefront. Thanks to our deeply-rooted tradition of manufacturing, we possess a well-known capacity for transformation, as well as the basic competencies for generating future competitiveness in a number of sectors. The most competitive areas in the world are those who are in the process of undertaking a complete transformation of advanced industry in their own economies, as advanced industry is the main motor for generating wealth.

For instance, according to a study by HBS, industry spins off an average of between 2 and 5 jobs in the rest of the economy, constituting the most significant part of commerce worldwide. Not only is this critical for generating a surplus, which in turn offsets the cost of imports, it also contributes to increasing a country’s productivity which in turn produces positive returns for the rest of the economy. Additionally, advanced industry is the main investor in applied research and innovation, as well as the main source of development of value-added services, which normally creates highly qualified jobs, albeit fewer in number.

As a result of the global financial crisis, people today in most developed countries are clamouring for the transformation of the industrial network. Some of the tell-tale traits of countries and regions with superior results in this area are those producing high value-added manufacturing exports. Consider the following two examples: 1) economic growth in China is primarily based on manufacturing for foreign markets; 2) the United States has launched the "Made in America" programme in an attempt to reclaim all or part of the 5 million jobs lost in industry since 2002.

From where I stand, we are presently witnessing a new era of industry with industrial transformation taking place right here in Baskland. We urgently need to develop and implement an integrated industrial strategy, including innovation, education and research all aimed at creating an internationally competitive, high value-added, manufacturing industry, which integrates new technologies and business models.

Although we currently have a large base of manufacturers with growing international competitiveness, we still need to put design capacities to good use and go from an industry of process to an industry with a capacity to contribute integrated solutions and products. We need to intensify knowledge of end clients, and not be exclusively subcontractors. Finally, we need to incorporate emerging technologies in manufacturing (bits, genome, neurons, clean), as well as increase cooperation, develop minimum efficient sizes in order to compete, etc.

This is the time to make a serious pledge for the future. Our country is compelled to increase our competitiveness in the global arena by supporting advanced manufacturing with a high degree of value-added. I would certainly not like to see the son of Spanish actor Javier Bardem starring in a remake of "No Country for Old Men" in Euskadi. Is this the panorama we wish to leave to future generations? I think not.

*Originally Published in El Economista, 03/12/2012

Sabin Azua

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