Crisis hits Spanish car industry

Government meets car manufacturers and officials from regions affected by the crisis in the car industry in Spain

Almost 50,000 jobs are at risk due to the serious problems the car industry in Spain faces. Not all the jobs at risk are in manufacturing but they are also in sales where it is believed that up to 20,000 jobs could be lost and also in parts manufacturing where up to 14,000 jobs could be lost. According to car manufacturers the sector is facing a critical period.

Due to the looming crisis the Minister for Industry, Tourism and Commerce, Miguel Sebastián, is holding a meeting today in Santiago de Compostela with representatives from the car manufacturing sector and with officials from the 9 regions most affected. The aim of the meeting is to look for possible solutions to the situation the sector now finds itself in.

During today’s meeting it is expected that Miguel Sebastián will urge the sector to ask for help from the European Investment Bank which has up to 40,000 million euros available to help investment in related industries at the request of Spain.

The regions which are most affected by the crisis in the car manufacturing sector are Galicia – the Galician regional government has just approved a 10 million euros aid package for car manufacturers in its region in order to try and avoid a wave of redundancias. Castilla and León, is meeting regularly with representatives from Renault, Nissan and Iveco in order to try and assure the future of these plants in its region and the Catalan regional government minister for Innovation, Josep Huguet, has recently announced that the Catalan government will look at plans to invest in the capital of the companies most affected by the crisis in the car industry.

The car industry is the backbone of Spain’s industrial base and constitutes 8.

4% of Spain’s GDP and accounts for 7% of industrial employment and 26% of all exports. There are 18 car manufacturing plants which employ 70,000 workers and suppliers employ another 245,000 workers.

The car industry now faces serious problems in Spain because following property it is the second biggest investment for most families and in times of cutting costs and uncertainty it is also an expense that can be easily put on hold.

In fact if recent figures are analyzed then it appears that sales of cars have come to a virtual standstill. In October sales dropped by 40% which is the third biggest fall in history and the Association of Car Manufacturers, Anfac, believes that overall sales will drop by more than 25% for 2008 – this is 400,000 less cars than in 2007. In the rest of Europe, where 80% of the cars made in Spain are sold, sales dropped by 14.

5% in October.

Overall car production in Spain has fallen by 4.7% and Anfac is predicting that production will fall further to over 10% which is almost 300,000 cars less than last year.

Amongst all the companies producing cars in Spain, Nissan is facing the most serious difficulties – it is looking at plans to make 40% of its workforce redundant (1,680 employees) in Barcelona due to the drop in demand for 4X4 vehicles. Fortunately, at present employees have only been temporarily suspended from work.

Meanwhile car dealers have accused the car industry of producing more cars than required and of being responsible for building up a surplus stock of cars. Now that finance is not easily available for clients around 20,000 jobs are at risk in the sales sector.

The future of Spain as a car manufacturer appears to be more uncertain than ever. Experts have warned that if factories are closed down now it will be very hard to reopen new ones in the future given that the influence of Spain in the global sector is very small.

Related: Driving in Spain