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Country Commercial Guides for
Report prepared by U.S. Embassy Madrid, |
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENTBest Prospects for Non-Agricultural Goods and Services
List of Best Prospects:
1. Telecommunication Services
2. Pollution Control and Water Resources Equipment
3. Franchising
4. Telecommunications Equipment
5. Medical Equipment
6. Electric Power Systems
7. Automotive Parts and Accessories
8. E-Commerce
9. Aircraft and Parts
10. Architectural/Construction/Engineering Services
11. Organic Chemicals for the Pharmaceutical Industry
12. Paper and Paperboard
13. Industrial Controls
14. Computer & Peripherals
Sector rank: 1
Sector name: Telecommunications Services
ITA Industry Code: TES
The telecommunications service market in Spain is booming, driven by the recent liberalization completed on December 1, 1998 and the general recovery of the Spanish economy. Ranking ninth in the world, the Spanish telecommunications sector has shown record growth in the cellular phone and Internet application subsectors and in digital networks and associated technologies. Telefonica ranks 10th worldwide, including its South American operations.
The market values in the table below (with services totaling over USD 14 billion in 1999) reflect the creation of new operators and their significant investment in the development of alternative networks to the former state-owned monopoly Telefonica. Though the telecom services sector does not currently rank within the top 20 exports to Spain (according to official U.S. Government statistics), it holds tremendous potential. The sector is growing exponentially with services expected to increase at a minimum of 13 percent per year. These figures may increase due to projected increases in services such as e-commerce.
Since liberalization, the Telecommunications Market Commission (Spanish FCC-type body) has awarded more than 25 different types of licenses depending on the services to be provided.
With new entrants in the fixed telephony market, Telefonica has had to face increased competition. At the end of 1998, Retevision, the second fixed telephony operator, gained eight percent market share. In 1999, Retevision's market share was approximately 13 percent. On December 1, 1998, a new operator, Lince, entered the market. Under the UNI2 trademark, Lince's projected investment is expected to be approximately USD 1.3 billion over the next ten years. By 2008, this operator expects to gain 7.5 percent of total market share.
The major cellular operator in Spain is Telefonica's GSM service, Movistar, with 5.9 million subscribers. A second operator, Airtel Movil (associated with the U.S. cellular telephone company Airtouch) began operating in 1995 and currently has nearly 2.7 million subscribers. In January 1999, a new entrant, Retevision Moviles, began operating in the mobile market. Under the Amena trademark, Retevision has reached 1.26 percent of total market share. The three operators combined have 8.7 million users including more than 800,000 subscribers of analogue ETACS service users (Telefonica's Moviline). Initially, the Retevision DCS operator will be able to roam on the other networks to make up for its lack of infrastructure in comparison with Telefonica and Airtel. Retevision Moviles will use its competitors' networks until 2000. During this time, Retevision Moviles will install GSM 1800 system platforms to build up their own mobile networks.
Recent reports indicate that the Ministry of Development will tender the third generation (UMTS - Universal Mobile Telecommunications System) licenses in 1999. The UMTS will be operational by January 2002. Industry experts expect that the Government will probably award the license to Lince, a group headed by France Telecom.
Of the forty-three cable demarcations, ten operators are currently providing cable services in Spain. Telefonica is also substantially increasing its cable projects. According to Spanish legislation on cable telecommunications, Telefonica cannot provide cable services for 24 month since 1997 so this moratorium will be over in 1999. Cable operators in Spain have committed to invest over USD 6.7 billion to develop the cable sector. Recently, cable operators requested that the moratorium imposed on Telefonica (regarding the date when the former-state company may begin operating) be extended. Additionally, the Ministry of Development approved an authorization to allow Telefonica to develop ADSL (Asymmetric Digital Subscriber Line) infrastructure. According to the Ministry of Development, ADSL would increase Internet access quality.
Two digital satellite TV platforms have benefited from the delay in cable telecommunications, one backed by Telefonica (Via Digital) and the other by the substantial Spanish Sogecable Communications Group. Telefonica has recently increased its stake from 53.9 to 68.6 percent in Via Digital. Sogecable owns the Canal Plus pay terrestrial TV channel. Retevision, Onda Digital's major shareholder, has recently won digital terrestrial television tender.
The Internet market is booming with more than 300 Internet Service Providers (ISP) in the market. Industry experts agree that following the market boom, many small ISPs will be acquired by large groups already established in the market, especially now that telecom operators will offer free internet access. Voice applications over Internet are also becoming best prospects in Spain and many foreign companies are considering entering the Spanish market. Estimated figures on Internet users for 1999, 2000 and 2001 are 3.6 million, 5.75 million and 8.75 million users, respectively.
There are still many issues pending to fully complete the liberalization process in Spain such as pre-selection and number portability between operators. These issues will help determine how competitive new operators will be in the recently-liberalized market.
Data: (All figures in USD millions) 1997 1998 1999* A. Total sales: 12,159 13,065 14,894 B. Total sales by local firms: 12,943 14,321 15,839 C. Sales abroad by local firms: 3,357 4,816 6,886 D. Local Sales by foreign firms 2,573 3,560 4,923 E. Sales by U.S. owned firms: 651 1,068 1,794 F. Exchange rate: $1 146 149 155 * The above statistics are unofficial estimates.
Rank of Sector: 2 Name of Sector: Pollution Control and Water Resources Equipment ITA Industry Code: POL/WRE
Resources allocated during recent years confirm that Spain is increasing investment in this sector. According to the Spanish Ministry of Industry & Energy, Spain's investment in the environment increased six fold in four years, from USD 506 million in 1990 to USD 3 billion in 1994. E.U. members basically doubled their total investments in the environment for the same period (from USD 21 billion in 1990 to USD 54 billion in 1994). In 1998, the Government of Spain spent approximately USD 1.5 billion on projects to address environmental concerns. The Spanish Government's estimated environmental budget for 1999 is USD 1.6 billion.
Specific plans and projects at the national, regional and local levels support Spain's environmental policy. The Spanish Ministry of Industry provided the following data on the main Spanish National Plans in the environmental sector:
Estimated investment for the National Plan for Dangerous Waste (1995-2005) USD 1.4 billion (25 percent to be provided by the Ministry of Environment to the regional governments through bilateral agreements).
Estimated investment for completing the National Plan for Soil Remediation (1995-2005): USD 1 billion (50 percent to be provided by the Spanish Ministry of Environment to the regional governments using its budget or Cohesion Funds. In 1992, under the Maastricht Treaty, Cohesion Funds were established to prepare for the Economic and Monetary Union in Europe.
This money was designated to boost environmental and transport projects in countries whose per capita income is under 90 percent of the community average in order to bring them up to the standards of the other members. At the time, 15.15 billion ECUs (approximately USD 13.8 billion) were earmarked in the fund to be used in Spain, Portugal, Ireland and Greece between 1993 and 1999 (seven year period), increasing from ECU l.5 billion (approx. USD 1.37 billion) in 1993 to more than ECU 2.6 billion (approx. USD 2.37 billion) in 1999. This figure could move up or down, depending on the number of proposals presented by the member governments for funding and the number of projects approved by the E.U. The above figure is an estimate based on E.U. reports.
Estimated investment for the National Plan for Waste Water Cleansing and Treatment (1995-2005): USD 14.4 billion (the Environmental Ministry will provide 25 percent through the year 2005 to the regional governments from its central budget or from E.U. Cohesion Funds).
Completion of the Infrastructure Master Plan of the Spanish Development Ministry calls for a total investment of USD 147 billion. It is expected to be completed by the year 2010 and presents important opportunities in the environmental sector as well, specifically for waterworks, with special interest in the redistribution of water throughout Spain's territory and the upgrading of environmentally degraded areas.
Demand for equipment, technology and services is high from both the government and the private sector. The Organization for Economic Co-operation and Development (OECD) estimates that Spanish environmental public and private investment needs to increase up to USD 4.8 billion a year in order to attain the present E.U. environmental protection level, by the year 2005.
American businesses can bid on government contracts but must be prepared to face stiff competition from E.U. companies. U.S. firms interested in bidding on Spanish environmental projects should be present in Spain either directly through subsidiaries or branches or indirectly through distributors or representatives.
Spain fully complies with all E.U. environmental directives issued since 1993. In addition to the central government, there are 17 Spanish autonomous or regional governments, which issue environmental laws and regulations that are mandatory for their territories. The regional governments incorporate laws issued by the central government as well as E.U. directives.
Through the Ministry for Environment, the government imposes fines on contaminating industries. These penalties force Spanish industries to look for environmentally safer technologies and pollution control equipment to treat emissions and industrial waste. As a result, increased opportunities exist for U.S. environmental companies over the next eight years.
The Spanish Ministry of Industry expects an investment of over USD 14 billion in the environment by Spanish industry to the year 2000. The sectors that require the largest investments are the chemical and energy industries, with 21.5 percent and 19.2 percent, respectively. The basic industry segments (steel and non-ferrous metallurgy) will experience the largest increase, composing 12.1 of the total investment forecast. Textiles will invest 6.2 percent, construction 5.6 percent, automotive 3.9 percent, mining 3.4 percent, and other industries 28.1 percent.
The following treatment equipment offer best sales prospects for U.S. firms in the Spanish market: Waste thermal treatment plants (incinerators) (HS 8417.80); Water filtering or purifying machinery and apparatus (HS 8421.21); Industrial waste treatment/recycling plants and equipment (HS 8479). Since there is a large variety of pollution control and water resources equipment and parts, import duties from the U.S. cannot be determined unless the specific equipment is known. Duties are based on a case-by-case basis.
Data:(All figures in USD millions) 1997 1998* 1999* A. Total market size: 11,420 12,562 13,190 B. Total local production: 8,600 9,460 9,933 C. Total exports: 980 1,268 1,331 D. Total imports: 3,800 4,370 4,588 E. Imports from the U.S.: 1,375 1,718 1,803 F. Exchange rate $1: 146 154 155
* The above statistics are unofficial estimates.
Rank of Sector: 3 Name of Sector: Franchising ITA Industry Code: FRA
There are over 676 franchises in Spain with more than 26,900 outlets, which account for approximately 6.5 percent of total retail sales. It is forecasted that franchises will account for 7.5 percent of all Spanish retail stores by the year 2000. Around 70 percent of franchises are Spanish, followed by American (11 percent), French (10 percent), Italian (4 percent) and British (2 percent).
Franchising is most popular in the restaurant/food business with 11.2 percent of total franchised retail outlets, distribution/self-service sector, with 10.2 percent and textile/fashion with 9.5 percent.
For small, traditional retail stores, franchising provides a means to compete with larger stores. In large urban areas, small retailers have few traditional options. Previously, small entities had to specialize, associate with other retailers, or close. Franchising offers them a safe and promising new option.
Domestic statistics show that of every five new independent retail operations opened each year, three to four either change business, ownership, or close before their first anniversary. The same survey shows a different outlook for franchised outlets. For example, four out of five franchises remain open and are still working with the same brand and promoter after their first anniversary.
In the last two years, franchising has grown rapidly. Since 1994, the number of master franchises has increased from 250 to 690. Recession has helped to fuel the demand for franchising because job displacement has created a large pool of trained professionals who are willing to invest their unemployment indemnity in the purchase of a retail franchise. Now that Spain's recession is over and the economy is in an expansion cycle, franchise outlets are benefiting from increased consumer demand which is triggering a new surge in franchise business development.
Data: All figures in USD millions) 1997 1998 1999* A. Total sales: 5,900 7,150 8,120 B. Sales by local firms: 4,660 5,550 6,090 C. Sales by local firms abroad:** -- -- -- D. Sales by foreign owned firms: 1,240 1,600 1,930 E. Sales by U.S. owned firms: 650 850 900 F. Exchange rate $1: 146 149 155
* The above statistics are unofficial estimates. ** Information not available
Sector rank: 4 Sector name: Telecommunications Equipment ITA Industry Code: TEL
Spain ranks among the top 20 importers of telecommunications equipment from the U.S. American technology is highly regarded in Spain as the U.S. market is considered to be at the forefront of change and innovation. Spanish telecom operators entering the market and Spanish telecom activity today are similar to those in the U.S. after the enactment of the Telecommunications Act of 1996. Telecommunications equipment ranks number four in U.S. exports to Spain according to U.S. Government sources.
Many U.S. manufacturers are established in Spain, some with their own manufacturing facilities, but all face strong competition from E.U. competitors - notably France, Germany, Italy, the U.K. and Scandinavia. In addition, Japan continues to maintain a formidable market presence.
Local and national operators will make large investments in network infrastructures as numerous telecom licenses have been granted since the end of 1998. Retevision, Lince and the niche operators will invest over USD 2 billion in the sector during the next five years, in addition to Telefonica's constant expansion and modernization of its network.
Internet technology and e-commerce related hardware and software are hot prospects in Spain. DCS-1800 digital cellular infrastructure will bring about major sales in this sector during the next few years. Amena, Movistar and Airtel will make huge investments in DCS-1800 digital cellular infrastructure.
In terms of Spanish imports, U.S. telecommunications equipment exports to Spain rank second with 25 percent following E.U. countries that represent 44 percent of the total market of approximately. Best prospects are for cable equipment (HS 8525** to 8528**) and wireless equipment (HS 8518**, 8527** and 8525**). Duties levied on telecommunications equipment range from 0.9 to 14 percent.
All equipment must be CE marked, and in some cases be certified in Spain if it is to be connected to the (Public Switching Network) or use the electromagnetic spectrum for transmission.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size:
3,184 3,678 4,082 B. Total local production: 3,154 3,544 3,969 C. Total exports: 1,271 1,369 1,474 D. Total imports: 1,301 1,503 1,727 E. Total imports from U.S.: 458 601 793 F. Exchange Rate: $1 = pesetas: 146 149 155
* The above statistics are unofficial estimates.
Rank of Sector: 5
Name of Sector: Medical Equipment
ITA Industry Code: MEDThe market for medical equipment depends heavily on imports, which represent approximately 80 percent of the total market. U.S. medical equipment is highly regarded by Spanish MD's and domestic importers/distributors. The U.S. is the main supplier to Spain with approximately 25 percent of total imports. Purchases of medical equipment are made predominantly by public health care sector institutions (85 percent). The private health care sector comprises the remaining 15 percent. Most public health care sector purchases are made by public hospital tenders. However, pre-selection among competing companies is a step made prior to the open bid. During this pre-selection period, the supplying companies present to the hospital the description of their products and their prices. After reviewing the proposals, the hospital authorizes the final selection and chooses a few companies, which are considered to be most suitable. The final purchase decision is made from these selections. In the private sector, tenders are not used. Normally, private hospitals select a small number of suppliers from whom they make direct purchases. Because of these procedures, foreign and U.S. companies are encouraged to have either a Spanish distributor or their own branch in Spain.
A requirement for most tenders is that the medical devices have the EC Mark. This mark became compulsory in June 1998. This requirement means that many products, which had been registered in previous years in Spain, when the EC Mark was non existent, now need to be reregistered following the new E.U. Directive. The registration can be done in any E.U. country, including Spain. The registration process has been reduced from 12-14 months to 6-8 months. Also, a positive improvement has been made in terms of payments by hospitals, which in the past had taken up to 18 months, and now which have been reduced to 6-8 months in most cases.
As a consequence of the development of the E.U. market and the implementation of the EC Mark, many U.S. companies have been centralizing their manufacturing and import operations into one single country from where they register and distribute their products to the rest of the E.U. This practice disguises real U.S. imports to Spain which are credited to the country from where distribution takes place. The market for medical products is expected to grow at an average of five percent over the next three years. The domestic industry is growing slowly and, as a result, cannot keep pace with growing demand. Consequently, domestic suppliers' share of the market is declining.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size: 1,880 1,975 2,050 B. Total local production: 330 345 350 C. Total exports: 90 100 110 D. Total imports: 1,640 1,730 1,815 E. Imports from the U.S.: 570 610 645 D. Exchange rate $1: 146 149 155
* The above statistics are unofficial estimates.
Rank of Sector: 6
Name of Sector: Electric Power Systems
ITA Industry Code: ELPThe most significant accomplishment in the power generation sector in Spain has been the implementation of Law 54/1997, which paves the way for electric liberalization. This law implements European Commission Directive 92/96 for the internal electric market, and was published in November 1997. It initiated the deregulation of Spain's power generation and distribution market. This new law establishes the freedom to build power generation facilities, creates a competitive electricity market, and sets a gradual time frame for the liberalization process, which began January 1, 1998. The process of de-regulation has brought major changes to the electricity sector. Currently, large consumers can shop around for electricity. The process will be complete in 2007, when every consumer will be permitted to buy electricity freely on the open market.
Although there is a surplus of power generation capacity in Spain, most of it is derived from expensive fuel-oil power plants. Electric utilities and independent power producers plan to construct up to ten natural gas combined-cycle power plants from 1998 to 2003. Total investments are estimated to reach USD 2 billion. This investment will surely increase demand for electric equipment from the U.S.
The value of the electric power generation and transmission equipment market totals an estimated USD 1.78 billion (this does not include power generation or distribution). Imports amount to an estimated USD 966 million.
Four large power generation companies, all of which are private, dominate the Spanish power market. However, three foreign firms already have plans to build power plants and over 20 non-Spanish companies have shown interest in entering the market as power marketers.
Electrical installations in Spain operate on 50-hertz cycles, while power is supplied to 125V and 220V (single phase) and 125V, 220V and 380V (triple phase).
Electrical equipment falls under HS code 8501 and has a tariff rate between 3.6 - 6.2 percent. There are no quotas or barriers on electrical equipment imported from the U.S. Although similar import duties apply for most renewable energy equipment, duties should be checked on a case-by-case basis.
Data:(All figures in USD millions 1997 1998* 1999* A. Total market size: 2,030 2,170 2,278 B. Total local production: 1,600 1,700 1,785 C. Total exports: 230 250 262 D. Total imports: 660 920 966 E. Imports from the U.S.: 390 510 535 F. Exchange rate $1: 146 149 155
* The above statistics are unofficial estimates
Rank of Sector: 7
Name of Sector: Automotive Parts and Accessories
ITA Industry Code: APS
Spain currently ranks as the third largest automobile manufacturer in the E.U. with 2.2 million units, having surpassed the U.K. (with 2.0 million units), yet following France (with 2.3 million units) and Germany (with 5.1 million units). In 1998, industry reports indicated that Spain finished the year as the fifth largest automobile manufacturer in the world, surpassing Korea. Only the United States, Japan, Germany and France produced more automobiles than Spain in 1998.
In 1998, Spain produced 2.2 million automobiles, exported 1.8 million automobiles and saw 1.2 new registrations. It was a record-breaking year surpassed the historical market figures reached in 1989. As one of the world's major automobile suppliers, it exports eight out of ten automobiles it manufacturers (to Europe and other parts of the world). In 1998, 5.6 percent of all automobiles manufactured in the world came from manufacturing plants in Spain.
As a result of its direct relation to the local automobile manufacturing industry and the increasing growth in sales within its local automobile market, the automotive parts and accessories sub-sector has experienced important changes and become one of the strongest and most dynamic sectors in the Spanish economy.
Four key factors will lead to strong demand for automobiles and automobile parts and accessories in the future:
(1) The ratio of automobiles to drivers in Spain, which is lower than the E.U. average. The average number of automobiles for every 1,000 people in the European Union is 400. Spain has only 308 automobiles for every 1,000 people. This ratio is expected to increase until it nears the E.U. average.
(2) The large quantity of old automobiles in circulation, which will require replacement parts. At present, Spain has more than 15 million automobiles in circulation, more than 60 percent of which are over five years old. On average, Spaniards renew their automobiles every eight to ten years.
(3) The "Prever Plan", a government-sponsored program launched in April 1997 that gives automobile buyers who turn in their old automobile a $533 sales tax rebate on the purchase of a new automobile. It is expected that this plan will lead to a medium and long-term increase in the number of automobiles in circulation and in the demand and sale of auto parts and accessories. During the 1997-1998 period, it was estimated that approximately 200,000 automobiles came into circulation as a result of the "Prever Plan".
(4) Lastly, Spain has fast become increasingly receptive to new distribution channels as opposed to traditional distribution channels. New distribution channels include auto repair service franchises, specialized service auto shops, hypermarkets, etc. The introduction of new types of outlets is causing the market to go through many changes, thereby creating new opportunities for automobile parts and accessories manufacturers, as well as for new products to enter the market.
Two additional factors that will contribute to growth and new opportunities in this market are the automobile manufacturing and/or assembly facilities in Spain (most major world automobile manufacturers are established in the country, including Ford and General Motors), which will bring in original automotive parts and equipment to assemble new vehicles; and the slow but growing tendency of Spanish end-users to conduct regular repair and maintenance services to their automobiles. Although both local and foreign competition is strong, U.S.-made products are held in high regard due to their high quality and durability.
Data: 1997 1998 1999* A. Total market size: 2,280 2,508 2,758 B. Total local production: 1,988 2,186 2,404 C. Total exports: 988 1,087 1,196 D. Total imports: 1,286 1,415 1,557 E. Imports from the U.S.: 156 172 189 F. Exchange rate $1 146 149 155
* The above statistics are unofficial estimates.
(All figures in USD millions)
Rank of Sector: 8
Name of Sector: E-Commerce
ITA Industry Code: TESThe E-Commerce sector, although still in the early stages, is considered to be on the rise in the Spanish economy. It is generating a great amount of interest with activity accounting for approximately USD 23 million in revenue in 1998, an increase of 337 percent over the USD 5.3 million in revenue calculated for 1997. This amount is estimated at USD 66 million in 1999.
Large firms are taking the lead in the use of the Internet for sales to end-users. El Corte Ingles, a leading luxury department store chain that sells products from jewelry to furniture to car equipment, launched a major electronic commerce campaign in April. It estimates that it will soon be selling up to 70,000 products on the net. The first effort includes two virtual stores, a supermarket and a bookstore, with provision for additional virtual stores by the end of the year. The appearance of virtual malls with a tendency towards specialization and access to an unlimited buying public will encourage many smaller firms to offer their goods and services on the web.
In addition, virtual banking is booming and has been well-received by Spaniards. Spanish airline companies have begun to offer on-line services for air travel.
Yet, there is still a reluctance on the part of the vast majority of Spanish citizens as they face different traditional purchasing habits and a lack of confidence in the Internet. Of the 2.5 million users in 1998 with access to the Internet in Spain, only 20-30 percent made on-line purchases in 1998. The number is increasing, and shows that there are opportunities available in this market.
Despite reservations, commercial habits are expected to continue changing significantly in Spain over the coming years, not just because of the arrival of E-Commerce but also due to continuing economic and social evolution. It is estimated that E-Commerce sales may reach USD 300 million by the year 2000 and as much as USD 1.3 billion by 2001. Expectations in this area are impressive as all regular distribution firms and 50 percent of service companies will be selling their products via the Internet by 2002. Future growth will depend on the extent to which companies promote the use of the net and its numerous advantages and support provided by the Spanish government.
* Precise statistics are unavailable due to the widely varying numbers associated with this new market. For a more complete description of E-Commerce and Internet activities in Spain, consult the market research reports (IMI, ISA, etc.) generated by the U.S. and F.C.S. Office throughout Spain. These reports can be obtained from Export Assistance Centers throughout the U.S. or accessed through the National Trade Data Bank (NTDB) available through 19 federal depository libraries.
Rank of Sector: 9
Name of Sector: Aircraft and Parts
ITA Industry Code: AIR
The recent E.U. "open skies" policy has introduced competition into the Spanish air transport market. The liberalization of Spain's internal air transport system has resulted in increased demand which creates opportunities for U.S. manufacturers and distributors.
Also, the upcoming privatization of IBERIA plus the merge of AVIACO and BINTER into the same airline group is going to bring new opportunities for U.S. businesses.
Several new airlines have started operations since January 1994, with even more companies requesting airline licenses from the civil aviation authorities. This results in an increase on the total number of airplanes operating in Spain and a steady reactivation of the spare parts market. This trend is expected to continue to grow as the underdeveloped regional markets grow. Currently, local Spanish manufacturing suppliers are unable to meet the demands of production levels. These companies are forced to look to the international market for help. As a result, many Spanish sub-contractors are beginning to explore the possibility of international agreements to meet increased demand, offering excellent export opportunities for U.S. companies.
To decrease operating costs, several airlines are considering operational leasing from U.S. companies. This service market is expected to increase dramatically in the short term.
U.S. aircraft manufacturers face competition from domestic companies (small aircraft) and from Airbus, which is not a company, but a joint-venture of European companies.
Best prospects are for aircraft (HS 8801 & 8802) and parts (HS 8803). Duties levied on aircraft range from 0 to 7.7 percent. Parts range from 0 to 5 percent duty. Engine assembly (HS 8803.30) rates range from 0 to 4 percent.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size:
1,620 1,785 1,982 B. Total local production: 345 370 407 C. Total exports: 25 25 26 D. Total imports: 1,300 1,440 1,598 E. Imports from the U.S.: 1,000 1,010 1,060 F. Exchange rate $1: 146 149 155
*The above statistics are unofficial estimates.
Rank of Sector: 10
Name of Sector: Architectural/Construction/Engineering Services ITA Industry Code: ACECompletion of the Infrastructure Master Plan, which calls for a total investment of USD 147 billion, presents important opportunities for U.S. architectural/engineering services firms. Major projects to be completed by the year 2010, include: the massive refurbishment and revitalization of Spain's airport system, with special emphasis on Madrid's Barajas International Airport; seaport and coast refurbishment; railway network refurbishment and development, with emphasis on the development of the speed train network; and highway construction and maintenance. New and innovative techniques offered by U.S. firms are held in high esteem, but face strong competition from both domestic (Spanish engineering firms are large and internationally experienced) and foreign (mainly French and German) counterparts. It is advisable that U.S. firms enter this market sector in association with a well-established local firm.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size: 1,155 1,212 1,272 B. Total local production: 808 848 890 C. Total exports: 254 266 279 D. Sales by foreign owned companies: 624 655 687 E. Sales by U.S.-owned firms: 231 242 254 F. Exchange rate US$1 146 149 155
* The above statistics are unofficial estimates.
Rank of Sector: 11
Name of Sector: Organic Chemicals for the Pharmaceutical Industry
ITA Industry Code: IOCThe Spanish pharmachemicals industry is one of the chemical subsectors which experienced major market growth in 1997 (12 percent in peseta value; 1997 most recent year for which there are official statistics available). Within this industry, fine chemicals for the pharmaceutical industry did particularly well with a market growth of 20 percent. Imports of fine chemicals grew an unusual 60 percent as a result of the restructuring processes of multinational plants. Given the importance of Spain's pharmaceutical industry, the need for fine chemicals is expected to increase. Antibiotics and blood plasma are the two main imports. Spain is particularly deficient in human blood plasma, and a growth in imports is expected to continue.
Almost 50 percent of the market for organic chemicals for the pharmaceutical industry is produced domestically. The leading foreign supplier is the European Union, whose members hold a 50 percent share of the import market. In 1998, the U.S. supplied 19 percent of total imports. Other main suppliers are Switzerland (10 percent of imports), China (6 percent) and Japan (5 percent). That year, U.S. imports comprised about 8 percent of all imports of antibiotics (HS2941) and 37 percent of all imports of blood plasma and blood components (HS3002). U.S. exports to Spain of blood plasma and components represent the bulk (80-90 percent) of all U.S. exports of fine chemicals to this market. Imports from the U.S. are expected to grow an average of 15 percent (in peseta value) per year over the next two years.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size: 1,828 1,773 1,834 B. Total local production: 1,518 1,560 1,577 C. Total exports: 652 461 515 D. Total imports: 962 674 772 E. Imports from the U.S.: 106 129 142 F. Exchange rate $1: 146 149 155
* The above statistics are unofficial estimates.
Rank of Sector: 12 Name of Sector: Paper and Paperboard ITA industry sector code: PAP
The paper industry is an important subsector within the Spanish chemical industry, one of the major sectors in Spain's economy. Paper production represents seven percent of the Spanish chemical industry. Spain is the fifth largest European market for paper and paperboard with a total estimated demand of 5.6 million tons and a growth rate of two percent.
The average expenditure per person for paper and paperboard in Spain reached 141 Kgs. in 1997. This is nearly three times the average world paper consumption per capita (estimated at 50 kgs. per person). The growth potential is still considerable, however, as 141 kgs. are far from the E.U. average of 180 kgs. per person.
The Spanish paper industry is the E.U. leader in the use of waste paper as raw material. Approximately 75 percent of fiber pulp used by Spanish paper mills comes from waste paper. In 1997, 2.3 million tons of waste paper was collected in Spain (10.8 percent over the amount collected in the previous year). This amount, however, is not sufficient to supply manufacturer's needs and 716,400 tons of waste paper had to be imported in 1997 to cover this demand.
Imports of paper and paperboard account for approximately 50 percent of the market. Spain imported 2,821 metric tons of paper (valued at approximately USD 2 billion) in 1997 (latest official figures). Finland is the main supplier as Finnish paper prices are extremely competitive and the quality of their products very high. Imports from the U.S. increased nearly 15 percent in dollar value between 1997 and 1998 (from USD 101 million to USD 116 million). Other major foreign suppliers are Germany, France and Sweden.
Best prospects are for Kraft liner (HS 4804), which averages 84 percent of U.S. exports of paper and paperboard to Spain and writing paper (HS 4810), which shows consumption rates growing at an average of seven percent per year during the last three years. Duties levied on paper range from 1.5 to 8.2 percent.
Data: (All figures in USD millions) 1997 1998 1999* A. Total market size: 3,071 3,392 3,351 B. Total production: 1,980 2,142 2,099 C. Total exports: 920 1,016 990 D. Total imports: 2,011 2,266 2,242 E. Imports from the U.S.: 101 116 119 F. Exchange rate $1: 146 149 155
*The above statistics are unofficial estimates.
Rank of Sector: 13
Name of Sector: Industrial Controls
ITA Industry Code: PCIThe industrial controls sector is expected to grow due to the increased use of automation by Spanish industry (Spain currently has an estimated 75 percent automation level out of an optimal level of 80 percent, as cited by industrial sources). Demand for industrial controls comes from all industrial sectors, specifically from the electrical, chemical and machine-tool sectors. Other areas of activity with good prospects for industrial controls are the automotive, food processing, utilities, pharmaceutical and pollution control industries.
The Spanish market for industrial controls offers excellent opportunities for U.S. firms in specialized and state-of-the-art equipment and services. Best prospects are in the areas of process controls and monitoring equipment (HS 9032 and HS 9026), remote control and measurement (HS 9032 and HS 9026) and machine tool control equipment (HS 9024 and HS 9031).
Approximately 80 percent of the market is served by local industry, while the main foreign suppliers are the U.S. (around 20 percent of total imports), and the E.U. countries, primarily Germany. The majority of the national firms in the sector are small to medium size firms, while international firms normally have larger facilities (the U.S. leads the ranking of foreign investors in the sector). Most of the imports go to automation components and parts, and equipment for automation.
Import duties for automatic instruments and apparatus is 3.7 percent if imported from the U.S. and other non-preferential countries (HS 9032). Similar import duties apply for most industrial related equipment, such as industrial instrumentation (3.7 percent, HS 9031), or meters (2.7 percent, HS 9028), but duties should be checked on a case-by-case basis.
Data: 1997 1998 1999* A. Total Market Size: 1,516 1,559 1,574 B. Total Local Production: 1,218 1,256 1,271 C. Total Exports: 312 324 330 D. Total Imports: 610 627 633 E. Imports from the U.S.: 128 132 133 F. Exchange rates $1: 146 149 155
* The above statistics are unofficial estimates.
Rank of Sector: 14 Name of Sector: Computers and Peripherals ITA Industry Code: CPT
After Spain's economic crisis in the first half of the 1990s, Spain's computer sector is recovering rapidly with large increases in the levels of production, exports and imports. The sector is growing due to an increased use of computers and new peripherals for businesses and a higher demand for home PCs (due to the use of the Internet and new multimedia applications).
The hardware market represents 51 percent of the total Spanish market for Information Technology, with an increase for 1999 estimated at nine percent. Most of the computer hardware market in Spain is comprised of central units, (61 percent of the total hardware market), while printing systems represent 16 percent of the market, hardware for communications nine percent and data storage systems six percent. The rest of the hardware market is composed of other peripherals (six percent), and parts and components (2.3 percent).
Estimates indicate that there are a total of 2.5 million PCs in use by businesses and 1.5 million in use by the private sector resulting in a total of four million PC units in Spain. In terms of manufacturers, Compaq has a 13.5 percent market share, IBM 13.1 percent, Hewlett Packard (HP) 10.3 percent, Dell 7.1 percent, Toshiba 5.3 percent, Packard Bell/NEC 5.3 percent and Inves (a national manufacturer) 5.1 percent.
Although official statistics indicate that 80 percent of IT products and services come from other European countries and only eight percent from the U.S., the majority of the imported computer hardware is either directly sourced from the U.S. or manufactured in Europe by a U.S. subsidiary. Regarding exports, 84 percent go to other countries in the E.U. and 11 percent to Latin America. Best opportunities are found in the business/industry segment, primarily in work stations and servers for small and medium size industries (HS 8471). The home sector is also expected to experience large growth thanks to the impressive development of the Internet and the market for CD-ROM readers for private use (HS 8471), modems (HS 8517) and multimedia PCs (HS 8471). There are also good opportunities in other segments such as laser printers, plotters, laptops and Palm-PCs (HS 8471).
Import duties for automatic data process machines range from 2.5 percent to one percent depending on the product, if imported from the U.S. and other non-preferential countries (HS 8471). Similar import duties apply for most related equipment, such as peripherals (one percent, HS 8471.80) or parts of this equipment (1.6 percent, HS 8473).
Data:(All figures in USD millions) 997 1998 1999* A. Total market size: 3,038 3,218 3,362 B. Total local production: 1,322 1,412 1,480 C. Total exports: 1,072 1,145 1,210 D. Total imports: 2,788 2,951 3,092 E. Imports from the U.S.: 586 620 649 F. Exchange rates $1: 146 149 155
*The above statistics are based on unofficial estimates.
Best Prospects for Agricultural Products
Wheat and Grain By-Products
Oilseeds and Oilseeds By-Products
Forestry Products
Marine Fisheries Products
Consumer-Oriented Products
Edible Pulses
Tobacco
Pet Food
BourbonName of Sector: Wheat
Boosted by a rapidly diversifying market for bakery products, we project Spain's need for imported hard wheat to grow 5 percent annually through 2002. The U.S. currently has nearly half the market, while Canada is the other major supplier. However, lack of user recognition of the quality and uses of U.S. hard wheat currently hinders expansion of the U.S. market share. The U.S. only recently began again to ship wheat to Spain after the Margin of Preferences Agreement (MOP)was implemented in 1995, explaining the currrent lack of information about U.S. wheat. We believe that the U.S. can take advantage of the new opportunities provided by this Agreement and ship more wheat to Spain as millers and bakers become more familiar with the characteristics of U.S. hard wheat. Imports could be bolstered further if the duties established under the MOP were further reduced. With greater user recognition of the quality of U.S. wheat and lower import duties, Spain's exports of U.S. wheat could grow to 7 percent annually and reach USD 48 million by 2002. Of course this projection depends upon market conditions, particularly U.S. prices relative to European and Canadian prices.
Data: Wheat (1000 Metric Tons) 1997 1998 1999 A. Total market size 7,133 8,050 7,697 B. Total production 4,633 5,347 3,500 C. Total exports 800 600 200 D. Total imports 3,300 3,300 4,100 E. Imports from the U.S. 220 300 325 F. Exchange rate $1 146 149 155
(The above rates are based on unofficial estimates)
Name of Sector: Oilseeds and Oilseed By-Products
Due to projected growth in demand from the livestock sector, Spain's soybean imports are expected to grow two percent annually through 2002. A fundamental constraint in Spain's crushing industry, however, is the frequent development of oil surpluses, which reduces crushing margins and leads to the import of South American meal rather than U.S. soybeans. Domestic soybean oil consumption, therefore, should continue to be promoted. Soybeans are one of the most important U.S. exports to Spain and continued marketing efforts are required to sustain and build upon the excellent U.S. sales records in this market. The main competitors are Argentina and Brazil. There are no major import barriers since Spain is free to import whatever quantity dictated by the needs of the market.
Data: Oilseeds and Oilseed By-Products (1000 Metric Tons) 1997 1998 1999 A. Total market size 4,656 5,282 5,032 B. Total production 1,616 1,578 1,302 C. Total exports 114 55 62 D. Total imports 3,157 3,759 3,792 E. Imports from the U.S. 1,843 1,826 1,776 F. Exchange rate $1 146 149 152 (The above rates are based on unofficial estimates)
Name of Sector: Forestry Products: Softwood Lumber
With steady growth in the housing and furniture manufacturing sectors, Spain's imports of softwood lumber are projected to grow 3.5 percent through 2002. Interior design, joinery in particular, millwork doors, windows and balconies are traditionally made from U.S. softwoods; therefore, demand for U.S. softwoods is closely linked to new housing construction and old home remodeling activities. This demand is currently rising due to the increased housing activity as well as flourishing furniture and door manufacturing sectors. Last year, Spain was the U.S.'s third largest market for softwood lumber, and the number one market for U.S. Southern Pine lumber. While U.S. market share has increased steadily in recent years, now accounting for about two-thirds of the market, further promotional and product information dissemination activities are required to maintain and increase the U.S. market share. With increased marketing as a variable, forecasts show that Spain's U.S. softwood lumber imports could grow 4 percent annually and reach USD 103 million by 2002. Major competitors include Canada, other E.U. countries and other Northern European countries. There are no major barriers to importing lumber.
Data: Forestry Products: Softwood Lumber (1000 Cubic Meters) 1997 1998 1999 A. Total market size 3,250 3,300 3,340 B. Total production 2,100 2,100 2,100 C. Total exports 35 50 50 D. Total imports 1,185 1,250 1,290 E. Imports from the U.S. 150 151 155 F. Exchange rate $1 146 149 155 (The above rates are based on unofficial estimates)
Name of Sector: Forestry Products: Temperate Hardwood Lumber
Due to expectations for continued growth in the furniture and door manufacturing industries as well as to increased housing construction activity, we forecast Spain's hardwood lumber imports to grow 3.5 percent through 2002. The demand for U.S. hardwoods is also closely linked to new housing construction and home remodeling as interior design, flooring, and millwork doors in particular, are important uses of U.S. hardwoods. Other major uses include furniture manufacturing and production of wine barrels with oak staves, an industry, which is also booming. Last year, Spain was the seventh most important U.S. market for U.S. hardwood, the number one market for U.S. oak, and ranked third in hardwood veneer imports. The U.S. market share has increased in recent years; the U.S. now holds about a third of the total hardwood lumber market. However, the market share can be expanded further and an import growth rate of 4 percent per year can be achieved with increased overall market promotion efforts. Major competitors include France, Germany and Canada.
Data: Forestry Products: Temperate Hardwood Lumber (1000 cubic meters) 1997 1998 1999 A. Total market 1,055 1,110 1,115 B. Total production 650 650 650 C. Total export 20 20 20 D. Total imports 425 480 485 E. Imports from the U.S 150 183 180 F. Exchange rate $1 147 149 155 (The above rates are based on unofficial estimates)
Name of Sector: Marine Fisheries (Hake - Lobster - Wild Salmon - Squid - Surimi)
Spain is one of the world's largest seafood consumers, with a per capita consumption of around 42.6 kilos. While consumption may decrease slightly in the future, Spain will continue to be a leading seafood market importer. With current imports of nearly USD 2 billion per year, this market holds vast potential for U.S. exporters. Furthermore, because Spain's allowable catches will decrease in the future, we project Spain's seafood imports to grow 7 percent annually through 2002. The U.S. coastline offers several different seafood products that could be exported to Spain, and we believe that through increased promotional efforts, U.S. seafood exports to Spain could grow 8 percent annually through 2002. Competition for this market will be fierce, however, as our current less than one percent market share indicates. The principal competitors are other E.U. member states, Argentina, Africa, Central and South America, and other European countries. No major import barriers exist for seafood products.
Data: Marine Fisheries Products (1,000 Metric Tons) 1997 1998 1999 A. Total market size 1,673 1,588 1,524 B. Total production 1,219 1,189 1,164 C. Total export 534 668 690 D. Total imports 988 1,067 1,050 E. Imports from the U.S. 16 30 33 F. Exchange rate $1 146 149 152
(The above rates are based on unofficial estimates)
Name of Sector: Consumer Oriented Products
One of the most notable features of Spanish market is the importance of the tourist industry to the national economy. Despite a resident population of 39.8 million, Spain attracted over 70 million visitors in 1998, achieving the record as the world's second most popular destination in tourism.
The Mediterranean beach areas and the Balearic Islands are the most popular tourist resorts, and the Canary Islands are an especially attractive winter tourist region. Most tourists come from northern Europe, with a very high percentage coming from Germany, the United Kingdom and France, many of whom still prefer to adhere to their usual dining and drinking habits while enjoying their vacations in Spain.
These demographics have resulted in a significant increase in the demand for high-value and consumer ready products from restaurants and institutions such as hotels during the summer months. This sector is the fastest growing food sector in Spain and U.S. exports have only begun to scratch the surface. Spain's own tremendous domestic production capacity coupled with the major Northern European member states' exporters form the basis for most of the competition for U.S. exports to Spain. In this sector, the U.S. achieved record sales in 1999; there was a drop in 1997 due to the strong dollar and weak Peseta, which picked up again in 1998. In 1999, the upward trend is expected to continue for most of these products. Major barriers to trade in these products include labeling laws, standards and the high cost of importing these products. However, there is a niche market for many of these products, such as snack items, sunflower seeds, peanuts, walnuts, etc which makes the effort worthwhile.
1997 1998 1999** Consumer-Oriented Totals 126,161 169,933 - Snack Foods (Excl Nuts) 6,251 3,813 - Breakfast Cereals & Pancake Mix 310 409 - Red Meats,(fresh,chilled,frozen) 2,574 1,454 - Red Meats (prepared/preserved) 26 117 - Poultry Meat 1,650 296 - Dairy Products 573 531 - Eggs and Products 599 837 - Fresh Fruit 36 7,290 - Fresh Vegetables 3,632 4,928 - Processed Fruit and Vegetables 7,777 6,886 - Fruit and Vegetable Juices 197 591 - Tree Nuts 78,957 111,074 - Wine and Beer 1,081 1,107 - Nursery Products and Cut Flowers 762 4,107 - Pet Foods (Dog and Cat) 15,523 22,663 - Other Consumer-Oriented Products 6,173 7,829 - Exchange Rates: 146 149 -
Source: United States Census Data **Figures for 1999 not available
Name of Product: Edible Pulses (Dry Beans and Lentils)
As a result of expected further declines in domestic production, FAS/Madrid projects Spain's pulse imports to grow 6 percent through 2002. Currently holding about 20 percent of the market, the U.S. faces stiff competition from other suppliers, namely Canada, Argentina, Chile, and Turkey. To keep pace with the expected growth in the overall legume demand and to hold market share, the U.S. will need to maintain and strengthen ties with importers and canners and highlight the quality of U.S. legumes. In addition, in the case of lentils, the availability of competing local supplies would be further reduced if the U.S. could secure a reduction in the E.U.'s direct payments. With lower incentives for local production, and, more importantly, strengthened relationships with the local trade, we predict Spain's U.S. pulse exports will grow 6 percent annually through 2002 and reach USD 26 million.
Data: Edible Pulses (1000 Metric Tons) 1997 1998 1999 A. Total market size 254 260 255 B. Total production 115 104 100 C. Total exports 10 17 10 D. Total imports 174 156 160 E. Imports from the U.S. 33 36 38 F. Exchange rate $1 146 149 155 (The above rates are based on unofficial estimates)
Name of Product: Tobacco No Country Promotion Plan for Tobacco. 1997 1998 1999* A. Total market size 65 65 - B. Total production 35 35 - C. Total exports 23 23 - D. Total imports 54 54 - E. Imports from the U.S. 19 19 - F. Exchange rate $1 146 149 155 (The above rates are based on unofficial estimates)
* Statistics not available for 1999.Name of Product: Pet Food
Spain's imports of U.S. pet food have risen dramatically in recent years, more than doubling between 1992 and 1996, reaching another record in 1998 with USD 22.6 million. The rapid expansion of the market is attributed to a combination of sociological and animal health issues. In addition, U.S. pet food raw materials are relatively inexpensive. Owning a pet, particularly registered large-breed dogs, has become something of status symbol in Spain, especially in urban areas. Encouraged by rising incomes and an expanding middle class in the major cities, FAS/Madrid expects this practice to continue and projects Spain's need for imported pet food to grow 6 percent annually through 2002. The U.S. currently has nearly 55 percent of the market with the other major supplier being Japan. However, lack of user recognition of the quality of U.S. pet food currently hinders expansion of U.S. market share. With greater user recognition of the quality of U.S. pet food, generated through targeted promotional campaigns, FAS/Madrid projects Spain's exports of U.S. pet food to grow 7 percent annually and reach USD 27 million by 2002. The E.U.'s adoption and implementation of the "Equivalency Agreement" will facilitate achieving this growth rate. Chief competitors are other E.U. member states.
Data: Pet Food (In Thousands of USD) 1997 1998 1999* A. Total market size NA NA - B. Total production (tons) 201,000 203,000 - C. Total exports 31,305 32,000 - C. Total imports 104,470 104,000 - E. Imports from the U.S. 15,523 22,663 - F. Exchange rate $1 146 149 155
(The above rates are based on unofficial estimates) * Statistics not available for 1999.
Name of Product: Bourbon
Since 1988 Bourbon exports to Spain have tripled and further growth is expected due to changing demographics and shifting beverage consumption patterns. At present, most Bourbon consumers are below 30 years of age and have lower than average incomes. FAS/Madrid believes that by maintaining this younger generation market sector and also by edging into the demand among elderly higher-income consumers, who are drinking less wine, U.S. bourbon can obtain a greater share of Spain's overall alcoholic beverage market. Principal competitor products are local wines and scotch and appropriate targeted promotional efforts are winning over many new customers.
Data: Bourbon (In Thousands of USD) 1997 1998 1999 A. Total market size NA NA NA B. Total production 0 0 0 C. Total exports 0 0 0 D. Total imports 28,637 26,715 28,500 E. Imports from the U.S. 18,878 15,750 19,500 F. Exchange rate $1 146 149 155 (The above rates are based on unofficial estimates)
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[end of document] Note* International Copyright, United States Government, 1999. All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
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