The resurgence of industry after the pandemic
The arrival of the pandemic was a severe blow to a sector that was already going through a delicate situation due to trade tensions and disruptions in the automotive industry at a European level. The fall in manufacturing activity in Q2 2020 was sharper than the decline in the economy as a whole, although its subsequent recovery was more vigorous. Some sectors, such as textiles, footwear and beverages and even automobiles, were hit hard and are recovering more slowly, while other sectors, such as pharmaceuticals and food, were hardly affected at all. The lifting of restrictions, progress made with vaccinations and reduction in uncertainty will help to revive consumption and flows of international tourists, all of which are vital to our economy, and this in turn will support manufacturing.
- But this is not a return to normality, to how products used to be manufactured. Manufacturing was already going through a far-reaching transformation, the fourth industrial revolution (or Industry 4.0), which involves extensive changes to production processes, from adopting new digital technologies (the internet of things, big data and cloud computing, to name just a few) to a new wave of factory automation, installing digitally-connected robots equipped with artificial intelligence (smart factories).
- The pandemic may represent a turning point for manufacturing and accelerate some underlying trends that were already in operation in recent years. Firstly, new technologies make it easier to bring production centres closer to the end consumer, shortening supply chains. Secondly, it is essential to improve energy efficiency to ensure the business model is sustainable in the medium term. To promote these far-reaching changes, the green and digital transition of industry, it is important for the public and private spheres to be able to collaborate readily and effectively, as well as extensive financing being available, and in this respect the European Next Generation EU funds will be an important point of support.
- The Spanish economy has a manufacturing sector that is ready and able to take on this challenge. Manufacturing companies enjoy high labour productivity and are remarkably export-oriented: around 40% of the manufacturing sector’s sales are for export, demonstrating the competitiveness of Spanish companies in the global arena. However, their small size compared with their European counterparts is a factor that may limit the ability of these companies to make the large investments required, including in technology. Specific support for SMEs is therefore vital, while an environment conducive to business growth must also be created.
- Special mention should be made of the automotive industry and this is addressed in the last article in this report. The automotive industry capitalises on the challenges of technological transformation and adaptation to new environmental requirements, more so than any other sector. The pandemic is likely to help speed up the transition to more sustainable forms of mobility, such as electric cars, a development to which Spain’s first Strategic Economic Recovery and Transformation Project (PERTE) will contribute.
- Finally, we should not underestimate the significant positive synergies that can also be encouraged by industry’s green and digital transition in the rest of the economic sectors, as well as in society as a whole. Consequently, the development of a new growth model for the Spanish economy based on innovation, productivity and sustainability depends, to a large extent, on its capacity to carry out these transformations.
To read below
Draghi proposes a European industrial policy as a driving force to address the challenges of the coming decades
CaixaBank Sectoral Observatory: a look at the evolution of the Spanish economy from the perspective of its sectors
