Spanish Industry: From 1855 to Present | Challenges and Transformations

Posted on Oct 1, 2024 in Geography

Item 6. Industrial Areas

Industry and Raw Materials

Industry transforms raw materials into finished or semi-finished products using energy. Raw materials, the resources for these products, are categorized as organic (cotton, linen, wood, rubber, meat, skins) or mineral. Spain faces shortages in some organic resources like cotton.

Mineral raw materials are extracted from areas with high mineral concentrations. These include:

  • Metallic minerals (iron, copper) found in the Hercynian block, primarily used in the coal and steel industry.
  • Non-metallic minerals (quartz, feldspar) found in Paleozoic formations, used in construction.
  • Industrial rock (limestone, granite) used in construction and distributed unevenly.

Spain’s mineral production is insufficient, necessitating imports. While industrial rock production meets domestic demand and generates surplus, cost-effective sourcing remains a challenge. Spain’s mining policy, aligned with the EU, aims to enhance domestic competitiveness, improve environmental conditions, and promote research and development. This has led to the closure of numerous metallic mineral mines due to more profitable deposits elsewhere and environmental concerns.

Energy Sources

Spain’s energy consumption surpasses its production, creating an imbalance and energy dependence. Consumption peaked after 1960, relying heavily on coal, oil, and nuclear energy. Production primarily comes from coal and nuclear energy, with an oil deficit. Spain’s energy self-sufficiency is low (22% in 2003), requiring imports of oil, gas, and coal.

Primary Energy Sources

Coal

Coal’s quality and calorific value depend on its type (hard coal, lignite). Crucial during the first industrial revolution, coal’s importance in Spain stemmed from high import costs. Post-war technological advancements shifted reliance towards oil. The 1975 energy crisis revived coal usage, but production declined after 1984 due to:

  • Exhaustion of rich deposits and poor quality of remaining reserves.
  • Operational difficulties and rising extraction costs.
  • Fragmented industry with numerous small companies.
  • Decreased demand.
  • EU liberalization of prices.

Coal production, concentrated in thirteen basins (Asturias, León, Palencia), primarily fuels power plants (80%). A major drawback is pollution from coal-fired plants.

Oil

Oil, formed from decomposed marine organisms, became Spain’s primary energy source after 1960. The 1975 price surge didn’t significantly impact consumption until the second crisis in 1979. Subsequent measures focused on reducing consumption and developing alternative energy. OPEC manages price control measures. Domestic oil production (Tarragona, Burgos) is limited, requiring reliance on imports. Oil is primarily used in transportation, industry (fertilizer production), and electricity generation.

Natural Gas

Natural gas, liquefied for transport, offers high calorific value, low price, and is the least polluting fossil fuel. Consumption increased from 1969. Production (Basque Country, Huelva) is insufficient, necessitating imports. Gas byproducts (propane, butane, naphtha) have various industrial, electricity generation, and domestic applications.

Nuclear Energy

Nuclear energy expanded after the 1975 crisis but stalled after 1984. Uranium production comes from Salamanca and Badajoz, meeting national needs. Nuclear energy primarily generates electricity. Key problems include external dependence on uranium enrichment and technology, risks, radioactive waste storage, and high decommissioning costs.

Hydraulic Power

Hydraulic power, derived from dammed water (Ebro, Duero, Tagus), meets national needs and primarily generates electricity. Advantages include renewability, cleanliness, and instantaneous production. Disadvantages include fluctuating production due to rainfall and conflicts with other water uses (irrigation, domestic consumption).

New Sources of Energy

Driven by the oil crisis, these inexhaustible, clean, and dispersed sources provide thermal, electrical, or mechanical energy. Types include:

  • Mini hydro: Low-power, utilizing river flow, electrifying remote areas.
  • Wind power: Converting wind into mechanical or electrical energy, experiencing significant growth.
  • Biomass energy: Gas produced from organic waste.
  • Solar energy: Utilizing heat and sunlight for thermal and photovoltaic applications.
  • Geothermal energy: Using underground steam or hot water for heating and electricity generation.

Electricity Production

Primary energy sources require conversion into usable forms like electricity. Spain generates electricity from thermal plants (oil, coal, gas), nuclear fission, and hydroelectric plants. Production has increased due to economic development and rising living standards.

Energy Policy

Following the 1975-1979 oil crisis, the International Energy Agency promoted saving, replacing oil with new sources, and research. Spain’s energy policy, initiated post-Franco, implemented National Energy Plans (PEN). The 1978-1987 PEN focused on nuclear energy, later shifting to coal and gas (1983-1992 PEN) due to public resistance. The 1986 Renewable Energy Plan (PER) encouraged renewable energy. Current policy, guided by the EU, focuses on the 2001-2010 PEN and the 1999-2006 Renewable Energy Development Plan. The EU aims to ensure secure supply, promote saving and renewables (25% by 2020), liberalize the internal market, and mitigate environmental impacts. The new PEN emphasizes gas, oil, and renewables, aligning with environmental objectives and research. The renewable energy plan targets 12% renewable energy production by 2010, incentivizing green power sales through premiums and support from the Institute for Energy Diversification and Saving (IDEA).

Spanish Industry from 1855-1975

Historical Overview

A) Early Industrialization (1855-1900)

Spain’s industrialization lagged behind other European nations due to:

  • Limited raw materials and energy resources.
  • Low entrepreneurial spirit.
  • Scarce capital.
  • Technological backwardness.
  • Limited demand due to low population growth.
  • Unfavorable external environment (loss of American colonies).
  • Inadequate industrial policy.

B) Industrial Growth (1900-1936)

Factors contributing to growth included:

  • Increased coal mining.
  • Declining mineral exports.
  • Incorporation of second industrial revolution advancements.
  • Increased domestic investment.
  • Public works promoting industrial sectors.
  • Industrial protectionism.

C) Civil War and Post-War (1936-1959)

Industrial growth halted due to war destruction and autarkic policies, leading to a crisis.

D) Industrial Development (1960-1975)

Huge industrial growth driven by:

  • Import liberalization.
  • Expanding world economy and Spain’s advantageous position (low costs, abundant labor).
  • Low energy prices.
  • State encouragement through development plans.

Industrial Production

Technical innovations from both industrial revolutions fueled growth in specific sectors. The late 19th century saw growth in iron and steel (Andalusia, north) and cotton textiles (Catalonia). The early 20th century witnessed growth in basic and consumer goods sectors. Basic sectors (steel, refineries, shipbuilding) were state-driven through the National Institute of Industry (INI). Consumer goods (textiles, footwear) expanded with rising living standards, further boosted by automobile and appliance manufacturing. Capital goods (machinery) experienced minor development, primarily during the developmental period, aided by multinational establishments.

Industrial Structure

Key characteristics of the industrial structure (1855-1975):

  • Mass production, particularly the Fordist system.
  • Abundant, low-skilled labor with gradual improvements in working conditions.
  • Contrast between small and large companies, with small companies focusing on consumer goods and large companies linked to the second industrial revolution.
  • Technological, financial, and energy dependence due to limited innovation capacity and insufficient domestic resources.

Despite industrialization, these limitations placed Spain in a peripheral position globally.

Factors and Trends of Industrial Location

Traditional Factors (1855-1975)

Industries sought locations maximizing profit by minimizing costs, considering factors like proximity to resources, consumer markets, labor, transport, capital, support sectors, infrastructure, and state policy. Until 1975, proximity to resources, labor markets, consumption centers, and transport systems were key.

Industrial Concentration

Industries concentrated in urban-industrial agglomerations to benefit from external economies (agglomeration economies), attracting dependent and related industries.

Industrial Areas

Early Industrial Areas

Initial industrial areas concentrated on the peninsular periphery, influenced by specific factors:

  • Extractive base areas: Located near raw material sources (Malaga, Asturias, Cantabria, Basque Country).
  • Port core areas: Located near ports (Bilbao, Aviles, Barcelona, Valencia).
  • Urban-industrial areas: Located in cities providing labor and consumption markets (Madrid).

Regional Imbalances (Early 20th Century and Franco Era)

Existing industrial regions strengthened their dominance. Cantabrian regions specialized in core areas and large factories controlled by the INI. Mediterranean regions had greater diversification and a higher proportion of light industry and small businesses. Madrid consolidated its industry due to centralized policy and its position as a communications hub. This concentration led to saturation, increased land values, and competition from tertiary uses, encouraging the spread of some industrial activities. New industrial spaces emerged along main routes and in cities with basic industries. Other areas experienced limited industrialization, primarily in provincial capitals and isolated enclaves based on traditional products.

Industrial Policy

Key characteristics of industrial policy during this period:

  • Protectionist policy shielding Spanish industry from foreign competition, stimulating growth but hindering modernization.
  • Establishment of public enterprises in strategic areas.
  • Measures to correct regional imbalances through development plans.

Industrial Promotion

Key actions included:

  • Development and promotion centers: Inspired by French planning, these aimed to trigger industrial concentration in backward regions (Seville, Granada, Cordoba, Oviedo). Results were limited, failing to stop concentration in traditional areas and exacerbating regional disparities.
  • Preferential treatment and incentives for industries in designated areas, industrial estates, and large industrial expansion zones.
  • Creation of development lines: Interconnected urban and industrial networks.
  • Industrial estates to decongest saturated urban areas.

Spanish Industry Today

The Third Industrial Revolution and Industrial Recovery

The third industrial revolution, driven by information technology and microelectronics, has led to changes in production, industry, location, and industrial policy, enabling industrial recovery in developed countries, including Spain, although challenges remain.

Changes of the Third Industrial Revolution

a) Changes in Industrial Production

Growth in sectors using information technology, including telematics (computers, telecommunications), automation (robotics, office automation, CAD), and precision instruments. These sectors complement others like biotechnology and renewable energy, positively impacting traditional industries.

b) Changes in Industrial Structure

  • Decentralization and flexibility in production: Enabled by new technologies and networks, decentralization involves dividing production into separate phases located in optimal locations. This includes multi-site enterprises, outsourcing, and networks of SMEs.
  • Changes in company size: Growth of SMEs and reduction in average industry size.
  • Changes in industrial employment: Increased demand for skilled professionals and technicians, decline in manual labor due to automation, and a shift towards precarious employment.
  • Outsourcing: Computerization and automation reduce productive work, increasing the importance of R&D, design, management, and marketing, leading to the expansion of the service industry.

c) Changes in Industrial Location

New technologies enable companies to relocate for cost reduction and encourage the concentration of high-tech industries and services in well-equipped core areas.

d) Changes in Industrial Policy

Reduced state intervention, promotion of endogenous industrialization based on regional advantages, and increased focus on environmental issues.

Impact of the Third Industrial Revolution on Spanish Industry

After the industrial adjustment (1977-1984), Spain experienced industrial recovery from 1985, interrupted by the early nineties recession. However, this recovery faces challenges related to production, structure, spatial distribution, and environment.

Industrial Production: An Unfavorable Sectoral Imbalance

Spain’s industry still relies heavily on mature sectors undergoing restructuring, dynamic sectors with significant foreign capital, and a delayed implementation of high-tech sectors.

Mature Industries Undergoing Restructuring

These sectors face reduced demand, declining competitiveness, and EU policy requirements for production cuts and subsidy elimination. Examples include:

  • Basic metal and metal processing: Steel industry (Asturias) and metal processing (Barcelona, Basque Country, Madrid).
  • White goods manufacturing: Reorganization of production, enterprises, and market.
  • Shipbuilding: Galicia, Basque Country, Andalusia; capacity reduction and specialization in other activities.
  • Textile and footwear: Catalonia, Valencia; facing competition from cheaper countries.

Dynamic Industries

These industries have higher expectations due to high productivity, specialization, flexible structures, and secured demand. Foreign capital plays a significant role. Examples include:

  • Automotive: Undergoing conversion with multinational involvement and government assistance.
  • Chemical: Weaknesses include high foreign capital, limited competitiveness, and limited research capacity. Sub-sectors include basic petrochemical (large complexes integrated with refineries) and chemical transformation (small businesses).
  • Food: Small, scattered industries with significant multinational presence.
  • Construction: Sensitive to economic fluctuations.

High-Tech Industries

Delayed implementation and nascent stage due to:

  • Dependence on foreign research and technology.
  • Predominance of small and medium-sized enterprises.
  • Poor alignment of workforce and education system with business demands.

High-tech industries concentrate in innovation areas, such as technological and scientific parks, characterized by co-location of research institutions and companies, low building density, high environmental quality, and proximity to cities. These parks face challenges in attracting businesses, sharing innovations, and contributing to regional imbalances.

Industrial Structure and Structural Problems

Spain’s industry faces structural problems hindering adaptation to the new technological cycle:

  • Inadequate company size: Predominance of small companies with limited economies of scale and investment capacity.
  • Limited research: Low investment in R&D.
  • Technological backwardness and dependence: Low creation and export of high-tech products.

Consequences include low productivity, higher prices, and reduced competitiveness.

Factors and Trends of Current Industrial Location

Current Location Factors

Classic factors have diminished in importance, with new factors gaining relevance:

  • Reduced importance of proximity to natural resources due to cheaper transport and energy transmission.
  • Expansion of sales areas reducing dependence on local markets.
  • Improved transport and communications emphasizing accessibility.
  • Labor remains important, especially skilled professionals.
  • Access to innovation and information, including proximity to research, infrastructure, and advanced business environments.

Location Trends: Distribution and Concentration

Industry is spreading to peripheral areas while urban-industrial areas retain their appeal.

a) Spread to Peripheral Areas

Driven by problems in large industrial concentrations (saturation, increased costs, environmental deterioration), technological advancements enabling separation of functions, new capitalist strategies (lower costs in peripheral areas), and endogenous industrialization. This decentralization primarily affects mature industries seeking cost reductions. However, automation and innovation can lead to spatial reintegration processes.

b) Continued Appeal of Central Spaces

New technology sectors prefer central locations due to their demand for advanced infrastructure, services, and high-level markets. Corporate headquarters and business management also concentrate in central areas. This concentration is evident globally, nationally, and regionally.

Industrial Areas and Regional Imbalance

Spain’s industrial location exhibits territorial imbalances, creating disparities in population, wealth, and infrastructure. Different areas include:

  • Developed industrial areas: Madrid and Barcelona, experiencing both decline in mature sectors and revitalization through innovative companies and headquarters.
  • Growing industrial hubs: Resulting from decentralization and endogenous industrialization, including metropolitan crowns, peri-urban fringes, industrial development axes, and some rural areas.
  • Declining industrial hubs: Asturias, Cantabria, and isolated nuclei (Cádiz, Puertollano), characterized by specialization in mature sectors, large enterprises, low-skilled labor, and environmental deterioration. The Basque Country is an exception with its industrial resurgence.
  • Areas of low industrialization and induced industrialization: Aragon, Castilla y León, Andalusia, with limited industrial diversification and interaction between sites. Areas of low industrialization include Castilla-La Mancha, Extremadura, Balearic and Canary Islands, dominated by low-value-added industries. Castilla-La Mancha is an exception due to industrial spread from Madrid.

Environmental Problems of Industry

Environmental problems caused by industry include:

  • Overexploitation and depletion of natural resources.
  • Pollution: Air and water pollution, soil contamination.
  • Landscape degradation: Construction of facilities and industrial casting.

Current Industrial Policy

Characterized by reduced state influence and measures to address structural, environmental, and regional imbalances.

Decline of State Direction

Reduced state intervention is evident in increasing external openness (EU integration, globalization) and privatization of public enterprises (creation of SEPI).

Policy to Correct Structural Problems

Aligned with EU policy, aiming to improve competitiveness through:

  • Accelerated conversion of declining industries.
  • Support for SMEs.
  • Increased research investment.
  • Reduction of technological dependence.

Policies to Correct Regional Imbalances

  • Industrial promotion policy: Regional Incentive Act (1985) providing compensation for investment in disadvantaged areas and regional development agencies (RDAs) coordinating industrial promotion.
  • Endogenous industrialization policy: Focusing on local potential and advantages through micro-planning, support for local SMEs, and promotion of innovation. Strategies include industrial development partnerships (SODIs) and industrial districts formed by networks of specialized SMEs.

Environmental Policy


From the 70’s developed a greater awareness of the environmental problems caused by industry. The main actions to solve them are:
a) On the misuse of resources, sustainable development is intended, ie making rational use of natural resources to meet the needs.

b) With respect to environmental pollution, the policies adopted are:

– The protection of certain areas by prohibiting industrial land use
– The prevention of negative effects on the environment industry
– The promotion of clean technologies by applying research to industry. This is the end of a new branch of production, the so-called green or environmental industry. The addition of clean processes is profitable for companies, since the saving of raw materials, recycling … gives them more efficient and respectful attitude towards the environment is positive.
– Corrective measures have been taken to change processes and products that generate negative impacts. For example, environmental audits, which are studies on the environmental performance of companies to understand their situation and take appropriate action.

c) With respect to the degradation of the landscape aesthetic value, have carried out some operations to rehabilitate brownfields in old industrialized areas, including infrastructure improvements, amenities and the environment. This is to a revaluation of these areas to attract new businesses and homes or offices. The program emphasizes the Basque Country.