International Network

Spain, a relevant market for German industrial contractors
01/16 2020 // Advertorial

Spain, a relevant market for German industrial contractors

Source photos: Llana Consultores

Over the last 20 years, we have seen an enormous growth on the industrial subcontracting activities all around Europe.

This trend basically targets four specific areas –cost reduction, keeping the focus and investments in the core activities of the contracting companies, coping with high peak demands and getting a direct access to high specialized skills and equipments; all of this in a flexible environment and always maintaining the quality standards and delivery times of the main contractors.

The large exporting driving forces of our region, especially focused on Germany and France, have developed increasingly sophisticated purchasing departments that seek to find subcontractors able to assimilate their productions to the standards set by the most demanding producers.

This is a task of great importance as it entails a series of risks that begin, in most cases, with the identification of high added value suppliers in order to establish long term and trustworthy relations. Such relations are no longer based solely on the mere production of parts but are extended to the provision of R&D or to the facilitation of production solutions provided that quality and process certifications are held and always meeting the delivery and proposal response deadlines; a direct dialogue with the technical, production and commercial departments of the contractors is also required.

Companies with a collaborative approach that can be almost assimilated by those of their clients as they understand their language, problems and needs and that can accompany the development of their activities in the medium and long term.

 In many cases, having a pool of suppliers with these characteristics can spell, for end customers, between being competitive or being out of a significant number of sales in international markets.

Given this situation, companies that produce equipment or industrial solutions suffer from a high level of risk and acknowledge a complex menu of possibilities in which the scales of cost, quality and trust are hardly attainable in an autonomous way. The resources of the departments responsible for industrial purchases must keep a balance between the promptness managing the projects to be executed and the need of working hours for the identification, verification and testing of new suppliers.

Even though hundreds of suppliers approach purchasing departments to provide services, the identification of a seemingly adequate solution tends to clash with the risk of taking a step forward as it may imply, for as insignificant as any piece may seem, It can cause a late delivery or a quality problem that affects the final solution delivered to the customer. Needles to say, that this could lead to a reputational risk, the breakup of pre-established relationships or, in the worst case scenario, a likely economic sanction due to the problems caused by defective equipment.

The search for suppliers that can help to maintain the contractor’s competitiveness is faced differently by each company being, the complexity of such search directly related to the technical difficulty involved in the outsourcing activity. In this environment, solutions solely based on costs that is, turning to suppliers that offer a competitive advantage as their only competitive tool, have proved clearly insufficient. To this extend, they tend now to be considered only for null risk environments in which the choice between one or another supplier does not mean a clear added value and in which these subcontractors are easily replaceable.

This practice has been gradually stopped as it does not comply with the productive value and needs of German companies; companies that are worldwide known for their reliable, innovative, solid, certified and adaptable solutions in the most complex sectors as well as for the most demanding industrial clients. Even if for these customers price is an important factor, it is not the only one. Hence, the suppliers of these companies can no longer be rated and considered just by the mere cost but they should mirror the key fundamentals of their contractors. The problem remains in where to find the necessary subcontracting capabilities to maintain a competitive position in the market at the same time that allowing the company to maintain the intensity of the investment in the core activities of the company. Beyond the sheer individual search it is necessary (and more efficient) to approach industrial hubs in which plenty of complementary partners can be found for German contractors; Areas of high industrial intensity that can generate collaborative ecosystems containing both private and public participation so as to generate a profitable, trustable and long lasting relationship.

Spain meets all the above mentioned requirements and therefore it has become a great potential partner for German industrial companies. Beyond low-cost geographical environments, Spain offers a highly specialized, long tradition of subcontractor network within an enormously dynamic environment and with highly compatible sectors with Germany. These characteristics coupled with significantly lower salary costs –in relation to those found in Germany, both in strategic positions and in plant operators, make the possibilities of cooperation between companies of both countries feasible and real.

Of course, it would be necessary to provide data and experiences that confirm that Spain is an ideal partner for Germany as many other countries may assume these characteristics as of their own.

Spain has a vast industrial tradition, much of which comes from German investments and engineering applications. These activities have crystallized in the implementation of more than 2,000 German companies in Spain whose turnover amounts more than € 60,000M and with a total staff of 168,000 employees. Logically, these investment commitments, maintained during periods of crisis as strong as those suffered by Spain from 2008 to 2013, imply a strong knowledge of German business culture, an enormous permeability and transmission of its management methods as well as an exchange of experiences and mutual knowledge between both countries. Half the German presence in Spain (1,000 companies approximately) belong to industrial sectors confirming that the real existing possibilities of industrial collaboration, which are currently being used, can be increased through subcontracting environments.

The intense work developed by German companies in key sectors such as the automotive industry can be seen in the Volkswagen production plant in Navarra and its subsidiary Seat in Barcelona, ​​Daimler in Vitoria or the Evo Bus chassis factory in Cantabria. Needless to say that all these examples are clear indicators of the German trust and commitment in the market as well as in the industrial capacity of its subcontractors. Top-level manufacturers of auto components such as Bosch, Brose, Grammer, Continental, Mahle or Mann + Hummel complement a sector of great tradition in Spain, endorsed by the presence of other international reference manufacturers such as Ford, Renault, PSA or GM.

 These investments have turned Spain into a key international player in the sector with 17 production plants and more than 1,000 manufacturers of equipment and components (the base of its outsourcing capabilities). The country has become the second largest manufacturer of vehicles in Europe, binding together 10% of the employment in the manufacturing industry and being able to develop an associative and research environment with 15 technological centers and 10 sectoral clusters nationwide.

 However, the abilities of the Spanish industry are not restricted to the automotive field. Spain maintains a relevant strength in other added value sectors such as aeronautics, space and defense. In particular, the aeronautical sector, with the presence of Airbus plants, both civil and space, as well as other leading manufacturers such as ITP, Aernnova or Indra, have generated a large industrial environment with more than 700 companies certified to work in this sector with a total turnover of € 12,000M. 

 A similar case can be found in the defense industry where Spain houses more than 600 companies with an annual turnover of around € 6,000M. In fact, the presence of high complexity manufactures, such as armored vehicles or precision weapons, has a long tradition in the country and is developed through leading international players such as General Dynamics, Maxam or Oto Melara.

Of course, some other group business clusters can be named such as household and small electrical appliances -with the paradigmatic example of BSH that has 6 production plants in Spain, that of the renewable energies, in which the country holds an important position worldwide developing different technologies that are manufactured internally, or the steel industry with 22 production plants and 50 lamination and first transformation facilities.

 This industrial environment is accompanied by an institutional and business investment commitment, especially in the R&D areas, through more than 60 research and technology centers mainly oriented to the different industrial sectors; centers that are actually being used by more than 18,000 companies in the country and that employ more than 3,600 people. What is more, there are strong implications in the educational system as this year alone, 860,000 students have enrolled in Vocational Training programmes while 125,000 students did so in different engineering degrees.

All these factors must turn Spain into a preferred destination for industrial collaboration environments with German companies as it combines proven experience and industrial culture, technological capabilities developed for clients in high value-added sector environments and the existence of trained personnel, with an educational system focused on keeping the industry a priority. If to all this we add the geographical proximity, key aspect for on time deliveries and the keeping of communicational channels opened on the same time zone with and an intense logistics traffic (Germany is the first import destination and the second export market for Spain) we have the ideal conditions so that these relationships are extended with a medium and long term objective. Obviously, we cannot avoid mentioning the existence of a flight system that involves the arrival of 15 million German passengers every year,

The arguments cited above will surely be of interest to many readers of this newsletter. The next question is how to start a search for subcontractors among the different existing territorial industrial hubs such as Aragon, Basque Country, Asturias or Catalonia and, once the location is selected, how to choose our collaborator.

Llana Consultores, with more than 45 years of experience in the market, can be an important help in this process. Our team works hand in hand with the client in identifying subcontractor options that have the required capabilities and the potential to become a trusted industrial partner with a long-term view.

Our company, strongly focused on industrial environments, has its origin in Asturias, one of the industrial centers of the metalworking sector in Spain, where the reference plant of Arcelor Mittal is located. Here, we maintain, since 1974, an intense relationship with both companies and institutions not only in international developments but also in legal, accounting, financial and M&A advice.

Our Asturias industrial roots have not stopped us from extending our activity to the rest of Spain, centralizing these activities in our Madrid office, which opened 7 years ago.

Working on the ground, and always in relation with the manufacturing ecosystem, has allowed us to maintain an industrial catalogue of Spanish companies in different activities and processes such as machining, welding, boiler making, metal cutting, surface treatments, automation, molds and dies, industrial maintenance etc. and in sectors such as steel, defense, energy, naval, aeronautical or machinery manufacturing, to name just a few.

At the same time, our service has been extended as advisors to different Spanish regional organizations dedicated to the international promotion of their industrial sectors among German companies. This activity has provided us with a direct knowledge of what the German contractors need as well as with the requirements requested by them when facing a process of manufacturing or outsourcing their production or specific components or parts of it.

Our long experience has also led us to manage the export consortium NANTIKO ( with four industrial companies in which we constantly deal with German customers. This, has allowed us to participate in many reference industrial events in Germany (from Hannover Messe to IAA or IZB) which result in the opportunity to visit the BME International Symposium in Berlin, event that strengthened our idea of ​​the enormous potential that the Association's companies have in Spain and the professionalism and collaborative availability of its management team.

Llana Consultores wants to be your gateway to the Spanish market and we will be happy to assist you in our offices in Asturias and Madrid or, at any time, in our contact email in which, from the starting contact, we will offer you a personalized service and a customized solution to meet your needs in Spain.           


Mario Martínez
Partner. International Business
Llana Consultores

Tel: +34 985175051
Cell: +34 695686307

Address (Madrid): 115 Velázquez Street, 3rd Floor
Address (Asturias): 1 Marqués de San Esteban Streeet, 4th-5th Floor. Gijón


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