“Andalusia is, in its external sector, the first growing Community in Spain so far in the 21st century”

Interview with Arturo Bernal, CEO of Extenda

On the occasion of the anniversary of our media, we continue analyzing what these two decades of the 21st century have given to the development of the Spanish foreign sector. Today with us is Arturo Bernal Bergua, CEO of Extenda, the body of the Government of Andalusia dedicated to promoting the internationalization of Andalusian companies.

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The Spanish foreign sector, and evidently the Andalusian one, have had outstanding development so far in the 2021st century. Andalusia, for example, closed 34.551,9 with exports worth 10,9 million euros, XNUMX% of the national total, being the third autonomous community with the highest contribution to the total.

 

How has Andalusia behaved and what have been the keys and protagonists that have led us to these good data?

Arturo Bernal: “This question almost makes for a thesis. Based on objective data, Andalusia is, in its external sector, the first growing community in Spain so far in the 21st century., both exports in figures, and in their weight in the total national ranking, and in contribution to Spain's growth, to the surplus... any of the figures show this weight. 

I am going to give some figures that have to do with the six most exporting autonomous communities, which represent 75,76% of Spain's total. Today Spain has more than double the weight in exports of what it had at the beginning of the century, approximately 140%, however in Andalusia we have grown more than three times as much, at 240%. In 2001 we did not reach an export figure of 10.000 million euros and yet in the year 21 we have reached the figure of 34.500 million. In the first quarter of 22 alone we have already exported 10.200 billion euros, more than everything we exported in 2001. 

We have grown more than double that of the rest of the most exporting communities. For example, Madrid only 57 points more, but more than double compared to the rest. And we are the only Community that has climbed three places in the national ranking in the last three years. We have gone from fifth to second place in the ranking. And the most important thing is that we are contributing to Spain's trade surplus; In Andalusia we are going from the structural deficit that we had in the first 15 years of the century to having a surplus in our trade balance, especially in the last three years, and this is important. When I was studying they said that the only activity that is capable of contributing positively to the trade balance is tourism in Spain, well, The foreign sector, apart from tourism, is contributing to this positive trade balance.

The protagonists, the architects of all this evolution are the Andalusian professionals and companies that make up our export base. These companies have also doubled in Andalusia until almost 30.000 that we have in 2021, of which approximately 5.500 are regular exporters. This has also produced increases in employment, practically doubling: we have 200.000 more jobs in export companies than we had in 2009.” 

 

What milestones have marked the evolution of the Andalusian foreign sector? How has the sector behaved in the face of different crises?

AB: “The history of exports in Andalusia is very much in line with the different economic crises that we have had to address in Spain, and I say address and not suffer because I believe that The way in which Andalusian companies have been able to undertake these crises and respond to them is what has given them the strength that we now have. and it helps us, in future crises like the one we just experienced in the year 20-21, to face them with other perspectives.

Until 2008, Andalusia had a very marginal position and practically vegetative growth. Between the beginning of the century, 2001 and 2008, we had grown in total only 16% in exports. Andalusia was the fifth, and became the sixth exporting community, and we could speak of a marginal situation. The 2008 crisis cut off this growth and 2009 is when we are most affected by the crisis, with a very significant drop of more than 14%. the biggest drop we have had since the 90s. 

In the period from 2010 to 2018, after the financial crisis, Andalusia experienced an unprecedented export boost. Companies had the obligation to leave, not because they had an export DNA, but because they had to find a life outside the Spanish market, which did not then provide them with the solvency and viability that they needed. Then we began to see double-digit growth in export figures with some ups and downs in 2015 and 2018, but Already in the year 19, Andalusia regained the path of trade surplus, accounts for more than double the exports than at the beginning of the decade, we went from having just over 14.000 million to having 31.000 million in the year 21. We have achieved more than double the weight of exports in the Andalusian GDP: we went from 9% in the year 2009 to have more than 20% in the year 21. We are talking about important growth.

By focusing on companies, we have had more than 55% growth in export companies, and we have been the Community that has grown the most. Andalusia growing at 24% in year 21, three points above the Spanish average

And a point that seems important to me: Spain right now has a trade deficit of more than 26.000 million euros, however Andalusia has a surplus of 1.400 million. "We are providing a surplus, which I think is good news, and in some way highlights the power of our foreign sector." 

 

Currently, what do you consider to be the strengths and weaknesses of the Andalusian foreign sector?     

AB "I think that We have a very solid business fabric that is very committed to internationalization. It is true that we have learned it in blood. When we stepped on the accelerator and raised our heads internationally, it was after the crisis in 08. And we could not have said this before the crisis in 2008. This milestone of the 2008-2010 crisis was a before and after in the awareness of the companies we have in Andalusia in relation to internationalization.

The companies saw that those that were well internationalized also had a plus of better structure, better strength, and better economic and financial dimension. 

One of the strengths is that we have a diversified offer, which is made up of traditional sectors such as agriculture, beverages, but also and recently of medium and high-tech industrial sectors. To say one thing, it is indisputable that the leadership of the Andalusian food sector It is known not only in Spain but in Europe: one of every three euros that Andalusia exports is from this sector, approximately 12.400 billion euros, which generates a surplus of more than 7.000 million in the trade balance.

But also high and medium technology exports, which account for one in every four euros exported from Andalusia. In year 21 in this chapter we have had a historical record, reaching 8.000 million euros, more than triple what is exported on average in Spain. And all this taking into account that the aerospace industry (Andalusia is one of the three aeronautical poles of Europe after Toulouse and Hamburg), we are talking about that in the year 21 it had not yet fully recovered, so in this chapter In terms of high and medium technology exports, we expect significant growth in the year 22 and 23, when the aeronautical and aerospace sector is fully recovered. 

like a fortress we have good territorial diversification: There are no provinces that stand out above each other, the eight provinces have record figures, they are growing, some of them at double digits, five of them with a structural surplus in their export figures. I believe that this territorial diversification does more because there is awareness that internationalization structures the Andalusian territory very well and all provinces and companies feel involved, it seems transcendent to me.

We also have some weaknesses. I would like to highlight three. The first has to do with We are a business network of small and very small companies and that is obviously a handicap to developing a true internationalization policy taking into account that the global world requires dimension, requires financial muscle. International implementation that many small Andalusian companies are not yet capable of having. In that sense, we are providing them with all types of solutions so that international implementations occur, at least in hubs where a small ecosystem of Andalusian companies can collaborate and coexist, sharing knowledge and benefits.

The second weakness is that it still we have a lack of awareness when it comes to internationalization, in the education and training of young people, both professional and university training. Fortunately, the new generations of Spaniards have a more advanced sense of belonging to the international community, not only languages ​​are included but also the predisposition to international mobility, to change jobs to have a professional career, and that gives us an international vision that We didn't have it before and little by little we are gaining. It is a weakness that is on the way to being resolved. 

And finally, the most relevant thing is the lack of key transportation infrastructure. Seven of the State's commercial ports are located in Andalusia. That implies that In Andalusia we export more than 50% by sea, which is much more than the average for the Spanish State, which is 30%. And we have a weakness which is the lack of capacity from the Government of Spain to provide Andalusia with the infrastructure that we need, so that these ports and port communities can achieve the strategic role that they have geographically and that we are not capable of achieving because we have a significant infrastructure deficit, eg railway. 

The very clear lack of commitment to the Central Railway Corridor, in addition to the Mediterranean Corridor and the Atlantic Corridor. This is not about prioritizing some over others. Taking into account the amount of European funds that we can have, the Resilience and Recovery Plan, the new scenario 21-27, is that we are returning unused funds from Spain to Europe. It makes no sense that investments as crucial and strategic as these are not being undertaken. They want to give priority to some runners over others and what that does is create division. 

And I'll give you a fact, the port of Algeciras is the only one in Spain that is on the route that connects world trade from east to west, and it is classified as the most efficient in Europe, because This port is condemned to transport its railway merchandise through an obsolete network, in some sections of the 19th century. These types of issues affect us and affect sustainability and we must take them seriously and work from the State and the Community to find a solution." 

 

There is no doubt that the internationalization of companies in the Community, understood as foreign trade and foreign investment, is a priority for the Junta de Andalucía and for Extenda. In this sense, what are the priorities and objectives that Extenda has in terms of internationalization for the near future?       

AB: “If we talk about priorities, internationalization after all this evolution is a strategic matter, it is a State matter within the Andalusian Government. 

The Andalusian Government approved the Internationalization strategy of the Andalusian economy for the period 21-27, and it is an authentic guide for a new impulse for the foreign action of the Andalusian economy, and above all to attract foreign investment. This plan is initially endowed with a budget of more than 620 million euros, and this is more than double the last planning carried out on the matter. This demonstrates the intention and objective that the Andalusian Government hopes to achieve, which is aware that every euro it clearly invests in internationalization is returned in the form of wealth and also employment. 

In this sense, Extenda's historical work supporting Andalusian companies has also been comprehensively transformed in this new stage. We are focused on markets and digital transformation. Our foreign promotion has changed and we have also changed the focus; we have generated new departments that have geographical competence and that, supported by business intelligence and big data tools, are guiding external action not only the policies of the Board but of the companies that work with us and also of our entire external network. An external network that is present in 50 countries and that in the last three years we have increased to 62 new countries, maintaining the 38 headquarters that we had structurally and that is important, because without increasing structural spending we have generated much more business internationally to companies, expanding our presence in new markets. For example, with an important focus on Southeast Asia, Central Asia, Sub-Saharan Africa and the Middle East, and growing with new offices in Asia-Pacific, which is the new economic and commercial center of the world.

We also want to enhance this market approach with the new Extenda clubs towards strategic markets: Asia, Africa, Latin America, in Europe, the United Kingdom... It is about building hubs where Andalusian companies can generate community, make them more competitive, taking advantage of knowledge and good practices, generating synergies that small companies will take advantage of so well.

And one of our most important objectives is to generate an increasingly larger export base. We must grow the number of companies that export. In 2021 we have grown to 30.000 with a growth of 24%, but the most important thing is to continue maintaining this tone of growth, and our goal was incorporate at least 1.400 new export companies every year to our export basket. If we do not manage to generate larger export bases, these growth numbers will be very difficult, growing at double digits in the last 13 months without interruption. And this must be done by incorporating new companies into the export base. and our objective is being met, in the last two years they have been achieved.

And the great objective that we always maintain is training and talent in international trade, Capturing human capital with technical training and being able to incorporate new talent into companies, which is a very fast and safe way to grow in internationalization objectives.

 

¿How is it affecting the current context – war in Ukraine, rise in energy and raw materials prices, supply crisis, etc. -to the internationalization objectives that Extenda sets? Any reformulation or adaptation of the forecasts?

AB: “Regarding the economic consequences, they go beyond the products we are exporting to Ukraine or Russia. Of the 35.000 million euros that we have exported in the year 21 We only export 200 million to Russia and only 50 to Ukraine, It is only 0,7% of our annual exports. If it were only this question we would stop exporting a really small amount. 

The impact has come from this tsunami of generalized economic crisis which has occurred due to lack of mobility. the price of elements in our international basket that affect transportation, fuel, and the supply of raw materials. We are talking about the medium and high technology industry and an important part of that industry is microchips and microchips They are made from materials and raw materials that come from those two countries. 

We are in a financially complicated situation right now, basically in a stagflation point, we are generating high inflation sustained over time, it is not expected to go down, and also with stagnant economic growth, because growing at 3% after having had a pandemic, taking into account that always after a crisis there is a rebound, we are talking about there being no real growth. A stagflation situation is very dangerous for an economy and that weakens the international position of our companies. If inflation in Spain is at 10 and in Portugal, France... it is in the middle, which means our products are less competitive than those of other countries. 

In any case, the foreign sector is knowing how to respond to this crisis. We are already trained in crises. Our history is the story of how we have adapted and learned to manage in crises. And we are also knowing how to face this with great solvency.

Our programming has not been affected. We have international problems that affect us all, but I think the message is positive. We are trained, after all these crises we have known how to recover and grow and generate new opportunities.”