by Dr. Noor Ahmed Memon

The economy of Spain is the fifth largest in Europe, accounting for around 9% of EU output. Per capita income, at 78% of the EU average is among the lowest in the EU, although it is well ahead of Ireland, Portugal and Greece. Spain’s main trading partners are France, Germany and Italy for exports and Germany, France and Italy for imports.

Spain is also Europe’s fourth large manufacturing country after Germany, France and Italy. The principal growth areas include tourism, insurance, property development, electronics and financial services. Tourism is one of Spain’s most important industries, especially in Andalucia, earning about 4% of the GDP and employing some 10% of the workforce, both directly and indirectly. Spain’s mixed capitalist economy supports a GDP that on a per capita basis is 80% that of the four leading West European economies.

Textile machinery sector comprises 71 companies with sales in excess of €270 million. Small and medium sized companies with less than 50 employees account for 90% of this sector that generates more than 2,500 direct jobs. This structure highlights its capacity to easily and quickly adapt to the different trends in the market.

Production is concentrated across a few geographical areas, most significantly in Catalonia (63% of companies) and the region of Valencia (3%) jointly accounting for 67% of sales, while the two companies based in Madrid account for 32%.

During the year 2005 Spanish textile and clothing machinery exports totaled €170 million, representing a year on year decline of 16% since 2001. In 2005 Spanish exports accounted for 70% of total sales, making the sector’s exports highly significant. This export ratio has remained constant in recent years and is not based on a temporary strategy but demonstrates the sector’s long-term commitment to selling abroad, ranking it eleventh in the world in terms of exports.

The top five destinations for Spanish exports in 2005 were Turkey, Italy, India, Portugal and Morocco. These countries accounted for 32% of Spanish textile and clothing machinery exports.

In the last five years, Spanish sales of textile and clothing machinery have increased to Turkey, India, Morocco and China. Sales to Germany have remained stable while other countries have declined due to economic factors.

As a whole, Europe is the leading manufacturer of textile machinery in the world both in terms of sales and the number of companies as well as for the quality and technology of its products. This highlights the competitive nature of Spanish exports that supply the sector’s leading companies around the world.Table-1 shows the performance of Spanish textile machinery manufacturers.

The textile machinery sector restructuring being undertaken by Europe is becoming more specialized and concentrating production in the manufacture of high-tech fabrics. Textile production towards emerging markets such as China, India. Iran, Pakistan and Turkey, where the Spanish sector competes for a dominant position. This trend has allowed emerging countries to take up third, fourth, sixth, eighth, twelfth and thirteenth positions in the country ranking of importers of Spanish textile and clothing machinery.

The top ten purchasers accounted for 53% of Spanish sales. The EU is recognized as the principal destination market for Spanish exports and in 2005 42% of Spanish textile machinery was exported to Europe, although with regional differences. Although exports to the EU’s traditional markets have declined, exports to the new enlargement countries have increased considerably. From 2000 to 2005 purchases by Asia grew by 114%; purchases by Latin America fell by 45%; purchases by the USA and Canada fell by 53%; while sales to the Maghreb countries and Africa increased by 30% and 25% respectively.

Trade Balance

Trade relation with Pakistan

Over the years of friendly ties trade between Pakistan and Spain has increased significantly and other economic activities have also grown between the two countries. During the past five years exports and imports between Pakistan and Spain has increased but the rise in exports has been faster than the imports. The balance of trade had remained in favour of Pakistan. Exports from Pakistan to Spain increased from US $173.8 million in 2001-02 to US $343.2 million in 2005-2006, thus showing an average increase of 19% per annum. Table-2 shows Pak-Spain trade balance.

Cotton fabrics, readymade garments, towels, hosiery, bed-wear, made-up textiles, carpet and rugs are the major items exported from Pakistan to Spain. Export of textile and other items from Pakistan to Spain is given in Table-3.

The government has continued to improve and rationalise its import policy with a view to allowing liberal import of industrial raw materials, capital goods and essential consumer goods. These include usually high imports of machinery, chemicals and other raw materials. Textile machinery, chemicals, pharmaceutical products, textile fiber/waste and transport equipments are the main items imported from Spain.

Pakistan, an attractive market for textile machinery manufacturers all over the world, has become a focal point of the suppliers in view of the massive balancing, modernisation and replacements (BMR) taking place under “Textile Vision 2005″ programme. Since last five years, Pakistan textile industry has made significant investments in expansion and BMR and it is heartening to note that all the investment had been in production of value-added textile products for exports. Import of textile machinery from Spain to Pakistan decreased from Rs527 million in 2003-2004 to Rs439 million in 2004-2005, thus showing decline of 19%. Categories-wise import of textile machinery from Spain to Pakistan is given in Table-4.

There is great scope of cooperation in various industrial sectors between the two countries. There are good prospects for undertaking joint ventures in Pakistan with the help of Spanish technical know-how. The main areas of co-operation for joint ventures are textile machinery, automobiles, power generation, chemicals and pharmaceutical.