AmChamSpain and bilateral economic relations between Spain and the USA.

Jaime Malet has chaired the US Chamber of Commerce in Spain since 2002. Re-elected twice in succession for the office, Malet explains that “the chamber promotes bilateral economic relations between Spain and the USA.” Founded in 1917, for almost a century, the Chamber has successfully represented and defended the interests of its members “which currently number over 600 companies, including American businesses in Spain and Spanish firms operating in the US.” Another of its basic tasks is to “increase the volume of bilateral trade and investment by promoting new business opportunities in different sectors.” Even in times of crisis like the current one, this has been possible.

Briefly, what is the basic role of the American Chamber of Commerce in the Spanish economy?

We are an organization whose main aim is to improve the competitiveness, productivity and international projection of Spain. Our associates currently have an aggregate turnover of around EUR 285,000 million, which amounts to approximately 24% of Spanish GDP, and employ over a million people. The installed investment in Spain from the US is 20% of all foreign direct investment. The numbers speak for themselves. We also represent almost all of the companies that make up the IBEX 35 index, although our significance extends beyond the national borders. Officially based in Washington, the US Chamber of Commerce is the world’s leading business organisation. It is present in 113 countries and is often consulted by their major financial traders.

I would also like to point out that besides watching over the business interests of our members and their countries – in this case, Spain and the USA – we have a very ambitious economic agenda covering labour law, swaps to improve the regulatory framework and productivity of the country, and ideas on how to protect intellectual property.

In which sectors of the Spanish economy in general and the Catalan economy in particular are US companies more consolidated?

The industrial sectors in particular. US companies in Spain generate a great deal of employment in local companies, especially in SMEs. For example, many Spanish companies are suppliers to Ford and General Motors, or distributors for information technology giants such as IBM, Microsoft, Cisco and pharmaceutical companies. The latter have a total share of the Spanish market of 40%. Then there are the franchises. McDonalds, Burger King, Coca-Cola and Pepsico, among others, which are widely represented in the national market. Many Spanish companies work with products, technology, licences and agency or distribution contracts from US companies. By Autonomous Community, we can confirm that Madrid and Catalunya lead the way with the most US production and R&D centres in Spain.

Which Catalan companies have the most confidence in the US market?

There are numerous Catalan SMEs that export to the US and some industries in the agri-food and wine sector that have invested in the US. Companies of repute could include La Caixa and all of its investees: Gas Natural, abertis, Aguas de Barcelona and the Port of Barcelona.

How is the financial crisis affecting financial and trading relations between Spain and the United States?

Overall, US companies are holding their own in Spain fairly well, despite the crisis. There has been stagnation, slowdown and even disinvestment. At the most critical point, some companies even chose to relocate some of their production processes outside Spain. Fortunately, we can now say that the situation has stabilised and that businesses are looking to the future with greater optimism and confidence.

Spanish investment in the US, incredibly, has been reinforced and will emerge stronger from this crisis. Investments have been made in renewables, the financial sector, agri-food and civil construction. Our Spanish members have been very brave to take this step in an age dominated by fear. The figures are very clear: five years ago, Spain held 30th place in the classification of foreign investors in the US. Last year, it was the third leading foreign investor.

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BARCELONA AND USA

Closer corporate relations bind Barcelona with the US

American Airlines, Axis Corporate, Baker & McKenzie and Harley-Davidson are just four of the high-profile companies with headquarters in Barcelona. As commercial ties develop, we analyse what is attracting so many US companies to set up shop in Catalonia. By Chris Dove

With more than 600 companies in Spain and Latin America operating in the US, American companies in Spain generate substantial employment in local companies, especially SMEs. As Jaime Malet points out, a similar business pattern exists in Catalonia with many companies working in technology, licensing, agency or distribution contracts from US companies.

Operating from its New York office, the Catalan Government implements bilateral talks between Spain, Catalonia and the US through a series of agreements, policies and pledges. In June, the Generalitat de Catalunya co-organised the second part of the Development Cooperation Forum to discuss the new actors in development cooperation; while in May, Vice President Josep-Lluís Carod-Rovira met with World Business Chicago to highlight the similarities between Barcelona and Chicago as two cities intent on encouraging specialised training for business professionals.

Furthermore, Barcelona welcomed former U.S. President Jimmy Carter as an honoured guest on 1 July when GenCat President José Montilla awarded him the ‘2010 Premi Internacional Catalunya Prize’, saying: “His sensitivity to the self-determination of communities is in line with what the Catalan people can and should do.”

Credit crunch and currency crises

While over-lending during the US sub-prime property boom is blamed for causing the credit crunch, the impact of the global finance squeeze on exchange rates was – and still is – felt deeply in the Euro Zone where US fears over the region’s financial stability and credit ratings led sceptics to compare Spain’s position to Greece.

With market turbulence steading, Wall Street reported last month (July 2010): “We have yet to see any waves of formal earnings warnings due to the decline of the euro” from conglomerates including McDonald’s and Burger King, suggesting that some of America’s biggest companies have not seen their bottom lines grossly affected by the impact of the euro on the dollar.

Effects of the economic crisis on Catalonia

Barcelona Mayor, Jordi Hereu, addressed the fight against the crisis, saying in May: “The fight for Barcelona will be the platform for recovery in the areas of prosperity and wealth creation. Barcelona has a positive differential that affects our approach to the world. Barcelona is a city that invests more than anyone and is capable at this time of demonstrating strength, ability, leeway and will. We should plan ahead at a local level, there should be full involvement from every sector of the local economy, from small and medium-sized businesses, freelancers, traders, every financial and social player in our economy, all of whom have been making adjustments over the last two years.”

According to the American Chamber of Commerce in Spain (AmChamSpain), the effects of the crisis on Spanish companies in the US have caused disinvestment here. AmCham’s Barometer of sector investment showed that in 2008 relatively few companies revealed negative expectations although the situation clearly intensified in 2009.

Importing the American model: Franchising

Big brands offer big bucks through franchise opportunities in Spain and Catalonia. Blue-chip stateside names in the food and drink industries including Starbucks, McDonald’s and Burger King are successfully replicating the franchise model around the world with Spain being no exception. Owner-managed stores for a growing range of products and services are reaping rewards: from High Street and boutique stores such as Zara clothing to franchise businesses such as cruise travel, golfing, staffing, pets and security.

Overview of American-owned SMEs

A 2009 report, “Top Barriers and Drivers to SME Internationalisation” by the OECD* Working Party on SMEs and Entrepreneurship found US SMEs taking a sub-national approach to promoting SME inter-nationalisation, with Spain one of the few examples of an economy with sector-specific initiatives to redress international barriers and facilitate access to priority external markets.

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BIG US NAMES IN BARCELONA

AMERICAN AIRLINES

Operating in Spain since 1988 starting with their Dallas route, American Airlines launched their Madrid to Miami route in 1991 and in 2008 began their New York-Barcelona route. “It took a lot of planning, money and we received support from the Chambers of Commerce and business associations in Spain,” says Nieves Rodríguez, Country Manager Sales for Spain and Portugal. “They gave us updated market information to ensure our Barcelona launch was a success. Since 2 May, we operate four routes from Spain to United States (2 routes to New York, Miami and Dallas), and despite the crisis in just three years, and within our EMEA division (Europe, Middle East and Africa) we are third in terms of the volume of routes to the United States, after UK and France.”

Regarding expansion plans for other American Airlines routes to Barcelona, Nieves states: “In Barcelona, there is great demand internationally but traffic, market size, and the potential for business and customer profiles are very different. Here much depends on the season, with two-thirds of our customers forming holiday travellers, especially cruises from April to October and one-third are corporate clients. In winter there’s a balance of 50% tourist and business customers. We are a serious company and we thoroughly study the Spanish market. We have a special Reservations team and dedicated Customer Service Hotline so we can communicate with Catalans in their own language, which demonstrates our commitment to the Catalan market.”

Discussing airline alliances, Nieves comments: “We’ve been members of Oneworld since 1999 and we are waiting for final approval of the trade agreement with Iberia/British Airways, with whom we offer a wide variety of routes, competitive schedules, a fully reciprocal frequent flyer program and more competitive rates. We are expecting the European Union and the US Department of Transportation to approve our trade agreement with BA and Iberia on Atlantic routes to Canada, USA, the EU and Mexico. The result of our agreement will have important implications for our customers.”

Referring to American Airlines’ price levels, Nieves says: “Our priorities are the safety of passengers and providing a high quality service. Faced with competitive rates from low-cost operators, we prefer to be conservative and maintain our service and message, offering all our clients – especially our business class customers – quality service. We form good relations with our best partners and travel agencies, as well as with Associations and Chambers of Commerce, for example our 2010 Travel Partner initiative with the American Chamber. Currently we are focusing on offering new products for SMEs which we deliver either through our preferred agency or are distributed directly through our network of Chambers of Commerce in Spain and the United States.”

“Spain is in fashion in the US. People going on vacation want to come to Barcelona and Madrid. Today Spain is the leader in our division. We’re growing, we have expansion plans in the medium and long term and we are very aware of the opportunities in this market.”

AXIS CORPORATE

Barcelona | Madrid | Shanghai | São Paulo| Londres | Boston

It does not get more global than Axis Corporate. Offering corporate consultancy solutions they opened their Barcelona office in 2005, the vocation of Axis Corporate President Casimiro Gracia and all the partners is: “To help companies through their business lifecycle – from launch, growth, international expansion, consolidation and restructuring. We offer change management advice; look at clients’ costs and give guidance on worldwide growth strategies always using our expertise in core sectors to deliver the best for our clients.”

With a second Spanish office in Madrid, Casimiro Gracia realised the synergies that exist between the two cities. He chose Shanghai and São Paulo as starting points for the company’s international expansion and now has an office in London and in the US with a team of 80 professionals worldwide “totally immersed in each project.” “São Paulo and Shanghai are two strategic cities in countries with very strong growth (BRIC countries: Brazil, Russia, India and China).Their internal markets are growing and have not been much affected by the economic crisis.”

When asked about what attracted Axis Corporate to the North American market and his reasons for setting up in Boston, Casimiro Gracia explains: “Principally, we have Spanish clients in the US finance and tourism sectors. We consult on business negotiations and solutions to help them realise their strategic objectives. Secondly, we have many US companies interested in doing business in Spain. Thirdly, the US is a big, durable market and we need to consolidate markets like Spain. We need the flexibility to offer a mix of culture and technology across finance, broking, utilities and investments.”

BAKER & McKENZIE GLOBAL LAWYERS

With 100 lawyers in their Barcelona office, Managing Partner for Barcelona Esteban Raventós stresses that the city is central to the group’s operations. “In 1986, when the Barcelona Olympics were in preparation, we decided to come here because we had US clients doing business in Spain. We cover all types of transactions in sectors including IT, technical reporting, media, sports, leisure, and we offer guidance in mercantile, fiscal and labour law to help clients understand how to establish or expand their business in Spain.”

Raventós’ high-profile clients include Sara Lee, Honda, Sony, Pepe Jeans, Bimbo and Boots the Chemists. “Many expand from their original countries first to the US then Europe. Spain is central in Europe, particularly Catalonia and Barcelona. People love coming here and executives looking for life balance in an agreeable cosmopolitan city with international connections can fly from the US and arrive in Barcelona in no time... We have a great airport, port and we’re more central than London, Amsterdam, or Frankfurt.”

HARLEY DAVIDSON ® Barcelona

Harley Davidson’s spirit and branding is legendary – going beyond borders as cult, high quality machines that force everyone to look, listen and lust after. Josep Grañó, Harley Davidson Director General for Spain and Portugal, told us why Spain and Catalonia form such an important part of their global strategy. “Catalonia has a very strong history and culture of motorbike sports,” he explains. “People here respect motorbikes, they like to see them pass by and be seen on them and Circuit de Catalunya has raised many Spanish motorbike champions.”

Commenting on the differences between the Spanish and US motorbike markets, he says: “Spaniards are more hot-blooded than Americans and Spain is a very youthful market. Our average client is 37 years old, which is the lowest in Europe. Here, we are targeting the under 25s who want a Harley as their first motorbike. And also the female market with fashion clothes and accessories for the increasing number of women now buying Harley bikes.”