Crucial time for Portugal´s automotive industry
in AutoRevista, by Luis Miguel González, 03-10-2016
Portugal is working hard to define a cohesive national automotive industry offering. The country-wide cluster created in April is spearheading an ambitious strategy designed to break through the glass ceiling via which Portugal´s significant potential is clearly visible.
There is no denying that issues like size and even geographical location have restricted the option for Portugal’s automotive sector. The country recently battled hard to bring to its shores the news Jaguar Land Rover plant that, in the end, will be built in Slovakia. It similarly lost out a few years ago when the financial crisis put Nissan off establishing a battery-making factory there.
Despite these setbacks, Portugal’s vehicle industry has continued to expand and grow stronger in recent times. New companies are constantly choosing a setting in which technological prowess and skilled labour go hand-in-hand with competitive costs. Although the economic climate is far from ideal, Portugal’s sector is well aware that its particular circumstances mean it is well positioned to increase in scale.
At the end of January, President of AFIA (the organisation behind creation of the Mobinov cluster) Tomás Moreira stated, “There´s room for a new automaker in Portugal. And that’s something the government needs to work on. Worldwide, around 30 countries are likely candidates to host new automobile factories, and Portugal is one of them. That said, we can’t afford to wait until an OEM decides to set up here”.
Mr Moreira believes that Portugal is strengthening the reasons to “consider it a good place to make vehicles.” In his assessment earlier this year, the AFIA President stated that, as Chinese, Indian and Korean manufacturers expand in the medium term they will all want to reinforce their positions in Europe.
To increase the chance of hosting new projects, Mr Moreira believes it is essential to start preparing between five and ten years in advance, doing so “by implementing a structured and systematic long-term promotion strategy – supported by government, vehicle manufacturers and components suppliers in the form of a cluster – that projects the image of Portugal as an investment destination for the international automotive industry.”
Mr Moreira warned, “We can´t depend solely on changes of personnel in government or in the country’s institutions. We need an ongoing, constant and long-term national strategy, and we need to put it into practice knowing that a lot of the effort we make won’t produce results.”
With forecast investment in automotive projects and business set to exceed €22 million through to 2020, at the start of the year Mr Moreira commented on a reality that AutoRevista reported on in September 2015: the macroproject to create a rationality structured industry “isn´t starting form scratch. The cluster’s goal is to optimise existing cooperation platforms and projects, which will be joined by others over the next few years.”
MOBINOV
As part of this, and as AutoRevista revealed in October 2015 in a special feature on Portugal´s automotive industry, on 22 April Mobinov was created as a cluster designed to bring together all the country’s automotive stakeholders. The organisation is fruit of partnership between Portugal’s ACAP automobile association and the AFIA, its association of automotive industry manufacturers.
Headquartered in Matosinhos and with a delegation in Lisbon, Mobinov is open both to individuals and organisations. Right from the start, it aims to combine the efforts and interests of automakers, equipment and components manufacturers, associations, universities, training centres and companies with links to the sector. At its launch last spring, its membership already spanned 35 companies and 13 non-corporates working in the innovation and education fields.
The new cluster’s objectives include working “to reinforce links between stakeholders, and initiatives to promote the sector’s internationalisation.”
it will focus its efforts on “creating the right conditions for high levels of innovation and technological development to flourish and drive the Portuguese automotive industry’s competitiveness.”
The initiative has the support of the country’s two main vehicle-making factories. Volkswagen Autoeuropa, created in 1995 as a joint-venture between German consortium and Ford, builds up to 100.000 units a year between the Sharan, Scirocco, SEAT Alhambra and, formerly, the EOS (which went out of production in July 2015). The factory, located, in Palmela is not enjoying its strongest spell and, at the end of August, output was cut to just over 350 units a day. The factory’s managers nevertheless believe that plant has entered a transnational phase that will lead to higher production volumes from the second half of 2017 onwards.
With over 50 years’ history under its belt, PSA welcomed the news that it will share manufacture of the parent company’s next generation of B-segment light commercial vehicles – due to reach the production lines in 2018 – with the Vigo Centre. Company sources expect this new vehicle programme to lead to an increase in the number of local suppliers. The plant currently builds the Citroën Berlingo and Peugeot partner. Output in 2015 amounted to 46,600 units, a decrease on the 54,000 manufactured the year before. Despite these fluctuations, in September 2015 Plant Manager Hamid Mezaib told AutoRevista that the French manufacturer’s Portuguese facility “could build as many as 80,000 units with a little bit of investment and could even rise that to 100,000. The centre is one of the links in the future Vigo-Mangualde-Kenitra chain that PSA Group is developing to span Europe and North Africa.
The country’s vehicle production capacity also includes the small Toyota Caetano plant that makes the land Cruiser 70 pick-up for the South Africa market and which is competing for new projects and is working to develop a supply base close to its facilities in the town of Ovar. On the industrial vehicle front, the Mitsubishi Fuso Trucks Europe factory, in which Daimler has a majority holding, exports the Canter to over 30 countries. It also produced the 10 prototypes for an electric version of that model.
INCREASING DEPLOYMENT
As regards the supply industry, Portugal is making the most of the vehicle programmes awarded to PSA’s Vigo Centre. In recent months, the north of the country has seen the arrival of new manufactures attracted by industrial sites available at little or no cost, cheap labour and minimal red tape for new companies. Furthermore, AFIA highlights that the level of labour unrest is even lower than it is in Spain.
In fact, several firms with production resources in Galicia have opted to expand their capacity on the other side of the border. These include Gestamp, Grupo Antolín, Grupo Valver and Transformaciones Metálicas Marsan, the latter setting up a surface-coating unit at a client’s plant. Meanwhile, Gestamp Aveiro, which invoiced €70 million in 2015, expects to raise that by a further 5% to €80 million and then to continue growing strongly in 2018. This upward trend will create new jobs and bring further investment for forthcoming projects. Grupo Antolín’s decision to make the seats for the K9 project (Berlingo / Partner) in both Vigo and Mangualde will mean opening a new plant (already under construction and due to go into operation in 2018). Grupo Valver has likewise extended its facilities in Paredes de Coura with new etching lines. This increase in automotive suppliers’ capacity extrapolates to both multinationals like BorgWarner and TRW (ZF) and local firms such as Coindu. They are joined by outstanding tier-one manufacturers like Bosch in Braga and Continental in Lousado.
Finally, Viana do Castelo will host two new industry suppliers that will create 200 job between now and 202. One of these will be a subsidiary of French firm Eurostyle Systems, which specialises in plastic and rubber and will set up operations at the Innovative Business Initiative Incubator in the town of Arcos de Valdevez. This unit will make injected plastic parts at a site that will receive €18 million investment. Meanwhile, Japonese group Howa Tramico Automotive will spend €12 million on a plant in Alvarães that will make textile and foam products for heat- and sound- proofing. Both initiatives have benefited from tax breaks approved by the Chamber of Commerce of Viana do Castelo.