Castile and León looks to exploit low costs and stability

The government of the Spanish region of Castile and León is working hard to attract FDI to help bring down its unemployment rate. At 15.88%, its jobless rate is slightly below the national average of 16.38%, but the local government says it is determined to reduce it further. Geographically, the autonomous community is one of the biggest in Spain with a total area of 94,200 square kilometres – about the same size as Portugal – but is one of the most sparsely populated with only 2.44 million inhabitants, or 26 people per square kilometres.

“Our region is attractive to foreign investors for two main reasons,” says Maria del Pilar del Olmo Muro, Castile and León's minister of the economy. “First, industrial land is comparatively cheap here and we have payment plans in place for up to 40 years. Second, it is highly stable politically and socially. We have strong agreements with local trade unions and these help to foster good labour relations.”

With a GDP of about €55bn, Castile and León is Spain's seventh largest region in economic terms, and is expected to grow by 2.6% (against a national average of 3.1%) in 2017. In 2016, income per head was €22,640.

Quartet of attractions

Castile and León’s three most significant industries are vehicle manufacturing, agriculture and pharmaceuticals, but tourism is one of the fastest growing sectors.

Vehicle manufacturing and agriculture make up 50% of the local economy. The region is home to 130 auto manufacturers, which account for 60% of local exports. France’s Renault has plants in the cities of Valladolid and Palencia, with Italy’s Fiat-Iveco also present in Valladolid, and Japan’s Nissan holding a plant in Avila.

Meanwhile, the pharmaceutical sector has been expanding rapidly, with 200 companies in the sector employing some 5000 highly skilled workers. “The region is home to one of GlaxoSmithKline’s most important plants in Spain,” says Ismael de Los Moros, director of the plant at Aranda de Duero, a town located in the Burgos province of Castile and León. “It is one of GlaxoSmithKline’s most efficient plants worldwide and makes asthma inhalers that are used throughout the world.”

Tourism on the up

Between January and August 2017, 5.57 million tourists visited Castile and León (an increase of 14.35% on the same period the previous year). Besides having more than 300 castles – hence the name – it is home to the historic city of Salamanca. Total income from tourism amounted to €850m during the first six months of 2017, 13.2% higher than in the same period the previous year.

The regional government says it is unconcerned about Catalonia’s attempt to become independent from the rest of Spain. “Castile and León is very much part of Spain,” says Ms Pilar del Olmo Muro. “I don’t think Catalonia’s claim to independence will affect FDI into Spain generally. In the case of our region, a number of companies are moving their administrative headquarters from Catalonia to us.”

Castile and León also has one of the best educated populations in Spain, with a total of nine universities – four public and five private.