Interview with director of SPRI Alexander Arriola at The Report Company

Thursday, October 9th, 2014

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The Report Company: SPRI receives 75 percent of the department of economic development’s budget. How is this money spent?

Alexander Arriola: Our main objective is to promote Basque industry and give it added value. We do this by different means. This is the area we call economic promotion. It tries to increase investment, creating companies, and entrepreneurship. We help start-ups gain value.

We also have another important focus; technology and innovation. Here we keep trying to add value, but by trying to increase the percentage of R&D a company is involved in because today, in order to compete and have added value, R&D is key. We have different programmes and we have a vast network of science and technology at our disposal.

Another focus, and one which is a key pillar for the government, is internationalisation. Currently, 32 percent of the Basque Country’s GDP is internationalised, and given the fact the local market has declined, this is clearly a big factor in adding value. We have a network of 70 offices worldwide.

We also deal with other important things like managing industrial land here in the Basque country through SPRILUR. This helps a lot when trying to attract foreign investment, and indeed investment from within Spain and the Basque Country itself.

Another of the companies in the SPRI group works in venture capital management. We help businesses that need financing to consolidate their projects or create new ones.

With all of these bases and pillars, our main goal is to increase the competitiveness of Basque businesses.

TRC: Where are the gaps in competitiveness in Basque businesses?

AA: Even though we are good at internationalisation, there is still much to do to speed up this process. We need to be proactive. We need not to arrive in countries once the boom has passed; we need to see the opportunities presented by that country beforehand. It’s also important for companies to know which country they should aim for. Yes, China is very attractive, but not for all businesses.

The second thing we need to work on is R&D. We are a region that invests 2.2 percent of GDP into R&D, and we are among the leaders in Europe for this. Finland, Germany and other northern countries are the leaders in this, investing around 3 percent of GDP in R&D. The Basque Country however, with its 2.2 percent, is investing a lot more than the rest of Spain, at 1.3 percent, and is competing with countries like France and other similar nations. We are investing, but we need this investment to translate into a product that can be sold. It’s one thing to invest, which we are doing, but we are a middling country with regards to technology.

TRC: How has the Basque government supported R&D?

AA: Companies are not the only ones to offer R&D. Indeed, the Basque government, through SPRI and its programmes, is a big investor offering approximately 50 percent of funding, depending on the type of business. There are companies that are very intensive in what they need and are publicly funded, and others who don’t need as much assistance. The company invests, but R&D is still a risky business. What I mean by that is that R&D can either work or not. You innovate new products without ever knowing if they’re going to be successful on the market.

Then there’s basic R&D, which is just research. This is carried out in universities, trickles down to technology centres, and then to businesses. The problem is that often the research stays at the university or technology centre and never makes it to the business or product.

TRC: How does SPRI’s network of technology and industry parks work?

AA: Technology parks are where businesses with a certain amount of technological know how set up. They take advantage of synergies there as they’re all based in the same area. Then you have a head, who is the director of SPRI, who has the honour and responsibility of managing the four parks. What’s important is that everything gets done. If we want to promote or attract a foreign company, we use SPRILUR. We do the work through SPRI, but we manage the site with SPRILUR. And if we need a financial tool like venture capital, then we have that to hand. If a company wants to set up in one of our parks, they come for a visit and we manage everything. That’s why SPRI is a key tool, because in the end it is involved in every link in the chain of Basque industry. It’s involved from the ground up, R&D, promotion, up to the market launch. SPRI costs a lot to run because we do a lot. The total number of people in the SPRI group is about 180, and then we have offices all over the world.

TRC: How is the Basque Country positioned with regard to the EU’s 2020 Horizon objectives?

AA: Horizon 2020 is the EU’s science and technology plan. It states that regions, countries too, but above all regions need to specialise. Every country has to know its strengths and how to build on them. Which sectors and what type of industry it is going to focus on. If all the countries in Europe share everything, in the end we’ll be competing amongst ourselves. So Horizon 2020 has recommended that the Basque Country has to know what its strengths are, and come up with an industrial policy to match. We completely agree with this. Obviously, there will be funding available, I believe around €80 billion from 2014 to 2020. And the EU says if we want access to these funds, we need to specialise. Having said that, the Basque Country has taken the baton and we have already stated what we’re going to specialise in. This is the famous RIS3 (Smart Specialisation Strategy). The meta priorities for the Basque Country are industry, biosciences, advanced manufacturing and energy, the so-called key sectors. These are the sectors for the future, and ones that today are not strategic but have great potential such as smart cities, clean energy, environment etc. As well as this, the Basque Country is working as one of Europe’s “Vanguard Regions” where different regions talk about the right strategy for advanced manufacturing and energy. We have our representative for this, and the Basque Country is a reference point.

TRC: What can you tell us about the Nanobasque and Biobasque agencies?

AA: Biobasque and Nanobasque are also part of SPRI. One of our priorities is biosciences, so Biobasque is the agency that coordinates all the activities in that sphere. For example, we have 20 bioscience companies. Each one does its own thing and has its own specific R&D projects. What we have in Biobasque is something to bring all the companies together, compare what they’re doing and work together to build synergies. This is really in line with what the EU is asking us to do, to take advantage of opportunities much more. If we have 20 companies working separately, we benefit from it. But if we have 20 companies working together or coordinating between themselves within the EU parameters, then the benefit is even greater. The process is the same for Nanobasque but it deals with manufacturing.

TRC: What would you say is the perception of the Basque Country abroad?

AA: The Basque Country brand is known in certain areas. And I think we need to promote it a lot more. I’ve lived very far away from here. Obviously when I was with English or French people, they had heard of the Basque Country. With my Australian and New Zealander friends, they knew about it a bit less. I think the brand has potential in America and South America, where it’s quite well known because of the Basque diaspora. What we want is to increase knowledge of our industry, aside from our culture, which is already well known. We want to receive recognition for our products. We have a lot to do though. What would we like? We’d like to be like “Made in Germany”, which is really famous, and sells. One day we’d like to have, maybe it’s a bit ambitious, a “Made in Basque Country” that sells. We’d like that a lot.

We have learned a lot from what Germany did many years ago. And we also have our own ideas too. What the Basque Country has done is take the best examples from different countries and try to imitate and do better than them, within our limits. We didn’t want to just copy any old countries’ measures, only the top ones, and I’m talking about industry here. Countries like Finland, Germany, and Denmark. What we’ve tried to do is get into that group. And this is what we need to keep on doing. We are getting there bit by bit, but we want to reach that level as soon as possible.

TRC: What does the development of the clusters mean to the Basque Country?

AA: Clusters have been a great tool for the development of Basque industry, through Michael Porter and Jon Azua. Clusters are a group of companies to build synergies that may generate joint business. They have worked very well. The good thing is that we don’t just rely on all the good work done years ago, we are moving forward. This year is the key year to establish a new clusters policy. We at SPRI are doing this. This year we met with all the clusters, and told them what Horizon 2020 is asking us to do. Our industrial policy is this: clusters. Obviously you contribute as companies, but you need to follow our industrial policy. And in 2015, we hope to have a cluster policy that still promotes their role. The government’s industrialisation plan contains a phrase that states: “We need to promote clusters as a tool for the department of industry”.

TRC: Where do you see intersections of interest with the UK?

AA: We’ve always had strong financial links to the UK. We have a strong car industry that could provide parts for English companies, for example Jaguar and many others.

Another important sector is aerospace engineering. We were in Sheffield not long ago, at the advanced aerospace engineering manufacturing centre. There are very strong companies there. A Basque company, ITP is working closely with them. It has a company in the UK and we consider aerospace engineering a key sector, so having an important partner like the UK would be very useful for us.

The third sector is energy, and I’m focusing here on renewables, wind and wave energy. In the north, in Scotland, there are big projects.

We have something that doesn’t exist in the UK though: a provider supply chain. That doesn’t exist in the UK, or at least is underdeveloped. We are involved in everything here, from the turbine manufacturer, Gamesa obviously, to all the suppliers who make components.

Another thing is machine tools. We’re very strong in that sector. In Spain we are the number one by a mile. Almost 90 percent of production happens here, in the Basque Country. These are the main and most strategic sectors, but we have other goals too, many of them are within the offshore sector. There is going to be an important relationship with energy there in order to keep up with wind turbine maintenance.

TRC: How would you define the Basque Country as an industrial region?

AA: I see the Basque Country as a region where two very important factors combine. There is the reliable part, which is industry, where you’ll meet hard working, honest people who keep their word. But that’s not all. We have very high tech companies, and this goes hand in hand with the other part. As well as being reliable, we also love to live life and we have beautiful surroundings in which to do it; the sea, the mountains, and we have great food too. We also have a motto, “The Big Little”. I think that sums us up well. We are small, but what we do, we do well. We do it conscientiously and our goal is to be the best. That’s why we compare ourselves to the best in the world.

You can see the overall story of the Basque Country

http://www.the-report.net/basque-country/oct2014

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