Recession has turned the heads of Spanish companies to Latin American markets and infrastructure projects. How are these firms faring in their reconquest?
At the inauguration of the 13th Latin American Summit in Cadiz, Spain, one thing was clear for King Juan Carlos: The relationship between Spain and Latin America has changed dramatically. "Spain needs more Latin America," the King said.
Spain has lived through many crises since the first Summit, 22 years ago, in Guadalajara, Mexico. Back then, Spain presented itself as a strong democracy with a healthy economy, while Latin America presented itself as a region of young democracies and hefty debts.
Today, as Spain continues to sink into recession, Latin America expects to grow 3.2 percent in 2012, and 4 percent in 2013. Gone are the days when Spanish companies saw the region as an opportunity to expand and create multinational groups. Today, Latin America represents the hope of survival. A study by IE Business School shows that by 2015, Spanish companies with operations in Latin America will generate most of their revenues in the region, instead of the Spanish market.
For telecom company Telefonica, it's already happening. Spanish investment in the region has reached more than 90 billion euros, mostly in Brazil, Mexico, Chile, Colombia, Peru and Argentina, and is likely to grow.
INFRASTRUCTURE, THE NEW LATIN AMERICAN GOLD
When Spanish companies started to arrive in Latin America during a privatization wave in the early nineties, most of them had their eyes set on the energy, telecoms and financial sectors. At the time, a real estate boom had helped Spain to become the eighth largest economy in the world. Construction companies were popping champagne corks, but eventually the boom became a bubble, and after it burst, they had no choice but to take their bricks elsewhere.
Sacyr Vallehermoso is a good example. With projects worth a total of 40 billion euros, it ended the third quarter of the year with 2 billion euros in growth. This includes new construction and infrastructure projects in Chile, the company's main market in Latin America. Sacyr Vallehermoso's operations in Chile are worth 1 billion euros in public works and another 1.7 billion in concessions.
In 2009, when the Spanish crisis caused many construction companies to collapse, Sacyr Vallehermoso landed a 700-million-euro deal to expand the Panama Canal. During the second half of the year, the company started operations in Colombia...