Spanish Industrial Crisis and Restructuring 1975-1985

The Industrial Crisis: 1975-1985 External Causes

External causes: The crisis was driven by higher energy prices and the Third Industrial Revolution. This period saw significant technological innovations, new industrial production methods, and systems. There were new market demands regarding quality and design, which required product innovation and diversification. Furthermore, the globalization of the economy and the international division of labor meant each territory specialized in industrial sectors where they held advantages. This provoked a crisis in industrialized countries whose prices were no longer competitive.

Internal Causes and Consequences

Internal causes: The shortcomings of the Spanish industry included a specialization in mature sectors that were high consumers of energy and labor. There was also a high dependence on external technological modernization. The consequences of the crisis were severe: many businesses closed, production fell, profits decreased, and debt increased.

Industrial Restructuring in Spain

The industrial restructuring: As the crisis ended, OECD countries adopted downsizing policies; Spain followed a decade later. Industrial restructuring is twofold: industrial reconversion and reindustrialization. Both received state aid, including fiscal and labor support.

Industrial Reconversion: Restoring Viability

The goal of industrial reconversion was restoring viability and competitiveness to specific sectors. Actions included:

• Adjusting production to supply and demand.
• Closing companies or reducing production capacity.
• Modernizing technology and reducing staff templates.

The sectors chosen for mature industrial reconversion included iron and steel, shipbuilding, electrical appliances, textiles, and footwear. The results showed a strong reduction in employment and a concentration of interventions in large companies, while some SMEs were excluded by the crisis.

Reindustrialization and ZUR Zones

Reindustrialization: The purpose was to rebuild the industrial base in areas affected by conversion. In 1983, the Zones of Urgent Reindustrialization (ZUR) were created. These areas encouraged the creation of new companies or the relocation of large factories to generate viable jobs. In exchange, they received tax incentives, financial aid, and grants.

Key areas included: Ferrol, Vigo, Asturias, Nervion Estuary, Barcelona, Madrid, and Cadiz Bay. The results included a growth of investment and industrial diversification in previously specialized areas. However, it generated much less employment than expected; large firms benefited most from the aid, and Madrid and Barcelona took the majority of projects, employment, and investment.