Navarre’s economic development is closely linked to its industry. And this is the name that the department has recovered from Mikel Irujo (Geroa Bai), Minister of Industry and Ecological and Digital Transition of the Government of Navarra, which has a clear challenge: to help the sector continue to be an engine of prosperity be and a source of value creation. “I’m not talking about reindustrialization, but rather about further promoting industry,” he says, alluding to the Industrialization Roundtable sponsored by the PSN and the government presidency.
Industry generates 31% of Navarre’s GDP – more than any other municipality – but it faces challenges, as does trade, for which Irujo is proposing a new law. “We want to create legal mechanisms to maintain rural trade, we want to give it an approach of territorial cohesion,” he says.
Volkswagen’s decision to outsource battery assembly to Hyundai Mobis has dampened the illusion of spring when the government announced that Volkswagen was betting on Navarra with an investment of millions. Isn’t Navarre left halfway?
We don’t stop halfway. When VW knocks on the government’s door and declares the investment of 1,024 million euros to be of regional interest, the battery plant is not there. The debate is later, but the reality is that everything is cascaded. In the summer of 2021 we experienced the soap opera that we would not produce electric models in Landaben. There were corresponding headlines. After the brand itself confirmed that this was the case, it said that it would be a single model. It was later confirmed that there would be two and so the debate over the brand began, whether it would be the VW or Skoda brand. And it’s always the pulse whether we lose weight in relation to Martorell, so if it were the only factory that VW has in the world. Everything is seen more generally from Wolfsburg. And a year ago there was a debate at VW about whether the batteries should be assembled in Navarra or 400 kilometers away. From then on, we as a government did everything we could to ensure that Landaben had the best project. We can also remember that not all brands present in the state have announced that they will produce electric vehicles. This is the case with Renault, for example. Macron wants industrialization to stay in France.
However, it happens that Volkswagen refuses to invest in battery assembly in Navarre after the provincial government decided to pay for the abandonment of the roads with public money (40 million euros)…
–The departure of the tracks is a condition that VW Navarra has been putting on the table for years.
But isn’t it a bit contradictory that in order to produce basically environmentally friendly cars, trucks run between Imarcoain and Landaben to transport the batteries?
– Ultimately, this is the group’s decision and we will not judge it. We will accompany you.
And what is Hyundai’s intention in coming to Navarra? Because it is the third largest manufacturer in the world. Will you only be a supplier for VW or also for other manufacturers?
– The first thing we know is that Hyundai and VW have a global cooperation agreement around the electric vehicle, just as VW and Ford also did for the development of electric platforms. From then on, the company must decide how to implement this agreement in each territory. We can’t say more. We can only help ensure that the decisions are the best to implement the construction of electric vehicles, which is beyond any doubt. Volkswagen has chosen Landaben.
Is there fear of the supplier park?
– Let’s see, no… At the moment there are components of the three current combustion models, such as the engine, that are not made in Navarra, something we sometimes forget. And this has never been debated.
Despite everything, electric cars still account for a very small share of sales. Are there any doubts about this change?
–Green investments have increased a hundredfold worldwide in the last decade. The market is already trending towards green. Europe is committed to being the greenest continent out of conviction and because this is one of our last opportunities for competitiveness in the world. We have long since lost the price war, the quality battle has also been lost and now it is the battle for the environment.
But China seems to have an advantage there too. Is the European automotive sector in danger?
– That’s why the race begins and it is decided to step on the gas. Because if we max out internal combustion engines, one day we’ll have things even worse, perhaps without the ability to respond. But when these considerations are made, the common commercial policy needs to be reviewed, because it was negotiated when China was not yet the giant that it was. We all know that to open a business in China you need a factory and local partners. And there are even more conditions. For this reason, they will investigate whether there is dumping of Chinese brands and subsidize them at the point of origin in order to sell them cheaper.
And what about renewable energies? Is the government of Navarra worried about Siemens Gamesa?
–We are in constant contact with the company, which informs us that it has not taken any actions or strategies that could lead to job losses or impact on suppliers. We know that the problems they have had will lead to a deterioration of 4.5 billion by the end, an amount that, although Siemens is a huge corporation, is still a cause for concern. But we have to consider the same thing again: We are committed to the energy transition, but we are moving forward without changing the rules of our trade policy. If we don’t do this, we run the risk of Asian companies significantly reducing our market share.
What level of execution do European funds have? It feels like everything is going very slowly…
–Von der Leyen himself admitted that 100 of the more than 700,000 million mobilized were executed. This is the overview map. At the end of March and June, the European Commission made two significant changes to extend the time frame and change the exemption framework. With electrification, it will be possible to almost completely subsidize certain industrial areas. If this had happened in 2021, the Next’s execution would have been infinitely better. Programs that already existed and that we manage here were implemented much more quickly and were as successful as the market would allow. For self-consumption, we have two packages of 22 million euros each and a waiting list of 5,000 applications. We were also the community that implemented the most in the Moves area. And that allowed us to get more money in the second call.
“Navarra is attractive, but it can be even more attractive when it comes to companies”
The development of Navarre cannot be understood without investments, especially foreign investments. Is the Foral Community still attractive to investors or are those who say it is no longer so right?
–In the last two years we have made a record investment in Navarra, reaching 3,000 million in Navarra. Rounded up a little: the 1,000 from VW, the 1,000 from renewable projects and another 1,000 million in various business projects throughout Navarra, from the Acciona plant in Sangüesa to the electrolyzer project in Barasoain and others. Navarra is attractive, but we need to do more and respond to the needs of large companies. For example, VW wants to be a zero-emissions factory and prioritize the circular economy. We need to move in that direction and make it easier. This is not just about attracting investments, but also about facilitating investments that are already underway.
In recent weeks, various regional governments have announced cuts in wealth and inheritance taxes, primarily affecting higher-income people such as managers or business people. Is Navarre losing competitiveness in this way?
–Taxation is used to explain corporate relocations. Our figures are similar to those of Guipúzcoa, Bizkaia and Álava in terms of the balances of departures and additions of companies and generally show us that they have a more favorable taxation…
But Navarre has powers, for example on corporate tax… Couldn’t it be a slap on the table and significantly lower tax rates?
– And do we compensate for what we no longer earn through income tax?
The collection is in good condition, perhaps there would still be room…
–We always talk about the nominal interest rate, but there are many other factors that affect it. Every investor always asks us what the industry structure is. Industry looks for industry because it knows it is services. Since 2022, we have also had a well-connected team that offers everything from a single source when it comes to investments, which is very much appreciated. Across Europe, not just in Navarre, training is another key factor. When we told Volvo that we had a training school for 200 painters and electricians just four months after Sunsundegui’s announcement, they appreciated it. This does not exist anywhere and this was communicated through the Navarrese employment agency. But there is more. Our public university is the one most committed to territorial development and our professional training is equivalent to that in Europe. We are a well-connected area…
Well, the airport only has two flight connections…
– Well, all air traffic has not yet resumed… But we have rail connections to ports and are one of the most open export regions in Europe, 50% of GDP.
Therefore, he does not see any stagnation. There are data like GDP per capita that take us further and further away from the richest regions…
–I’m not saying everything is going well. But in our political struggle we insist on pointing out that everything is going wrong. This creates whiplash in our self-esteem and we end up believing it. And there is no business that can move forward with low self-esteem. Of course there are other data that are worse. But if the message is how bad we are, then we end up believing it, and a football team that has that mentality ends up losing.
Maybe it’s a size issue. We feel and see ourselves small…
–How many inhabitants does Bilbao have? And he believes it. Or which country is Denmark to show your chest? We have factories, like one in Tafalla, that have a preliminary contract to produce parts for a space station that will orbit the moon. The thing about Estella (her candidacy for the headquarters of the Spanish Space Agency) was a very nice joke, but why don’t we believe it? There are companies that sell abroad.
To attract investment and promote the economy, Navarre had Sodena and has now added the Navarro Investment Institute. Isn’t this about duplicating structures?
–We must express the strategic vision of every public company, but it is a mandate that cannot be duplicated. It’s in the government agreement and it’s what we’re going to do.
Consumption depends on your department. A few days ago the Basque government, despite not having clear powers, demanded that banks raise the remuneration for bank deposits to zero for many months. What can you say from here?
– There are no competitions in Navarre. It is the National Securities Market Commission that conducts its inspections.
