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17 julio 2024

From the Casa de Ganaderos to the Amazon cloud

The Aragonese economy underwent a profound transformation throughout the 20th century and, today, its industrial, service and human muscle offers several advantages such as its strategic position, its stability and its size.

Exactly 805 years have passed since 1218. This is the period that separates the present day from the foundation by the Aragonese monarch James I of what is considered to be the first company in Spain, the Casa de Ganaderos. This cooperative is still standing, with 270 members, and is a good example of the economic legacy of the Community, an eminently agricultural and livestock farming territory until well into the 20th century. However, in the last century it underwent profound changes that have led, in recent times, to it being at the forefront of technology with, for example, the arrival of three Amazon Web Services (AWS) data centers, focused on the technology giant’s cloud services.

As Marcos Sanso, Professor of Economic Analysis at the University of Zaragoza, explains, the Aragonese economy was still “predominantly agricultural” at the beginning of the 20th century but, from there, “it has evolved a lot”.

An approach shared by the dean of the Association of Economists of Aragon, Javier Nieto, who observes that, in the last century, “there has been a profound transformation of the economy”. This has happened because “we have gone from an economy based on the primary sector, mainly agriculture and livestock, to one in which the service sector dominates and in which the weight of industry has been maintained”.

An empty countryside and a growing city

Looking back over the previous century, the 20th, Sanso observes how complex political situations such as the second republic, the civil war or the post-war period were experienced, until a period of “greater economic modernity” was reached in the 1960s. “Until, let’s say, the 1950s, Aragon’s economy was really backward, with a predominance of agricultural activity and a very incipient industry,” he says. “It was from the 1960s, basically, when, above all, around Zaragoza, industry began to develop,” he continues.

Nieto also sees it this way, who observes how a century ago there was “a significant percentage of industrial Gross Domestic Product (GDP)”, but all that secondary activity was “related to the primary sector”.

From the 1960s onwards, then, Zaragoza became an economic center that “absorbed a huge population” from the rural world, says Sanso about a situation of demographic imbalance in the Community that continues today. “There was an enormous migration from the rural areas of all Aragon, not only from the province of Zaragoza,” he says about a phenomenon that also led to the development of construction in the city.

This population exodus, emphasizes Nieto, “was exaggeratedly acute” in the case of Aragon, where “the capital was developed a lot” while there was a process of gradual depopulation in rural areas.

This shift from the countryside to the city came as a result of the Stabilization Plan carried out by Franco’s regime in Spain from 1959, when the regime wanted to leave aside the autarky and open up to the outside world. All this was manifested in an “enormous” development of the country, with a growth until 1974 (when the oil crisis arrived) of 7% per year. “There has never been a growth like then,” the professor adds.

In fact, current giants of the Aragonese economy such as Balay – now part of the BSH group – or, founded a few years earlier, the paper mill Saica, one of the most important in Europe at the moment, date from that period.

Growth continued in the eighties

Since those years, the Aragonese economy has been specializing “in certain industrial aspects”, an issue that reached a milestone with the installation of General Motors in 1982 in Figueruelas. This specialization in the automotive industry, which continues to this day under the name of Stellantis, also led to the creation of a “very important” auxiliary industry, emphasizes Sanso.

Proof of the weight of these auxiliary companies is shown by the fact that the factory, which started with 10,000 workers, now has 5,000, but that the automotive sector in the Community has more than 25,000 jobs.

This growth of industry also led to a strong development of transport and logistics, sectors which, by the way, are also “characteristic” of the Aragonese economy today, says the professor of the University of Zaragoza.

All this, without forgetting the importance of agriculture, which has allowed the existence of an “important” agri-food industry. “Let’s say that these are the three sectors -automotive, logistics and agri-food- in which Aragon has grown the most and in which it has specialized the most,” adds Sanso.

In this way, and as a summary of what has been seen so far, “the Aragonese economy has been tertiarizing since the sixties”, so that, progressively, services have also “been growing a lot”, says the expert.

On this issue, Nieto maintains a very similar approach, considering that, within the industrial sector, subsectors such as the automotive, capital goods and food industries stand out in Aragón. This, by the way, “has been developing in recent years, especially in terms of the transformation of primary sector products”. In fact, the agri-food sector already accounts for around 10% of the Community’s GDP.

Returning to the journey through the 20th century that has led to the current economic structure of the territory, the 80s also saw another moment of special relevance with the integration of Spain into the then European Economic Community (now the European Union) in 1986.

This step led to a period of “very good” growth for almost a decade, which was manifested, above all, in terms of productivity and employment, in the consolidation of industry and services and in an increase in exports.

Thus, the installation and development of ocean liners such as GM “generated a very important industrial culture that spread to the rest of the industrial fabric and greatly boosted the whole sector”, says Sanso.

Crisis and recovery

After that, from the mid-1990s until the 2008 crisis, there was a period of growth and “very important” structural changes, notes the professor, such as the incorporation of women into the labor market and the increase in immigration, especially since the beginning of the current century.

Of this period, Sanso argues that, although there was growth, above all, in terms of per capita income and the tertiary sector, it was also “very misleading”, not only in Aragon, but in the whole country.

This was because, although employment grew and, consequently, income per capita, productivity did not grow, but “practically decreased”. In a scenario in which the nearby environment did maintain or increase productivity, this led to the Spanish economy -and Aragon’s- becoming uncompetitive and with “unbearable levels” of trade deficit, reaching up to 10% of GDP.

After this traumatic period in economic terms, the recovery in Aragon was progressing in the consolidation of the lines that already had weight in the Community and in an effort by the business fabric to sell outside the regional and national borders.

Also, this recovery “had a lot to do with what is called a devaluation of the labor market”. This issue, and despite its negative connotations, in the end, “helped to recover productivity because unemployment increased a lot and reversed what had happened before”, reflects Sanso about this lack of competitiveness.

Thus, the road to recovery went through maintaining the specialization that already existed, but with “more competitive” activities and recovering international trade “with very important surpluses”, especially in the main sectors of the territory and of some companies installed in the last decades.

Among them, Sanso points out, Inditex, whose storage and distribution activity in PLAZA “has contributed a lot to the increase in exports” and to the fact that the airport of the Aragonese capital is the second in Spain in goods.

Attractiveness and challenges

Already in the present, the professor notes that the importance of logistics and foreign trade “has made the Aragonese economy very visible”, which is allowing “many investment initiatives” to come to the region. Projects such as, for example, the BonÀrea plant in Épila, or AWS, in Huesca, Villanueva de Gállego and El Burgo de Ebro.

“There are many very interesting investment projects”, he emphasizes on a scenario in which he also mentions the “success” of Teruel airport, specialized in aircraft parking and maintenance, “which is being an example worldwide”.

Nieto agrees in highlighting the logistics and agri-food sectors in the current panorama, although he also underlines the renewable energies, which find in the Community “a very leading area” that is going to achieve “soon” an energy self-sufficiency “enviable” for other territories of the country.

But why are investors from outside Aragon choosing this area to set up in? For Sanso, the attractions of the Community are, first of all, due to “a well-formed society”, with a “very positive” influence of the University of Zaragoza. “The investor knows that he will have a significant supply of qualified personnel,” he says. An aspect he shares with Nieto, who indicates that the human capital is “very well trained” and with a percentage of university graduates “above average”.

Sanso also stresses that Aragon is traditionally “a place used to pacts” and social agreement, an aspect on which he again agrees with Nieto, who underlines this “social peace” and the fact that the region is a place where “it is not usual to find labor conflicts or conflicts in other areas”.

Its strategic location is another of the issues observed by the professor, since Aragon is equidistant between some of the most populated territories in the country: Valencia, Madrid, Barcelona and Bilbao; “hence its logistical importance,” he adds. A point that Nieto emphasizes by highlighting that, around Aragon, a territory “very well connected with the two major cities of Spain”, “60% of the national GDP” is generated.

In addition, the dean of Aragonese economists notes physical aspects such as the size of the Community, which brings together “almost 10% of the territory of the peninsula”, or the abundance of natural resources such as sun and wind -proper for renewables- and water.

In these positive aspects of Aragon for the investor, Sanso also includes the good qualification of the entrepreneurship and the executives of the territory, as well as the level of the costs involved in setting up in the Community in comparison with other territories such as Catalonia, the Basque Country or Madrid, where the standard of living, the labor force or the prices of the land can be higher.

Likewise, Nieto adds to these reasons “very high levels of security”, as well as a “very high” quality of life. “We also have some very important tourist attraction areas,” he adds.

Now, and looking to the future, the professor of Economic Analysis notes that Aragon will have to face challenges, many of which are not specific to an autonomous community, but are manifested on the global board. For example, the war in Ukraine and how international markets and globalization will evolve from the phenomena that are currently developing. “Really, there are some major uncertainties,” he says.

But what he does consider a particular challenge of the territory is to consolidate those investment projects that have chosen Aragon to settle in recent times; “that none of them is frustrated and that they start properly”, he concludes.

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