Spain's Iron and Steel: Renovation of an Old Industry

Abstract

SPAIN'S iron and steel industry, historically hampered by a complicated political system, is today undergoing rapid development and expansion. Although 45-50 per cent of the active population is engaged in agriculture, Spain has believed for many years that the panacea for its economic problems is industrialization based on an expanding iron and steel industry. In many countries such thinking is belied by the slight possibility of their achieving industrial importance because of lack of capital, skilled labor, a large domestic market with considerable purchasing power, essential raw materials, and mechanical energy. The Spanish government, however, which in the past maintained an isolated economy by limiting imports of necessary equipment, raw materials, and foreign capital, has recently constructed its own integrated plant at Aviles and is competing directly with privately owned firms, most of which are too small to be efficient. Spanish-United States economic agreements, which date from 1953 and total some $1.2 billion, have produced important changes in Spain's economny; the Export-1mport Bank has extended $so million of credit to Spanish steel firms. In 1959 Spain tied itself to the foreign-loan facilities of the Organization for European Economic Co-operation (OEEC, which formally became the Organization for Economic Co-operation and Development, or OECD, on September 30, 1961), the World Bank, and the International Monetary Fund (IMF); and pressure has been exerted on the government to integrate into the European Economic Community (EEC), which is affiliated with the important European Coal and Steel Community (ECSC), or the European Free Trade Association (EFTA). On February 9, 1962, Spain formally applied for membership in the EEC. In view of these recent developments, this study considers the evolution of the Spanish iron and steel industry, analyzes the economic factors that determine the feasibility of such an operation, and examines the two largest firms-the government-owned Empresa Nacional Siderurgica, S.A. (ENSIDESA), and the privately owned Altos Hornos de Vizcaya, S.A.