How one of Europe’s oldest surviving communities, the Basques, preserves and expands its prosperity, its culture and its unique language
Almost two decades before taking up office as the second president of the United States, John Adams visited Biscay in 1779 and recorded from his first-hand experience the qualities he saw in the Basque people. He wrote in a book later edited by his grandson, Charles Francis Adams, “While their neighbors have long since resigned all their pretensions into the hands of kings and priests, this extraordinary people have preserved their ancient language, genius, laws, government, and manners, without innovation, longer than any other nation of Europe.”
The oldest surviving ethnic Europeans still reflect that assessment, although in recent decades they have seized upon the concept of innovation – albeit not in the sense Adams used the word – to inject dynamism into their economy, their industries, their promotion of social cohesion, their determination to preserve their language and culture, and even to elevate their cuisine to global standards of excellence.
The Basque Country comprises the provinces of Alava, Biscay and Gipuzkoa in northern Spain. Although autonomous to varying degrees throughout its 6,000-year history, its current status derives from the Spanish constitution of 1978. The region covers an area of 2,793 square miles and its population of around 2.2 million people gives it a density of something over 780 people per square mile.
That autonomy includes its right to fix and collect taxes, a system dating from a fiscal pact between the three provinces and the Spanish state in 1878. Although the Franco regime tried to suppress all aspects of Basque culture, including its language, the tax agreement was restored after the dictator’s death. The tax receipts fund local infrastructure, public works, social services and all areas save items such as defense, foreign affairs, institutions and infrastructure for which the Basque Country contributes a quota to the state. The amount is determined by a committee made up of 12 members, six Basque officials and half a dozen from the state administration.
Control over its tax income has enabled the autonomous community to develop its economy to a level where it regularly outperforms both Spain and the European Union average. Its manufacturing and heavy industry was built on the back of big deposits of iron ore discovered in the 19th century around Bilbao. Nowadays, the emphasis has moved toward hi-tech, services and the knowledge economy. Current leading elements are machinery, aeronautics, energy, new technologies, research and development and technology parks.
When not applying their strong work ethic, Basques – at home and among the diaspora abroad – make great efforts to maintain their language, which is unique in that it is not related to any other languages, and their culture, many aspects of which will be on display during the Smithsonian Folklife Festival beginning this month.
Rural households often include maternal or paternal grandparents, as well as unmarried aunts or uncles. Since continuation of the family farm, or basseria, is very important, one son or daughter is designated from childhood as heir. When he or she gets married, ownership is transferred to the couple as part of the wedding arrangements. However, in towns, the family size is usually restricted to parents and children, with occasionally a grandparent or unmarried aunt.
Almost all Basques are Roman Catholic and in the past, the region produced several priests and nuns, although this tradition has declined greatly. Two well-known theologians, St. Francis Xavier and St. Ignatius Loyola, founder of the Jesuit order, were of Basque origin.
Blood types and other genetic information suggest Basques are an ancient people who inhabited the region long before the arrival of other European groups. According to a local saying, “Before God was God and boulders were boulders, the Basques were already Basques.”
Ongi etorri to the Basque Folklife Festival
Today, the Smithsonian Center for Folklife and Cultural Heritage launches its program on the Basque Country, a combination of ultramodern and very ancient
Viewed from any angle, they make an ideal match. The Smithsonian Institute’s dedication to the preservation of culture and language alongside its vigorous promotion of innovation made the gravitation toward the Basque Country almost inevitable.
For centuries the Basques explored well beyond their homeland in northern Spain (and southwest France) and, as the Smithsonian describes it, adhered to “the cutting edge of global economic and sustainability movements”. The Basque language and people, whose history is said to stretch back perhaps more than 6,000 years, will also be featured in a Basque: Innovation by Culture program.
The 2016 Smithsonian Folklife Festival is set for Wednesday, June 29 through Monday, July 4, and Thursday, July 7 through Sunday, July 10. All the events will take place between Washington’s National Mall, between Fourth and Seventh Streets, adjacent to the Smithsonian’s National Museum of Air and Space. From 11am to 5pm each day, musicians, dancers, boat makers, cooks, and other experts from the Basque Country and diaspora will showcase their traditions.
Last year, the Smithsonian launched a research program called SMiLE, Sustaining Minority Languages in Europe, which will concentrate on the social contexts in which language revitalization efforts take place.
There could scarcely be a more suitable case than Euskara, the Basque language. A morsel of local folklore relates that the devil tried to learn Euskara for seven years and gave up. Features include expressing intensity by repeating a word (“very hot” is bero-bero), which is unknown in European languages but common among Polynesian ones. There are also no words for groups like “tree” or “animal” although there are names for specific trees and wildlife.
The Basque homeland was originally called Euskal Herria, “the land of the Basque language” and its people euskaldunak, “possessors of the Basque language”.
A ban on Euskara threatened it with eventual extinction but four decades of strong commitment by individuals and political associations have led to a resurgence. Ongi etorri (welcome) to the festival, which will host daily Euskara lessons and performances of improvised songs in verse by bertsolari poets.
Authorities seek to keep emigrants and their descendants in touch with events in their land of origin
Although Basques crossed the Atlantic at the same time as Christopher Columbus, their aim was neither conquest, trade nor settlement. It was to catch and sell whales and cod to help the general family finances or earn enough to buy a farm of their own.
Over time some Basques met partners, married and settled in both the United States and Latin America. Basque-Americans are mostly in Nevada, Idaho and California.
Back home, the Basque Autonomous Government created a directorate to keep in touch with them. It offers financial help to needy Basques, publishes a weekly newsletter, Euskal Etxeak (literally Basque Homes but meaning Basque Social Clubs here), and subsidizes travel for young people born abroad.
Euskadi offers US gateway into Europe
Cultural, social and business links between Basques and Americans abound, as Iñigo Urkullu, lehendakari, or president, of the Basque Country since 2012, explains. He also tells of his vision for investment and export promotion.
What are the origins of the Basque presence in North America?
We Basques have a curious history. Besides the presence of shepherds in the American West since the 1800s, in Canada, Basque history goes back 500 years with the discovery of the Labrador Peninsula. In Red Bay, archaeologists found roof tiles from shelters made by Basque whale hunters.This was in 1500, so practically before Christopher Columbus landed in the Americas, the Basques had already reached the coast of Newfoundland. There is even an outdoor clothing brand named Ternua, which in the Basque language is a simplification of “Terra Nova” or Newfoundland.
The Americas are home to part of the Basque diaspora. Are Basque roots gradually lost with every generation that lives abroad?
To us, the Basque diaspora constitutes the other Euskadi. These individuals feel the need to reaffirm their own identity, whether they are direct descendants of Basques or not. Nowadays, we are seeing a curious trend across the Americas as well as in Europe and Asia. There are people with no Basque ties whatsoever who nevertheless feel attracted to our culture and who want to be a part of it. At the Jaialdi celebration of Basque culture held in Boise, Idaho every five years, and at other events, people reaffirm their roots, provide their own interpretation of 21st-century Euskadi, and to adapt it to our era of globalization.
How is the Basque Country viewed in the US? Is it well understood?
We have around 38 Basque centers scattered across the US and Canada. In 2013, we celebrated the centennial of the New York Basque Club. These centers work to disseminate information about Basque reality, and they have ties with personalities in the fields of politics and economics. Historically, there has been an interpretation of the Basques as a small nation with a culture and history of its own, made up of proud, hardworking people who are true to their word. The image that the world has of the Basques is being constantly updated through Euskadi’s permanent modernization efforts and through the outreach work of the Basque centers and of the Basque government itself. We have an official delegation in New York whose goal it is to make the Basque reality visible to the main economic, political, institutional and cultural agents in the United States.
What can you tell us about the ties with the Basque community in Boise, Idaho?
Boise hosts annual events as well as the Jaialdi, which takes place every five years. The mayor of Boise, David H. Bieter, is of Basque heritage himself – he and his siblings have their roots in Lekeitio, in the province of Biscay. He is our top activist when it comes to putting out the word on modern Basque reality. On January 21, 2015, Bieter flew from Washington to Boise on Air Force One with President Barack Obama, and both men had a chance to discuss the roots of the Basque diaspora in the US. Boise not only has a Basque center that organizes activities for the diaspora, but there is also a Basque Museum, a Basque Studies program at Boise State University, and an ikastola, a Basque-language preschool for the children of the diaspora as well as for non-Basque Americans living in Boise. We had a chance to visit this ikastola in July of last year. Meanwhile, the University of Nevada in Reno has the largest library and Basque studies center outside of the Basque Country.
What values do Basques and North Americans share?
To talk about 500 million Americans is to talk about a huge plurality of people, and it would be simplistic to seek easy answers. But I think there is a value of pride that is shared by Americans, Canadians and Basques – although this pride can sometimes be misunderstood.
What strategy do you have to raise the profile of the Basque Country in North America following the Smithsonian Folklife Festival?
In 2008, a few of us traveled to the US and familiarized ourselves with the Smithsonian Folklife Festival. I was president of the Basque Nationalist Party at the time, and we sought to extract ideas for the Basque economy from the first world power in terms of economy and diversity. Bilbao recently hosted a meeting of the Consortium for the Internationalization of Euskadi, made up of the Basque government, the three provincial councils and the three chambers of commerce. At this gathering, we fixed five priority destinations, one of which is obviously the US. In America, we see an opportunity for a small economy such as ours to find a destination for our exports.
How can the Basque government help businesses get a foothold in the US?
During our 2008 visit, we toured the Gamesa wind energy plant in Langhore, Pennsylvania – the same factory where Obama delivered a memorable speech while he was still a presidential candidate. Gamesa paved the way for the subsequent arrival of other Basque companies such as Iberdrola, one of the world’s largest electric utilities. Three years ago, when I returned to the US as Basque president, we met with around 50 representatives of Basque businesses with a US presence and we visited a few plants, including Gamesa and Gestamp, which services the auto industry. And we are working to help other Basque companies like Irizar and Ormazabal get established in the US.
What sectors have the greatest investment potential?
In December 2014 we approved the Science, Technology and Innovation Plan 2020, which is in line with the EU’s Horizon 2020 program. In it, we defined priority areas for our productive economy, including automotive, aerospace, rail, and machine tools – all areas of advanced manufacturing. We are also at the forefront in energy, particularly renewable energy from wind and sea power. We are also exploring bioscience and health, developing a network of related tech centers. There are additional niches of opportunity in tourism – cultural tourism, food tourism, and nature tourism. Yet another niche lies in the development of smart cities. The Basque Country offers advanced and competitive technology options in a permanent state of innovation and research.
How open is the Basque Country to foreign investment?
As an autonomous community within the Spanish state, the Basque Country ranked third in foreign investment in 2015, behind Madrid and Barcelona. That’s despite being such a small region compared to the others. Our businesses are open to foreign capital, either through sovereign funds that participate as shareholders in strategic projects, or through alliances between companies, or via institutional investment.
Does the Basque Country’s location play a role in attracting investment?
I think that the Basque economy offers opportunities as a gateway into the European Union. For Europe, it is a gateway to the Americas, and for the US it is a gateway into Europe. Our transportation infrastructure reflects this; we have the port of Bilbao, which is permanently expanding its capacity and can currently accommodate large ships carrying liquefied petroleum gas, besides the regular oil tankers and other kinds of wholesale cargo.
How did the Basque economy change its focus from heavy industry to high-tech innovation?
We’ve been in a permanent industrial revolution ever since the 1980s, when we had to transform our heavy industry based on iron ore and steel into another type of industry. We reconverted the old shipyards by identifying the needs of a small economy like ours. These days, Euskadi is where 40 percent of all auto parts made in Spain are manufactured.
You are nearing the end of your term. What achievements are you proudest of since you took office in 2012?
There are many things I could talk about, but I will showcase one. During this term, we have proven that it is possible for all Basque political forces to coexist peacefully. This had not been possible prior to ETA’s announcement of a permanent cessation of armed activities on October 20, 2011. There is now a complete representation of all ideologies inside the Basque parliament. Political dialogue has been possible, normal political relations have been possible. And it is a particular source of satisfaction that this came about under a minority government such as ours, with a majority of forces in the opposition. This, in turn, is helping with the economic recovery and with job creation. In 2013, just a few months after taking office, we had had nine consecutive quarters in recession, and now we have experienced eight or nine consecutive quarters of growth. That is a source of pride, along with our ability for normalized political relationships despite all that is still left to do as a result of nearly 200 uninterrupted years of violence in our region, from the Carlist Wars to the Spanish Civil War to ETA terrorism. So I am very proud of our government’s ability to strike deals, reflecting the political and institutional stability of the Basque Country.
Biscay’s heavy industries have almost run their course and now the province is transiting to the hi-tech and knowledge sectors
For most of the last century, the grand industrial heavyweights of mining, steel and shipbuilding underpinned the economic growth of Biscay, bringing it wealth and reputation. Yet, though costs have traditionally been lower in Euskadi than in other parts of Europe, even the industrious Basques were unable to compete with the emergence of heavy industry in Asia. Stalwarts like the Altos Hornos de Vizcaya ironworks and the Euskalduna shipyard were closed in face of the cheap labor half a world away.
The Basques have a straightforward approach to such problems, including temporarily lowering their own salaries. Where solutions exist, they need identifying and implementing. End of problem. Where no solutions can be found, they do something else. Equally, end of problem. The practical application of this philosophy veered more toward finding alternative and more modern industries to replace the ancient giants.
The Sociedad Bilbao Ría 2000, a publicly-owned corporation set up in 1992, was tasked with finding new uses for derelict land that formerly housed industry.
The most famous product of the new plan was the Guggenheim Museum, which was built on 32,500 square meters of land beside the Nervión River in the old industrial heart of the city. That opened in 1997. Smaller projects included the playground next to the Guggenheim, the expansion of the park Doña Casilda, and a series of sculptures along Abandoibarra. Yet the plans were for more than cultural symbols, no matter how grand, and the areas stretched well beyond Bilbao. The corporation sold plots to private developers for the Zubiarta shopping center, the Hotel Sheraton, and the University of Deusto library.
Outside the city, the biggest action is Urban-Galindo, in Baracaldo, where a new neighborhood is planned near the estuary on the former home of the Altos Hornos de Vizcaya ironworks, with streets, parks, walks, sports facilities and defined areas for various types of businesses.
The next phase is dedicated to technological innovation and is based on firmly rooting a knowledge economy. This activity has rocketed Biscay and the Basque Country up the Altran Index of Innovative Potential. The region was given a maximum score (1.0) in line with Sweden and Finland, and just over double the 0.47 average of the European Union Index.
None of this happened through wishful thinking alone. A strong business sector and clear innovation programs have turned Biscay and the Basque Country into a reference in Spain and Europe. These programs include guiding university students into suitable employment and fostering their links with scientific, business and technological advances; rewarding innovative ideas that can be applied in Biscay but learned abroad in international university exchanges; and offering guidance and practical infrastructure help to SMEs.
The OECD highlighted the latter two in its Review of Regional Innovation in the Basque Country. That report stressed the need to continue prioritizing international research and technological development and to ensure that R&D&i investment contributes to higher productivity. It also noted that the proportion of Basque Country personnel working in R&D is 15 of every 1,000, compared to averages of 10.4 in the EU and 10.5 in Spain.
Extra help is available to encourage young people to succeed in business, including specific subsidies, such as those awarded by the provincial council of Biscay through the New Enterprise Promotion Plan. Various programs and subsidies aim to foster an entrepreneurial culture, as well as new business projects. They can also turn to Ekintzaile, support from the Basque government for innovative business projects led by Business and Innovation Centers, CEIs, which provide accompaniment and access to funding.
A largely regenerated Bilbao is now increasingly established as a services hub, and the challenge now for the Biscay authorities is to help that entrepreneurial drive extend to the rest of the province, creating a hub of new technology where before heavy industry made such a mark.
The provincial government stresses that it is very advanced in tech sectors, especially innovation in the automotive industry, renewable energy, aerospace, ICT, and biotechnology. It is also an innovation leader in regard to the “silver economy”, which covers market opportunities illustrated by public and consumer expenditure and related to the rights, needs and demands of the growing population of those aged over 50.
Yet industrial transformation is a process not an event and the transition to a new industrial age will take years, or even decades. Meanwhile there are still vibrant industries making big contributions. Exports by Biscay companies are worth around €8.5 billion annually.
Bilbao Bizkaia Design & Creativity Council (BiDC), a joint venture of the Biscay provincial authority and Bilbao’s city hall, is helping yet another sector. It groups 200 companies and 29 organizations in a public-private initiative to boost the international prominence of local firms in fields like architecture, fashion, videogames and interior design.
Although Biscay is the financial heart of the entire Basque Country, its leaders are fond of recounting its other assets. They call it a little Switzerland with mountains similar to Colorado’s, they liken its quality of life to that of San Francisco, and, when it is not disrupted by tides, extol the lefthander surfing wave of Mundaka as incomparable. At the same time it is labeled an extraordinarily modern region. As the second US president, John Adams, said, Basques are an extraordinary people.
Biscay province boasts the Urdaibai biosphere reserve, a vast food resource for seabirds, and the Forest of Oma’s colourful art installation by Agustin Ibarrola. The head of the provincial council, Unai Rementeria, speaks about US-Biscay cultural and investment ties.
What are your main goals for this political term?
I would like to open up Biscay to the world, and let people know about our quality of life, our good public services, our high security levels and our financial services. Readers might think of Biscay mainly as the city of Bilbao and its outlying territory. This is the financial heart of the entire Basque Country, but there is a lot more to Biscay than that. We could call it a little Switzerland where you can find mountains similar to Colorado’s, a quality of life like San Francisco’s, the lefthander surfing wave of Mundaka, and a unique culture that includes an ancient language. But we are also an extraordinarily modern region with a very safe living and investment environment. This is a unique combination that you can find right here in the Basque Country.
What will the agreement you have signed with the Smithsonian Foundation mean for the Basque Country?
I think the Folklife Festival is going to be a watershed, because it will open up the doors of Biscay and the entire Basque Country to the United States. But the main thing here is the fact that the Smithsonian came to us first, because they were interested in Basque culture. The Basque diaspora played a role in creating that link. And the Foundation told us it wanted Basque culture to be represented at the National Mall.
Do you see the Folklife Festival as a one-off event or will there be continuity to the Basque presence in the US?
Obviously, we’re not going there to just leave again. We have work to do in the US from now on, and the Basque diaspora can help us with that. They have often voiced the need to create a Basque lobby in the United States. When I met with California Congressman John Garamendi, who is of Basque descent, he told me that while the Smithsonian event will give us a cultural venue, there needs to be an economic and social side to our US presence as well. There has to be a more permanent relation between the Basque and the American people.
Who exactly are the people who make up the Basque diaspora in the US today?
They are a combination of Basque people who are living outside the Basque Country but who retain those Basque feelings and values while also considering themselves part of the American people. They are concentrated in several states: Idaho, Nevada, California, and also in Texas. Some states even have Euskal Etxeas [Basque Houses], although nowadays you see those everywhere, even in New York, where younger Basques have been concentrating more recently.
What are the intersections of interest for the Basque and American business communities?
We focus significantly on technology and innovation, and there are specific sectors in which Biscay and the Basque Country are at the helm, and these are tied to the automotive industry, energy, aerospace and ICT. We want to work with the American market on these fronts.
How will the Smithsonian event advance the interests of private business?
The signing of the cultural agreement with the Smithsonian paves the way for other types of business encounters. I would like readers to understand that the Basque Country is about more than its culture and language, which are certainly very important to us. We are also a modern nation with companies that can work side by side with American businesses, either in the US or the European market. This event could be an opportunity for US companies to establish a foothold in Europe, and a way into the US market for us.
What policies are you implementing to attract foreign direct investment, and what role will FDI play in the future of Biscay?
The US market needs to know that the Basque Country has a tool at its disposal that only sovereign states have: the Basque Economic Agreement [which regulates the financial relationship between the central government of Spain and the Basque regional government]. We have the ability to approve our own taxes and to collect them. We have the power to approve the laws regulating those taxes. This mechanism, which could be described as an agreement with the Spanish state, enables us to create a series of tools favoring foreign investment. Unlike nearby regions in Spain and France, we in the Basque Country have that ability. And what we aim to do in the coming years is to explore these mechanisms further in order to encourage foreign investment.
Where are the greatest investment opportunities in Biscay for US companies?
We are very advanced in tech sectors – everything to do with innovation in the automotive industry, renewable energy, aerospace, ICT and biotechnology. We are also at the helm of innovation in everything to do with the so-called “silver economy”, which covers new market opportunities arising from public and consumer expenditure related to the rights, needs and demands of the growing population over 50. These are sectors in which any US investor could invest safely.
Are you interested in opening up avenues of cooperation with other US states and cities?
The US is very big. We’ve signed a trade deal with the states of Maryland and Idaho, and we have agreements with the city of Boise. We are focusing on those states first, primarily on energy issues and also on aerospace in Idaho. We have a cultural agreement with the MassChallenge in Boston. We could consider extending our cooperation to other states and cities in the fields that we are interested in: aerospace, energy and automotive.
A few start-ups from Biscay are participating in this year’s MassChallenge accelerator program. How would you appraise the start-up sector?
That’s another one of the ideas we are focusing on. Job creation is closely linked to training; training attracts talent; talent means innovation; and innovation means economic activity. That’s a virtuous circle that this administration firmly believes in. The most important element of that circle is that anyone seeking an opportunity to create their own economic activity will be able to do so. We pour large amounts of money and effort into people who want to be entrepreneurs. And one of the ways we do this is through our agreement with MassChallenge. Ten start-ups from Biscay went to Boston, where the top start-ups in the world are being selected. This collaboration with the MIT and with Boston is important, because people are taking notice of us.
If an investor were considering various European regions to invest in, why would they choose the Basque Country?
Our innovation levels are similar to Germany’s if not higher, and the same goes for our quality of life. Wages are lower here, but so is the cost of living. And security is better here than in Germany. Where we lag behind is in letting the world know about us, letting them know that even though we are part of the Spanish state, we are somewhat different from Spain. That is why we need to open up to the world.
What does Biscay mean to the Basque Country?
Biscay is the financial heart of the Basque Country. It is the place where the government makes a very significant effort to encourage economic activity, to attract investment, to help businesses set up, and to create jobs. We invest large amounts into making this a reality. We also invest in transportation, networks and infrastructure, which includes the port of Bilbao. This is a small territory that has it all: the possibility to set up a business in any sector, to enjoy the best infrastructure, and to have fast and efficient links to the port and airport. It really is the best possible location. We represent 51 percent of the region’s GDP, 51 percent of the population, and we collect 63 percent of the taxes.
What scope is there for increased tourism activity?
The Guggenheim Bilbao gets 1.1 million visitors a year, and beat its own record this past year. There are a lot of European visitors but also many from the Americas, and Biscay is waiting for them to discover it. Bilbao is the capital of Biscay, but the territory contains a lot more than that, yet the distances are very small: you can cross it in an hour. But there is a wealth of different things to see and do within that small space.
Are there any particular traits that define the Basques?
I would say that Basques in general are very hard-working people. Even during the dark days of terrorism, we were able to produce the modern land that we have today – and that was thanks to the determination, the hard work, and the dependability of its people. And there is something else: living, to us, means more than just working. Of course work is important, but it’s also important to work in a place where you enjoy living. This is the key to attracting talent. You know that you can work hard here, and also have a good life in a very enjoyable setting.
What do Basques and Americans have in common?
I like the practical, results-oriented approach of the Americans. Our Basque values are very similar to American values. When you sit down with an American, you know you’re going to talk about the important things: business details, how this will benefit society in general and the sector in particular. They don’t go on and on about every subject under the sun. And I think the Basques are a lot like that, too.
Do you think that the stigma of terrorism is still there when you meet with foreign politicians and investors?
No. Our past should not be forgotten so it doesn’t happen again, but we have closed this chapter in our history. Investors the world over should know that it’s finished. Imagine all that we can do, now that terrorism is gone. That´s what we’re working on: showing the world that this is a small land with large opportunities.
Following on from its iconic Guggenheim Museum, Bilbao is intent on a major facelift for its almost abandoned industrial peninsula.
The next step in the age of enlightenment ushered in by Frank Gehry’s Guggenheim Museum Bilbao will be a massive rescue of the wasteland left behind on the peninsula of Zorrozaurre when much of the city’s industry closed down. The last 400 meters of a new canal cutting the Deusto area from the mainland – all that was left to do when the project was abandoned in 1968 – will be completed to help it become literally as well as metaphorically an island of talent, stemming from new developments in the digital and knowledge economy, as well as 5,000 new homes. Other targets for investment are advanced services for business and financial services and insurance. While Bilbao may have little heavy industry of its own left, it can supply services for industry elsewhere.
The €148m ($167m) cost of the Guggenheim, for whose detailed design Gehry used aerospace software, was recouped in three years, some claim. Helped by the establishment of a science and technology park to concentrate on research and development and innovation, the authorities are looking for similar returns on Zorrozaurre.
Intense R&D has become so ingrained in the Basque work culture that even the chef in the Guggenheim’s Nerua restaurant follows the trail. Josean Alija spends a year discussing, planning and experimenting with a new menu before introducing it. Currently a meal can run up to 21 courses and, with “pairing” wines, comes in at €260 ($294) a head.
The pride in developing local talent extends to soccer. Athletic Club, commonly called Athletic Bilbao, is one of the country’s top teams. However, it refuses to employ footballers who are not local. They needn’t be Basque. Living, and preferably being educated, in the area is sufficient qualification. The results haven’t suffered from self-imposed restrictions on the pool of potential talent. Athletic Club has topped the Spanish league eight times and won 22 domestic cup competitions.
The drive to modernize and beautify Bilbao will involve reducing carbon emissions, one of the pledges of last year’s COP21 summit on climate change, and subscribing to Just Two, a commitment to keeping the rise of global temperatures below two degrees.
The prospect of a growing urban population emphasizes the importance of adopting green policies. In practical terms, that means introducing a huge public transport network of electric buses and simultaneous restrictions on private vehicles. There are even thoughts of encouraging bicycles, though the very climate that keeps the Basque countryside literally green may put a dampener on that thought.
Mayor of Bilbao since 2015, Juan Maria Aburto believes the city’s Guggenheim Museum inspired a tenfold return on its cost. He now hopes for big benefits from the Smithsonian Festival this summer and a projected Basque Museum.
What can we expect from Bilbao during your term in office?
There are two main ideas. The first is that the transformation of Bilbao is not over. We are still working on a great project called Zorrozaurre, which will extend over the next 15 to 20 years. The regeneration of this peninsula, which will become an island, represents our great project for the future of Bilbao; it will be a place for growth with over 5,000 new homes. At the same time, we want to link that notion of an island of talent to economic development based on the digital economy and the knowledge economy. As such, the project is tied to the development of an urban science and technology park. In Bilbao, urban transformation is still underway, tied to economic development and to knowledge.
The second idea is that Bilbao’s next conceptual transformation must be its economy. Bilbao must become an epicenter of economic attraction, a city that looks both inwards and outwards to attract economic activity and foreign investment. We recently won fourth place in the Financial Times’ global ranking of top medium-sized cities for foreign investment, but we still need to work harder on making Bilbao a place of business opportunities. This effort will be focused on the digital economy, without forgetting advanced services for businesses, an area with great growth potential. The province of Biscay is an industrial territory, and Bilbao has to service that environment. Then we have financial services and insurance, as another element that is closely linked to industrial development. We are also talking about distribution, the energy sector, creativity, art and design.
Do you see scope for tourism?
We want to build on cultural tourism and conferences, improving our connectivity with Europe, Asia and the United States. Although our economy is not based on tourism, the sector could contribute more than eight percent of our GDP, and become a springboard for greater international links. We are never going to be Benidorm, nor do we want to be. The next transformation of Bilbao needs to be tied to knowledge. In order to do that, Bilbao needs to really convince itself that it is a university city. That will position us well.
Do you feel that the upcoming Smithsonian event could act as a platform to bring visibility for the province of Biscay, for the city of Bilbao and for the entire Basque region – much like the Guggenheim did, back in its day?
I think that sometimes we don’t have enough perspective on the Guggenheim’s real impact, and that we should be eternally grateful to the people who made a decision, 20 years ago, in the midst of a terrible economic crisis and a soaring unemployment rate, that what was needed was a museum. You needed to have a lot of nerve, to put it mildly. It was the kind of vision that is very important in politics. The Guggenheim is an icon that has positioned us in the world. Besides a cultural element, it is an element of economic attraction of incalculable value, and the return on investment has been more than tenfold. It would certainly be very significant if the Smithsonian event had a similar impact.
What do you hope to achieve at the Smithsonian forum?
What I’m seeing there is a continuation of the international projection that Bilbao, Biscay and the Basque Country already have. Its American venue implies a big international reach, because US media outlets have a significant international impact themselves. The Smithsonian is fundamentally a cultural setting, and our own Basque culture, which will be present at the Smithsonian, can act as a force of attraction in and of itself. We’re not just selling a modern culture as represented by the Guggenheim. We have a project underway during this term, both at the provincial and the municipal level: the Basque Museum, which needs to become another factor that will position us in that cultural environment.
How relevant is the US as an investor country in Bilbao?
The US is a constant reference for us, first because of the Basque exodus to America, and secondly because of our economic and trade ties. Right now, tourism from the US carries a certain weight in Bilbao; the cruise ships at the port of Getxo mean that Bilbao gets lots of American tourists every year, and they are a source of income for the city. We also have strong ties with the US in the auto and energy sectors. Iberdrola, a company from Bilbao, is listed on the NYSE, and let’s not forget that the energy sector could be a driving force for the economy. Finally, the digital sector is enormously relevant to us, so we are interested in everything that comes out of Silicon Valley and all the major US internet companies.
What is the role of foreign direct investment in job creation for the city?
We place a lot of emphasis on FDI. We’re working on a presentation called Invest in Bilbao, which is near completion and is going to act as our business card. I mentioned the FT ranking earlier, and we are working very hard to do better than fourth place. We want Bilbao to be a magnet for tourism but also, fundamentally, for foreign investment.
What can the city of Bilbao contribute to the global fight against climate change?
I sincerely think that cities are going to be the protagonists from now on, because life is going to develop primarily in urban settings and most of the population is going to live in cities. I see two issues here: first, reducing carbon emissions, one of the great pledges of last year’s COP21 summit. We subscribe to that commitment, and we subscribe to Just Two, a commitment to keeping the rise of global temperatures below two degrees Celsius. We are working on a global strategy as a city, in which transportation is going to be a reference through a great public transportation network that will increasingly limit the use of private vehicles. We are already working on the introduction this year of electric buses. And even though we don’t have the most appropriate climate for it, I think that it is also important to encourage bicycles as a means of transportation.
Is the stigma of terrorism still present when you go abroad and talk to potential foreign investors or politicians?
When it comes to foreign investment, businesses look at many things. One of them is connectivity – and we have good connectivity. Another issue is fiscal incentives, which are significant in our case. And they also look at political stability, which we are in a position to offer, as well as talent. Why can we offer political stability, besides the fact that we do things differently in the Basque Country? Because terrorism has disappeared. If our economy still managed to be strong during the days of terrorism, now that this is gone, the Basque economy is poised to really take off. I think we are witnessing a moment of great opportunity.
How to make a little go a long way
Gipuzkoa is the smallest province in Spain but it has made, and continues to make, a big impression on the world of industry and innovation.
Gipuzkoa is an industrial territory that is investing significantly in an industrial future. It covers just 764 square miles, and more than half of its population of 715,148 (2014), live in the San Sebastian metropolitan area. Despite its size and its reputation for being conservative, the Basque province is home to the world’s biggest cooperative venture, the Mondragon Corporation, as well as a global player in the train industry, Construcciones y Auxiliar de Ferrocariles (CAF), and many other industries.
Mondragon has an interesting history. The cooperative’s 75,000 workers operate in everything from heavy industry and retail to banking and education. Its rules stipulate that no manager can be paid more than six times the salary of any worker. The lowest-paid Mondragon “associate” earns around €28,000 ($31,800). And that removes senior executives permanently from the world of multi-million euro salaries and bonuses.
However, the socially-cohesive structure of a cooperative does not make it immune from global commercial pressures. Battered by the 2008 financial crisis and the collapse of Spain’s property market, one of Mondragon’s leading lights, the electrical appliances manufacturer Fagor, went under in October 2013 and around 1,600 people lost their jobs. What followed, however, was radically different from the aftermath of conventional company failures. The Basque self-help culture kicked in. Without seeking financial assistance from any level of government, nearly 90 percent of the workers found other jobs or took early retirement. The 200 still without work received 80 percent of their salary for two years from a provident fund to which all the workers had contributed 6.5 percent of their salary.
Gipuzkoa’s provincial government is at pains to showcase the Basque work ethic and flexibility. The province also has one of the lowest inequality levels in the world, with a Gini coefficient of 0.24. Indeed, it was flexibility that helped transform a small ironworks that was founded in 1860 into a world giant in the train-building business. With headquarters in Beasain, Gipuzkoa, and production plants in the US, Mexico and Brazil as well as other parts of Spain, CAF’s 7,581 employees manufacture and sell trains, rolling stock and railway systems in Spain and internationally. Like the rest of the Basque Country’s smallest province, CAF is perpetually on the move.
Known at home for their enterprise, Gipuzkoan businesspeople are also noted for being conservative. Markel Olano, head of the provincial government, says it is time to spread the word, in the US and elsewhere, about the area’s products and skills.
You have said that the Smithsonian Folklife Festival is a great opportunity to showcase the real Basque Country. What main ideas would you like visitors to come away with?
Until recently, our brand had been deteriorated by ETA’s violence and terrorism. But once that ended, an opportunity opened up to let the world know about our new situation. There are a few ideas worth underscoring: first, this is an industrial territory that is investing significantly in an industrial future. It’s very important to highlight that this is a priority for us: we firmly believe that industry is our future, and we will develop the necessary policies towards that end by continuing to support knowledge, innovation and training. Eventually, these policies create an ecosystem that facilitates new entrepreneurial projects, and which attracts capital and investment.
The second notion to showcase about the Basque Country is its work ethic. Our socioeconomic environment promotes a set of values that contribute to economic development and help slow down the growing global trend towards higher inequality. Gipuzkoa has one of the lowest inequality levels in the world, and we feel that our social and economic model play a role in that. Corruption levels here are also much lower than you will find in other places. All these elements contribute to an ecosystem that is favorable to economic activity.
Is that another one of the things that make you unique?
I think that our model of social and territorial balance, and the effort we are putting into it, can be interesting to others, above and beyond the global interest created by the fact that we have a different culture and a different language and an identity going back millenia, which makes Basque personality interesting to the outside world. People who come visit us want to see something different, something unique, and that’s what they get.
The city of San Sebastián is the capital of Gipuzkoa, and currently also 2016 European Cultural Capital. How big of a role is this playing in regional economic reactivation?
Right now, San Sebastián is clearly in style, and the city is offering a new image of the Basque territory as a whole. Surveys show that people who come to the city and to other parts of Gipuzkoa come away with the feeling that the experience exceeded their expectations. It’s like a hidden jewel that’s been rediscovered by tourists after the end of violence. In fact, the European Capital bid was supported by EU authorities because the Basque search for peaceful coexistence following the years of violence is a remarkable process. The notion of culture as a tool for social harmony was the leitmotiv of the cultural capital bid. And I know that reinforcing social capital is also a priority for US authorities.
The mayor of San Sebastián says that US visitors now rank third after the French and the British in terms of annual tourist numbers. How can Gipuzkoa convince American visitors to explore other parts of the province?
The slogan we have adopted for our tourism program is “Gipuzkoa, the San Sebastián region.” One of the factors that drives the average American to come here is San Sebastián because the city is becoming increasingly well-known abroad. We need to use this celebrity status to attract visitors to other parts of the territory with something unique in terms of culture, gastronomy and nature. By US standards, Gipuzkoa is very small indeed, and very easy to get around. San Sebastián is a gateway to nearby areas such as the adjacent provinces of Vizcaya and Álava, and even Navarra and the French Basque Country, which is just a few kilometers away.
What natural attractions can Gipuzkoa offer visitors?
We have some very important natural parks in the area, as well as a beautiful coastline. The Gipuzkoa landscape has been shaped by human hands since prehistoric times. We have natural parks that contain dolmens, a reminder that our culture has been under construction for millenia, and I think that this makes the territory of Gipuzkoa attractive – this combination of nature and of the human factor at work over the course of time. And then we have natural spaces that are already world references, such as the geopark between Deba and Zumaya, which contains the famous flysch formations of tremendous interest to geologists. So that’s a lot of nature, history and culture packed into a very small territory.
What are the goals of your Economic Reactivation Plan, which has an annual budget of €50 million?
Our generic goal is for the Diputación -the provincial authority- to actively participate in reactivating the Basque economy. After long years of a tough crisis, we feel that this contribution is a priority for our institution, particularly at a time when we are seeing positive signs in exports, industrial production and in job creation. So we are optimistic about the future, but feel that the Diputación has to do its share to make it happen.
What specific policies are you pursuing to achieve this goal?
We are striving to increase the competitiveness of our businesses, but without losing sight of the social perspective. We aim to be one of the regions of the world with the lowest inequality levels, and one very important component of that involves ensuring that our businesses have strong ties to the territory. It’s very important for most of a company’s stock to be held by local residents, and it’s also very important for workers to have a stake in the company that they’re working for. So we are going to put forward a law in Basque parliament to encourage worker participation in their companies through tax benefits. We feel that these kinds of policies ultimately have a social impact as well, by helping us fight inequality and keeping businesses rooted in the Basque territory.
How important is innovation as a tool to increase this competitiveness?
It is an essential factor. We are trying to position Gipuzkoa as a major European hub for R&D&i, and have just presented a support program for the Gipuzkoa Network of Science, Technology and Innovation, as well as another program aimed at attracting and retaining talent. Both programs have a budget of around €4.7 million. All of these measures will help increase competitiveness and turn the province into what we call “Smart Gipuzkoa.”
What kind of industrial activity are you trying to promote?
Gipuzkoa has always been reliant on iron and steel, with a very classic, traditional industrial structure that has since been evolving. Right now we are directing our efforts at developing three sectors: advanced manufacturing, energy and biotech/bioscience. This is going to create new businesses, and we will seek to attract as much investment there as possible because we feel that we have significant knowledge in place already, and we are now directing that knowledge towards the development of new products and new business projects. At the government level wish to encourage this type of activity, and feel that there is fertile ground for it.
Tell us a little bit more about the tax benefits.
We have a competitive edge here in Gipuzkoa and in the Basque Country as a whole, and that is the fact that we have our own tax authority. A territory with a population of not quite 800,000 and control over its own taxes makes for a government with a very significant ability to have an impact on – and a close relationship to- the business fabric. And this opens up many opportunities, as the taxation system becomes another tool for economic development. For us at the Diputación, this is probably the single largest contribution we can make to the development of the Basque economy.
How are you planning to prolong the Basque presence in the US beyond the Folklife Festival?
The Smithsonian event is going to be a magnificent showcase for Gipuzkoa and the Basque Country as a whole, but the fact is that this Diputación had already been working on a project named “Made in Gipuzkoa” based on the need to open up to the world and establish ties with a series of priority countries, and the US is evidently on that list. So we already have our own agenda of contacts, and will use the Smithsonian event to reinforce them and to seek prolonged ties beyond the event itself. We’re going to develop a specific program in partnership with the Basque government, which again has its own network of contacts in the world.
How can an event like the Smithsonian Folklife Festival change – or enhance – the image that Americans have of Gipuzkoa and the Basque Country?
Often people say to me that the Smithsonian event will be a chance for us to be there, to which I always reply: ‘But we’re already there.’ I think that Gipuzkoa is already known in the US for its businesses. There are companies like CAF and Irizar, which have their own production plants there. And then there is the Mondragon Group, which has a world presence and is Gipuzkoa’s largest industrial group. These are our main ambassadors, and the quality of their work and their products speak for us. What we need to do now is to add an institutional presence that will support Basque businesses in the US.
What do you expect at a personal level from the Folklife Festival?
I am aware that we are very small and that we cannot expect too much. But I do hope that thousands of people in Washington will discover the Basques and experience our reality as closely as possible through food, sports and other exhibits that will bring our culture to life for them.
Will you be seeking to get President Obama to play Basque pelota on the National Mall?
At this point, perhaps we will try to get Hillary to do so.
Recipes for riches in food, business and culture
San Sebastian’s wealth spans the giddy heights of its world-class restaurants to league-topping GDP, globally-recognized companies to cultural events such as film and jazz festivals
The shared award of European City of Culture 2016 to Wroclaw in Poland and San Sebastian in the Basque Country set the stage for a surreal, if totally appropriate, opening ceremony. Polish children showed their city’s appreciation of the Basque Country’s massive efforts to preserve and extend its language by playing drums and singing songs in Basque, in an event that was beamed live to screens set up in front of San Sebastian’s town hall.
Observers who speak neither language could only marvel at the astonishing ability of children to master languages that befuddle many an adult. The essence of San Sebastian 2016, according to its program, “is to highlight the role of culture as a tool for improving how we live together”.
Events throughout the year include an analysis lasting eight months, until December, through exhibitions, artistic productions and talks, of how violence and peace have been represented throughout the history of art.
Apart from the social gains of peace, investors are also acknowledging the new era. Since the Basque separatist group ETA (Euskadi Ta Akatasuna) laid down its arms in 2011, San Sebastian mayor Eneko Goia told the Financial Times, “we have detected increased investor interest, not only because of the European award, but more importantly due to the ETA ceasefire”.
Other events include a production of Shakespeare’s A Midsummer Night’s Dream – to mark the 400th anniversary of the playwright’s death – in which the 250-limit audience will be invited to join the wedding feast of Hermia and Demetrius. The performances run from June 21 to July 24.
“Being selected as European City of Culture is something we look upon as a catalyst,” Goia continued. “Our aim is to use this opportunity to promote and develop San Sebastian in 2016 and beyond.” Despite the city’s expanding circle of appeal through events such as the annual film festival, providing a dedicated international airport is not on the agenda. San Sebastian, called Donostia in Basque, is an hour’s drive from Bilbao’s international hub and even closer to Biarritz across the French border. “We need to improve road and rail connections from neighboring airports, and this is a key factor in promoting investment,” said Goia.
The city is also actively supporting R&D, on which it spends three percent of its GDP, more than double Spain’s national average rate. The city’s technology park contains 92 companies, counting both domestic and foreign, working on issues from renewable energy to biotechnology and telecoms. So far it has attracted major international names such as IBM, Pernaud Ricard and DHL.
Part of the allure may well lie in the four universities in San Sebastian, which Goia views as the source of a highly skilled workforce. Employers clearly agree. The local unemployment rate is a fraction over nine percent, nearly 15.5 percentage points below the national average. In turn, San Sebastian has a GDP per capita of €34,600 ($38,250), the highest in the Basque Country and just over half as much again as the national average of €22,500.
Wealth is far from the only lure to San Sebastian. Basques are known for their innovative cuisine, and the city’s own reputation, in particular, is riding high. Two of its restaurants are ranked in the world’s top 20 eating establishments, along with a third, Azurmendi from Larrabetzu, near Bilbao. They are Mugaritz (sixth, chef Andoni Luis Aduriz, edible stones – and cutlery – and candy caviar), Arzak (17th, chefs Juan Mari Arzak and daughter Elena Arzak Espina, red egg combining piquillo peppers and crisped-up trotter meat), and Azurmendi (19th, chef Eneko Atxa, truffled egg with part of the yolk removed and replaced with truffle consommé). “Our cuisine reaches the elites, but it has the taste of the people,” according to Juan Mari Arzak.
Also keeping up the resort’s standards are the annual film and jazz festivals. The former, launched in 1953, provided high points in the careers of such directors as Francis Ford Coppola (The Rain People), Pedro Almodovar (Pepi, Luci, Bom, and Danny Boyle (Shallow Grave).
The jazz festival, Heineken Jazzaldia, which celebrates its 50th anniversary this year, has featured, among many others, Ella Fitzgerald, Sonny Rollins. BB King and Toshiko Akiyoshi. The 2016 line-up includes Diana Krall, Mark Guiliana, Ryley Walker, and Eska.
San Sebastian is European Capital of Culture this year and home to two of the world’s top 20 restaurants. Its mayor, Eneko Goia, wants similar levels of excellence in technology.
How can San Sebastián benefit from the added contact with the American public that the Smithsonian Folklife Festival will provide?
The US market is starting to stand out for us, as growing numbers of Americans are attracted here by our gastronomy, among other things. In terms of visitor nationalities, the United States now ranks third behind France and Britain, and their numbers keep growing. So there is clearly a market there for us, and still plenty of road to left cover. San Sebastián also offers itself to tourists as a city with a strong Basque flavor, so having this Washington showcase is a good opportunity to let the world know more about the Basque Country as a whole and the city of San Sebastián in particular.
Do you see any potential for creating permanent ties with American cities on cultural, entrepreneurial or technological issues as a result of this upcoming exposure?
For now at least, the US is not a country with which we have very deep ties. We are twinned with Reno and Boise, but that is because of the large Basque communities living there. It would certainly be interesting to develop partnerships based on other issues, such as urban projects. I have had an opportunity in the past to become acquainted with projects in Pittsburgh and in San Francisco, but I think there is still a long way to go on the issue of partnerships with US cities. Our city-to-city collaboration has so far taken place mostly at the European level. And when we have made the leap across the Atlantic, it has been mostly to Latin America.
What is it about San Sebastián that is so attractive to American tourists?
Our quality of life. The city’s size and its direct relationship with nature are two of the first things that capture people’s imagination. Besides the unique layout of the Bay of La Concha, nature is very well integrated into the city. And then there is the feeling of security – being able to stroll around the streets and enjoy what the city has to offer without concern for personal safety. And of course there is the gastronomy, which is our great added value. Also, the price-quality ratio is very attractive to visitors from the US, Britain and Australia, who feel that we offer high quality at very affordable prices.
Are there any specific parts of the US providing many American visitors?
We haven’t identified these areas yet, but I suspect that both coasts are probably high up on the list. On the East Coast, there’s New York of course, which is very open to the world, and when it comes to the West Coast, maybe our own surfing tradition has something to do with it.
Is it fair to establish a link between the Basques and the Americans based on a shared entrepreneurial mindset?
Yes, it is. I believe that hard work and sacrifice are highly valued here as they are there, and that we also share the notion of prospering in a land of opportunity through our own hard work, not through luck or speculation. We do share that entrepreneurial culture.
Can San Sebastián benefit from the Smithsonian event by developing business relations with the US?
There is still room for investment in the city, and I think we need to focus on new technologies, a field in which a relationship already exists in the form of US investment in local businesses. IBM is a case in point [after reaching a deal with Kutxabank to help transform the Basque bank’s tech infrastructure]. And there are local businesses developing products and services that find a market in the US. I think that the field of new technologies is ripe for greater interaction.
Are people in San Sebastián aware of the importance of the festival?
Not that much yet. There was a public presentation at Tabakalera featuring a key speaker, US Congressman John Garamendi, who is of Basque origin, but there hasn’t been too much communication thereafter. As the date approaches, however, there will be a greater outreach effort.
Spotlight on Alava
A green industrial heartland
The largest yet least populated of the three provinces making up the Basque autonomous community, Alava has long been one of Spain’s top economic performers. Since 1995, its per-capita GDP has topped that of the 52 Spanish provinces, reaching as much as 50 percent above the national average in 2013, thanks to a booming industrial sector, which has welcomed large export-oriented companies – Mercedes-Benz and Michelin among them – as well as a growing logistics hub.
But while steel manufacturing, glass production and the automotive industry all contribute to the growth of this former agricultural economy, Alava is as far from a gritty manufacturing landscape as is imaginable. Its dramatic, hilly countryside draws in tourists, artists and writers from far and wide, while the rolling vineyards of the Rioja Alavesa region produce some of the country’s best wine.
The city of Vitoria, Basque administrative capital, is bright and verdant, with no-one living farther than 300 meters from a green space. Indeed, it was awarded European Green Capital thanks to its strong environmental initiatives. But there is also plenty of room for culture: the Vitoria Jazz Festival, now in its 40th year, has seen such greats as Dizzy Gillespie and the Buena Vista Social Club take the stage.
The region’s strong industrial fabric coupled with the renowned Basque entrepreneurial spirit means its companies compete handily at the global level
The influence of Basque corporates on the American economy belies the size of their homeland. In almost every conceivable industrial sector, this tiny European region has made its way into the vast US market.
In the finance sector, the US’s top 15 commercial bank is BBVA Compass, the North American arm of Basque banking giant BBVA. Meanwhile, it was to Basque energy behemoth Iberdrola that online retailer Amazon turned when it wanted to install wind farms in North Carolina. And the wind turbines themselves? Made by Biscay-based Gamesa, which has already installed 4,000MW of capacity across the US. That’s not all: Basque technology runs the substations of New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation, and Central Maine Power Company, thanks to electrical equipment producer Ormazabal, while the Basque Mondragon cooperative has production plants in states including New Jersey, Massachusetts and Arkansas.
What has catalyzed their success? One factor is the supportive environment back home, with organizations such as SPRI, the Basque business development agency, which has set up a North America office specializing in introducing Basque companies and their products onto the American market. Another has been the weak European economy, which has forced Basque firms to look elsewhere for growth. But for many, it is the ingrained Basque business nous which has served them best in the highly competitive American market.
“Our Basque values are very similar to the practical, results-oriented approach of the Americans,” said Unai Rementeria, president of the provincial council of Biscay, which has spawned many of the world-beating Basque firms.
Now, Basque technical expertise is participating in a potentially game-changing infrastructure development in the United States: its first high-speed rail system. SENER, which hails from the town of Getxo near Bilbao, has won a contract to develop engineering and environmental services for the 35 to 45-mile section between Palmdale and Burbank, including a series of tunnels giving access to the line coming from San Francisco, through the Central Valley, to the Los Angeles Basin.
The works, for the California High-Speed Rail Authority (CHSRA), are the culmination of nine years’ experience in the Golden State for the 60-year-old Basque firm, which has already gained visibility on the US market after its work designing and delivering automated turnkey projects for Boeing, and taking part in local projects such as the master plan for the Los Angeles Union Station.
Focus on Tubacex
With four decades of presence in the US market, Tubacex is a prime example of successful Basque industrial internationalization. A provider of stainless steel and high-alloyed seamless tubes to the oil and gas, petrochemical and power generation industries, former Basque industry minister Bernabé Unda called it “a niche multinational that is a world leader within its sector, and a champion within this niche.” The company’s performance speaks for itself: in the hydrocarbons industry, for example, where low oil prices have pushed down the volume of wells in operation, Tubacex still managed to close 2015 with important orders in the Gulf of Mexico. Now, for CEO Jesus Esmoris, the focus is on maintaining the company’s strength through diversification.
Tubacex opened its first US office in Houston in 1975. How has the company evolved in the US market since then?
Shortly after opening our Houston offices, we acquired a company named Salem Tube in Pennsylvania. The US is a major hub for us, and our strategic vision for the coming years involves significant growth in this market. We are also thinking of investing here in the short and the long term. Right now, in terms of sales, the US market represents around 15 percent of TUBACEX total sales, but we are working to have 20 percent of our sales here.
What is it that makes Tubacex competitive in the US market?
In terms of products we have the umbilical tube, which is welded and coiled on reels and used in cables to manage wells in the subsea. We are the world’s second producer of this type of product, and we are a major supplier in Gulf of Mexico industry. The product is supplied by our plant in Austria. Also we have the classic CRA OCTG pipes for the oil & gas sector. We produce them in our Spanish plant and deliver to the US market. And then we have products which we make at Salem Tube, such as aerospace tubing, instrumentation tubing for hydraulic pumps, nuclear tubing, heat exchangers, etc. Our tubes are always critical for difficult environments with high pressure, high corrosion and high temperature, so they are very special, high-value products that are used only for very specific applications.
How has the global drop in oil prices affected your strategic planning?
One of our strategic goals is to reduce volatility, and one of the ways to do this is by diversifying. We have expanded into sectors other than oil and gas. Now over 50 percent of our sales are in sectors that are not oil and gas. Even when the market bounces back, we do not want our sales in oil and gas to rise beyond 50 percent, with a view to our future as a company. Volatility will always be there, so the more diversified you are, the better.
What would you tell potential investors considering your company?
Tubacex has been listed on the stock exchange for 50 years, and offers investors complete transparency. We are suppliers to the energy sector, and the world is always going to need energy. We are also diversifying and meeting our strategy goals. So Tubacex is a solid company with the desire to grow and the financial strength to do so. Our accounts are balanced and our financial situation is very good with a view to the future.Tubacex has been listed on the stock exchange for 50 years, and offers investors complete transparency. We are suppliers to the energy sector, and the world is always going to need energy. We are also diversifying and meeting our strategy goals. So Tubacex is a solid company with the desire to grow and the financial strength to do so. Our accounts are balanced and our financial situation is very good with a view to the future.
Which other sectors besides oil and gas are you focusing the most on, as part of this diversification effort?
We are interested in green energy – wind, sun and others. We are doing a lot of R&D to position ourselves there. We are also active in the automotive sector as new, high-pressure engines require new materials, and in aerospace, where our weight is still very small but where we see a lot of potential for growth.
Your strategic plan rests on two main ideas: added-value products and operational excellence. Can you give us some specific examples?
Around 30 percent of our sales come from products we began developing in the last three or four years, and we believe that this figure will grow to 50 percent in the next three years or so. This year we want to patent three or four new products. We are working to develop a new material for special applications with a first-level partner. I think that CRA OCTG and umbilical tubing, which we developed over the last four years or so, are the types of products where we stand to grow the most. We also used to be very active in subsea, but this sector is not growing. In power generation we have developed new grades, new pipes and new systems that allow us to sell high-temperature resistant products.
How much R&D&i does Tubacex conduct?
We’ve just approved a financing plan with the European Investment Bank for innovative initiatives. We are receiving a €65 million loan and pledging to invest twice that sum in R&D&i over the course of five to six years. And this figure will be audited. Our R&D department is growing significantly, and in recent years our investments have come to represent almost two to three percent of our turnover.
What lines of research are you working on right now, and what kinds of products will you be patenting in future?
We work with raw materials and with different grades and alloys, and we seek to develop new alloys that can withstand ever higher temperatures. Our second line of research involves finding various coatings that will add value to the pipe. We have just invested in a ceramic coating that allows tubes to improve the corrosion resistance and the flow of fluids. And then there is the area of applications: how do our clients use our tubing systems and how can we help them to improve and reduce costs? These days the sector is demanding a 20-30 percent cost reduction. It’s impossible to do that by lowering the price of the product, so we have to look at the overall cost.
What services does Tubacex provide its clients beyond the products themselves?
In order to be able to design, manufacture, assemble and maintain a tubular system, you have to be someone like us: a specialized manufacturer of tubes in special sizes. We are becoming providers of high-complexity tubular solutions. This required product diversification, so we invested in higher added-value products. We then needed to develop products that were hard to develop here at home, so we acquired an Italian firm with plants in Italy and China that makes even bigger tubes than we do. This allows us to offer both kinds at the same time. A tubular system also requires smaller curved sections and T-shaped fittings to connect pipes, and the company we have purchased also makes these elements. So right now we have the widest product variety in the market compared with our competitors. We are also working on helping clients to standardize their products and reduce costs through our engineering services. And we are additionally focusing on post-sale customer service, committing to the durability of our pipes and to the minimum maintenance that they require. So it’s about providing support for the entire lifetime of the product.
Are you considering any further US acquisitions in the near future?
Yes, we are. We have been setting up new companies and acquiring existing ones, at a rate that our balance sheet allows for. We have a certain debt ceiling which we have set for ourselves in order to preserve a solid cash position, and we are analyzing both organic and inorganic investments that will help us grow. I think we still lack sufficient local content of the type that we cannot make here. That would mean acquiring a company that is complementary to our own. We will continue to invest wherever our clients have their hubs, and the US is one of these hubs. Despite the market slump, we believe that this is still a time to invest, always in a controlled manner. At the same time, we continue to pay out dividends religiously.
Tubacex works in sectors under public scrutiny because of their environmental impact. How strong is your group’s commitment to sustainable development and environmental protection?
We have a system in place across all our companies with goals for consumption reduction – water, electricity, fluid control and so on. All our companies are ISO certified. At the same time, our product is very much focused on the environment; it is used in power generation to reach high temperatures, reducing CO2 emissions. This requires special materials which we have developed. The tubing we make for fuel conduction in the aerospace industry involves pulverizing the fuel to reduce engine consumption; in the automotive industry, we are working on a pipe where gasoline or diesel is compressed between 700 and 2,000 bars, which requires special materials that will withstand that pressure. This pressure achieves the pulverization of the fuel and thus a significant reduction in consumption. This is a clear market trend that we are acknowledging by developing appropriate applications.
CEOs of multinationals are often passionate about their product. Outsiders might wonder if it is possible to be passionate about pipes.
It’s not a very sexy product itself. But a tube is always used to connect things, in every sense. And even more so in our case, because we make very, very special tubing for very, very special applications. I am driven by the technological challenge that this poses. How do we meet our clients’ special needs? Take for instance an umbilical tube. Taking a tube, which is made of a hard material, and being able to bend and coil it around a reel while remaining perfectly waterproof, etc. There are only two companies in the world able to do that right now, and we are one of them. So while a pipe in itself may not seem very sexy, the difficulties of manufacturing high-alloyed seamless tubes represents an attractive challenge in the world of engineering. You are taking a very basic element - steel - and transforming it into a high-tech product.
What was your toughest engineering challenge ever? What is Tubacex’s flagship project?
There are two products that stand out: the OCTG and the Umbilical. They both represent major investments: one in Spain in 2013 at the Amurrio plant, which makes the OCTG tubing, and another one in Austria, where our plant makes the umbilical tubes. Both are highly complex products. We set up a completely automated plant where nobody touches the tube until the end of the process. Everything has a bar code for complete traceability as the tube undergoes various automatic controls. That was quite an engineering challenge and I believe we are the only ones right now who have this capability.
Your company was formed in 1965 in Llodio and today you are a multinational. What is left of the original Basque beginnings of Tubacex, and how does Basque culture continue to permeate the company?
I am not Basque myself, although my wife is. I have lived in several countries, including Germany. And when I moved to the Basque Country, I recognized its great industrial strength. Industry is deeply ingrained here; it is a historical trait that has been passed down for three or four generations, and which has been well cared for. I think a good example of that is the Escuela de Armería vocational training school in Eibar. When I became familiarized with auto companies here, I saw that they were located in different parts of the Basque Country yet they all had their origins in Eibar. So this industrial know-how is something that’s been cultivated and comes from years of training. And I would say that this attitude has even penetrated regional governments, which take very good care of Basque industry.
A wealth of experiences
Nestled on the rugged Atlantic coast, Euskadi’s dramatic landscapes and charming, cosmopolitan cities offer a uniquely Basque tourism experience
While other Spanish holiday spots draw in the crowds with the sun, sea and sand experience that they offer, the Basque Country attracts another type of tourist entirely, thanks to its superb cultural offering, world-class gastronomy, outdoor sports and stunning architecture.
Once a relatively undiscovered destination, visitor numbers are now increasing, with hotel stays in April this year (the latest month for which data is available) up by over six percent. Some come for the region’s vast plains and mountain massifs, which make for pleasant treks. Others come to soak up the unique Basque culture, taking in the museums or visiting one of the many festivals of art, cinema and music. And others still come to sample the famed Basque gastronomy, from the finger-friendly food art in the form of the ubiquitous pintxos to the avant-garde cuisine of the several fine dining restaurants, all sourced locally from the region’s bountiful farmland and fishing waters. While the Basque Country might be best known for its cider, poured from great height from vast barrels into stout glasses, it is the wine from Rioja Alavesa which has achieved global success, and tours through the vineyards offer the chance to see firsthand the oldest wine-growing estates in Spain.
Its cities demand further exploration. The industrial port city of Bilbao, best known for the Frank Gehry-designed Guggenheim, competes with leading European cities with its packed cultural calendar. The annual Bilbao BBK Live event, an open-air music festival, generated an economic impact of over €20 million ($23 million) in 2015, and is forecast to beat that figure this year.
While San Sebastian’s sweeping city beach has turned the city into something of a surfers’ paradise, it also hosts one of the world’s highest number of Michelin-starred restaurants per square meter. Perhaps unsurprisingly, it is also home to the Basque Culinary Center – an incubator for the next generation of world-class chefs. Although university degrees in the culinary arts are its main output, there are also courses for cookery enthusiasts in English for foreign visitors.
Less visited than its neighbours, but by no means a less-attractive destination, is Vitoria. The rich heritage of its old town is an attraction in itself, with traditional events such as the Fiestas de la Virgen Blanca, six days of intense merrymaking and rejoicing. The Vitoria Jazz Festival, part of the International Jazz Festival Organization, which brings together the most important jazz festivals in Europe and the USA, has become a must-see on the Spanish music calendar, but for many, it’s the city’s “green belt” which sets it apart. This set of urban parks encircling the city is crossed by an extensive network of pedestrian and cyclist routes, and has become an ecological refuge for plants and wildlife.
Located in the heart of the Rioja Alavesa wine country, Bodegas Luis Cañas produces multiple award winning wines of global renown, with its Reserva Selección De Familia 2009 ranked as the world’s third-best wine in 2016 by the World Association of Writers and Journalists of Wines and Spirits. A family business, it was set up by Luis Cañas in 1970 and taken over by his son, Juan Luis Cañas, in 1989, and now sells around two million bottles per year, exporting to 40 countries. While the younger Cañas opened a new winery equipped with cutting-edge processing systems in 1994, he is careful to remain faithful to the wine-making methods of yesteryear. Treating the grapevine as a living being is central to the winery’s approach, and Cañas is pioneering a return to the traditional, pesticide-free, handpicked approach of making Rioja wine. Popular wine tours are available for visitors who want to experience some of the 198 acres of the bodega’s own Tempranillo, Viura, Graciano, and Mazuelo vineyards.
How did this winery reach the point where one of your red wines, Reserva Selección De Familia 2009, ranked as the third best wine in the world in 2016 according to the World Association of Writers and Journalists of Wines and Spirits?
Obviously by making a good wine, but there are many things that go into that. From the vineyard that it comes from, to the varietals that we use and the barrels that it ages in, every part of the winemaking process has been meticulously analyzed. Through careful selection of our vineyards and rational winemaking practices that respect the environment, we manage to get the most important thing done even before reaching the winery stage: obtaining excellent grapes. Later we add the finishing touches by manually classifying the clusters and the grapes, and putting them through all the production steps with loving care.
How important is it for a winery to be on this global list?
It is flattering. It sends out the message that we are on the right track, although we are constantly striving to do even better. But there’s something else that’s important too, and it’s the fact that we enjoy what we do. We don’t really work on a wine with the idea that we’re going to win a prize; rather, we do it because we feel that we are doing something really special.
Yet the prizes are piling up: “Vivir el vino” magazine called you the best winery in Spain last year. How important is the team work behind these accolades?
If I have an idea, put it to the directors and notice frowns on their faces, then I know that this idea is going nowhere. You need to convince your team that your idea is worth developing. And when we come up with new ideas, we are not thinking about the money they will bring to the business, but about the prestige. When we start to make a wine, we never put a price tag on it. That is the last thing we do, after we’ve added the label. What we’re primarily thinking about is creating something good that does not exist yet.
Thirty years ago, Bodegas Luis Cañas was a modest winery making young wines, but today it is becoming a reference in the Basque Country, Spain and the world. What is the craftsmanship that’s driving this change?
First, you have to surround yourself with talented people who can contribute something to the project; then you have to make sure that these people see the project as their own. Secondly, we have been recovering the old way of growing grapes, before all the pesticides and other aggressive techniques were introduced in the sector. Back in my father’s day, wines were healthier and people worked differently. We have recovered many of the working methods used 50 years ago: no herbicides, no synthetic fertilizers - just organic, non-aggressive phytosanitary products. And we are systematic in the way we work: take cleanliness, for instance. It was harder at first, but now everyone takes pains to ensure that everything is so spotless that you could eat off the floor. And we have a consultancy organizing brainstorming sessions for us, to help improve the way we do things. So we are systematically seeking ways to achieve excellence in our work.
Who are some of the people who work with you?
We have an agricultural engineer and a technical engineer out in the field, and inside the winery we have a technical director, two enologists, and another technical engineer and enologist doing risk and quality work. So we have highly skilled people in all positions. Employee training involves field work, winery work, sales, administrative duties, and public relations, a department that is going to be headed by a French woman.
Do you get many French visitors?
We do. Last Saturday we had 14 French citizens eating here. We in Spain were once considered practically part of the Third World by France, but now we have become desirable to them. It’s funny how things have changed.
The latest wine export figures show that Spain has overtaken France in terms of volume, yet only makes a third of the money that France does. As a maker of premium wines yourself, how do you see the Spanish wine market?
This is one of the problems facing the sector. We are selling a good product, sometimes for under five euros. Winemakers in Rioja know that not all their wines can be premium, but a world-recognized region such as this one should consider raising its prices proportionately. The more we move in that direction, the more recognition we will earn in the international markets. To give you an exaggerated example, you cannot sell 10 million bottles of a wine and still expect it to be viewed as prestigious. Wineries should reconsider their production on the basis that excellence is never plentiful. And you also need to take your excellent product and work on the presentation, on designing a nice label, on explaining it well to other people – because there are winemakers out there doing a great job, yet nobody knows about it.
How important is the US market to Bodegas Luis Cañas?
It is more important today than it was five years ago, but it is going to be even more important five, ten years from now. We are going to introduce a lot of premium wine on the American market, and I think we are going to be positively recognized for it.
What are the peculiarities you see in the US market?
Americans are increasingly embracing wine. Drinking wine is becoming trendy at social gatherings. French wines, like French products in general, have enjoyed great prestige in the US since World War II. The Spanish wines being consumed there are mostly from Rioja and Ribera del Duero, but people under 50 are very open to trying new products, and I think the US market is headed towards a higher consumption of both reds and whites. These new trends taking hold in the US are going to benefit us.
How are you going to stand out from the competition?
We have a few wines with extraordinary personality. Our wines are different: we work the vineyard differently, we work the winery differently. So we are selling personality. And our wines are increasingly healthy because of the way we produce them. There must be very few wineries in Spain with five grape selection tables. So we don’t just practice outstanding viticulture, we also make a rigorous grape selection, discarding the ones that don’t make our cut. We are aiming for top quality.
What is your strategy for positioning the wines you want to place in the US market?
It depends a lot on our importer, who is in Florida. There are fundamentally five wine-consuming states: California, Florida, New York, Illinois, Massachusetts, and in general the New England area. The rest of the country represents 20 percent of consumption. Our US importer has his own distributors, and we are not in touch with those. But we have appointed another person – an American who is married to a Spaniard – to be the importer’s aide. This person travels across the US to events where we want to have a presence.
Are you taking your entire catalog of products to the US?
Yes, although there are certain products that don’t do well there, like young wines. They are interested in Crianzas, Gran Reservas, and our special Amaren wines. We have also just released a very special wine called Pendón de la Aguilera with a retail price of €240. It is on the wine menu of Tatel, a new Madrid restaurant owned by three famous Spaniards: the singer Enrique Iglesias, tennis champion Rafa Nadal and NBA player Pau Gasol. This wine has very special work behind it, and comes from extra-special vines.
What other special wines do you make?
My father was the first harvester of Villabuena, and he sold young wines made with the carbonic maceration technique (also used in the French Beaujolais). Those are our origins, and I felt we couldn’t lose that. So I want a top spot in that niche market as well. We’re going to make a delicious carbonic maceration wine with a higher price tag and an attractive label. We are also working on a line that we don’t normally take out to market, which are our Club Wines made with exclusive varietals and blends. A Mexican businessman recently convinced us to produce 2,000 bottles of these club wines for his stores.
What is the strategy behind your label change?
This is a bit like fashion – you have to change your labels from time to time, otherwise people start to complain that you’re always looking the same. Next year, when we begin with the 2015 wines, we will change the labels on our young reds and whites, bringing them more in line with our Crianzas and Reservas to create more of a brand look. And we already changed the look of the older wines not long ago.
Your winery offers guided tours. How important is enotourism to your business?
We see it as a business unit, but I am not that interested in the revenue it might represent – in fact, I’d be happy simply not to lose money on it. What I really care about is for people to come see what we do, and for word of mouth to spread. That is important to me because we are very transparent when we show our winery around; our tour guides talk so passionately about the business that visitors usually think that they’re my daughters! So when people walk away from here, they really know what Bodegas Luis Cañas is all about. We want to create ambassadors, rather than sell visitors a crate of wine. We’re looking to create prestige and brand value, rather than money.
How would you define wine as part of the Basque culture?
Back when I was 17, I used to go bar-hopping with my friends every day before dinner, drinking small wine glasses at each one. Later, when we were older and had more money, we would have a few wines with pintxos (Basque tapas). And people in their 60s also did this with their friends. Wine was a social thing that brought people together. These days, people tend to meet just once a week for pintxos or dinner, washed down with some wine. But wine is still associated with food and friendship. That is a reality in the Basque Country.
Could Bodegas Luis Cañas become an ambassador for this wine culture in the US?
It would be an honor.
The oldest winery in Alava, Marques de Riscal started operations in 1858 in Elciego, in the Rioja Alavesa. Today, it has grown to become a major global wine player, with annual sales of €50 million ($57 million) to 104 countries. Its City of Wine complex, which puts a Frank Gehry-designed and Starwood-run hotel amid vineyards and wine cellars, has become a key tourism destination, transforming the Basque wine-making tradition into a cultural experience – it even offers vinotherapy spa treatments.
Could you define Marqués de Riscal in one sentence?
I could tell you what many others say; that we are a combination of innovation and tradition. But instead, I think that the main thing to remember about Marqués de Riscal is that we are one of the biggest names in the world of Spanish wines.
Founded in 1858, this is the oldest winery in the Rioja Alavesa area of the Basque Country. What remains of those origins?
Quite a lot. We have preserved the innovative spirit that guided the foundation of the winery by Guillermo Hurtado de Amézaga, who was living in exile in the French region of Bordeaux at the time. He brought the innovative wine production system he had seen in Bordeaux back to Álava, in the Basque Country. But because the local market was not ready to pay for wines whose superior production methods made them more expensive, Marqués de Riscal decided early on that it had to start to export. So innovative methods and an international focus marked the winery’s beginnings, and these have clearly remained defining elements up until the present.
How do you find a balance between tradition and innovation?
By maintaining the innovative spirit of our founders. In the 19th century that meant adopting French winemaking methods. In the 20th century we went down to Rueda, in Valladolid province, to make our white wines. And at the turn of the new century we launched our City of Wine with the collaboration of the architect, Frank O. Gehry, project with a new focus on wine tourism. It’s not easy to keep the spirit alive, but we have worked hard to do so throughout the years.
This winery has put Rioja Alavesa on the map as a reference point for international wine tourism. How important is this activity to Marqués de Riscal’s overall business?
Just the other day I was saying that we would like to be the regional answer to Napa Valley, which attracts millions of visitors every year. As such, it is very important that Marqués de Riscal is not the only winery in Rioja Alavesa working towards that goal. Many others should join the project, and, as a matter of fact, they already are; one example of this is the Vivanco Museum, run by the Vivanco winery in Briones. It’s important to create a network of wineries offering quality tourism, and for us to be united on this issue. Marqués de Riscal has made a pioneering effort towards this goal, and now we need a concerted effort by lots of other wineries in order to put Rioja Alavesa on the map.
How much American tourism do you get?
Quite a lot. The hotel adjacent to the City of Wine is run by a US company, Starwood Hotels & Resorts, which is now merging with Marriott to become the largest hotel chain in the world. Our hotel is marketed under their Luxury Collection brand; I would estimate that around 80 percent of our clients are foreigners, and of these, perhaps around 20 percent are American citizens. Besides that, there are the visits to the winery proper, which receives close to 100,000 visitors per year. These tourists come from a variety of backgrounds and include many Spaniards and Europeans.
So wine tourism is a significant line of business in itself?
Our Project 2000 and the Frank Gehry building was originally a marketing initiative aimed at promoting and reinforcing our brand in the world through architecture, just like the Guggenheim museum did in Bilbao. At that point, our financial goal was to break even. These days, however, it has become a high-performing business unit in its own right.
What distinguishes Marqués de Riscal wines from the rest?
What I most like to hear from people when they talk about our products is that Marqués de Riscal is a safe bet, that you can’t go wrong when you buy one of our wines. And we have a large portfolio to choose from, ranging from our super-premium wines to widely affordable ones. We sell in over 100 countries and offer our distributors a varied selection of reds and whites. But it is like choosing between Mercedes models: no matter which one they buy, clients know that they are buying quality.
As president of Marqués de Riscal, do you have a favorite wine?
I see wine as a product for different occasions, so it really depends on the moment and what food you are having it with. Perhaps one day you feel like a full-bodied wine that’s been aged in wood barrels; or perhaps another day you want something fresher with your appetizer. There is a time for each wine. Having said that, we are making a significant effort to re-position our exclusive wines: our Gran Reserva, our Barón de Chirel, our Gehry selection, our Finca Torrea. We are trying to make these wines in a more traditional, old-fashioned way once again. We are also increasingly introducing organic agriculture, using fewer fertilizers. In the wine world, innovation sometimes means going back in time and adopting 19th-century practices all over again.
Tell us more about your Barón de Chirel.
It was launched in 1991 with the vintage 1986 on the advice of our US distributor, who said ‘Why don’t you make a wine that goes back to your origins, capturing the spirit of the old Médoc Alavés wines that Marqués de Riscal originally made – something more full-bodied and concentrated?’ And so we did, creating a signature wine that became one of the first modern Riojas to go on the market.
How does Marqués de Riscal approach the process that goes into making a bottle of wine, from the grape to the glass?
I believe that the concept of vineyard ownership is very important. We don’t buy wine from cooperatives or from other suppliers – we make all of our own, and know exactly where the grapes came from. We own 500 hectares of what is undoubtedly the best land in Rioja Alavesa, situated around the towns of Elciego and Laguardia. Besides that, we also have associates whose land we manage. These are old, family-owned estates whose founders passed down the Marqués de Riscal contract generations ago, so we have a close relationship with them. These estates represent over 1,000 additional hectares where we provide technical advice as to how to handle the vines, harvest the grapes and so on. We put as much enthusiasm into this work as we do with our own properties. All the grapes are tracked according to the estate that they came from. And in Rueda, where we make our white wines, we own and manage additional land. In total, we own around 1,000 hectares. That is why I say that land is fundamental to us.
How important is the US market to Marqués de Riscal?
Rioja wineries have two or three main foreign markets, but we haveMarqués de Riscal exports approximately two thirds of its production. Most 20, and of these, the US is the top one. Although we are selling in over 100 countries, we are especially happy about selling in countries like the US.
What is your commercial strategy in the US?
We don’t have our own distributors; we rely on importers instead. When you have a great brand, the great thing is that you are able to select the strongest distributors to work with, and this gives you an advantage. Take a good brand, with a good distributor in a good market and that’s a win-win situation. So our strategy is to find the best distributor in each market.
Does the US have any peculiar traits that make it stand out from other markets?
The US market is more than just one market. You have to break it down into states. We have a strong presence in places with a significant Hispanic community, but now we are expanding into other areas as well. That is our goal.
Which of your wines are doing best in the US?
Our Reserva is a hugely popular product there. And among the whites, the Rueda Sauvignon is doing really well too.
Spain is the world’s top exporter of wines, yet revenues are a third of what France makes. Why is that?
Because most of what we export is bulk wine. And that does not help the industry at all because it pulls prices down. But if you take those bulk wines out of the equation and focus on Designation of Origin wines, and if you take Riojas more specifically, you will see that the price tags have nothing to do with the average.
How does this focus on bulk sales affect the overall reputation of Spanish wines?
Evidently, it doesn’t help. If all Spanish wines were sold with a label and a brand, it would increase their value. And therein lies our pending task. The present situation pulls prices down and that’s a terrible strategy to follow in the markets. Obviously, Marqués de Riscal is not in the business of bulk wines, yet we are affected by them as many people identify “Spanish wine” with “cheap wine.”
What role can a leading winery such as Marqués de Riscal play in pushing the Spanish wine market in the right direction?
Marqués de Riscal must play its role by doing things well through its own brand. A larger concerted effort should fall to agencies such as the Spanish Wine Federation, the Regulatory Councils and the government... In the meantime, Marqués de Riscal can express its opinions through the proper forums, and contribute by doing a good job.
Your winery has received numerous awards over the years, including 2013 Best European Winery by the prestigious magazine Wine Enthusiast. Is there any recent prize that you are particularly proud of?
Our latest one, which was awarded by Mundovino.com, considered a reference in Spain among wine tasters. Our wines received the highest points in the Rioja wine region: Marqués de Riscal 150 Aniversario Gran Reserva 2010 with a 18/20 mark and Barón de Chirel 2011 with 17, 50/20.
This content was produced by The Report Company Publishing and appeared in The Washington Post newspaper on June 29th, 2016.