Barcelona free zone looks to cement tech future

What today looks like an abandoned plot of land covered with piles of earth and construction materials will shape the future of Barcelona free-trade zone Consorci de la Zona Franca (CZFB). An innovation hub called D-Factory will rise on the plot of land from the ashes of an old facility of car manufacturer Seat that redefined the concept of innovation of production processes back in the mid-20th century and around which the CZFB flourished. 

Back then, Fordism and the rise of a Spanish middle class paved the way for the mass production of cars and consumer goods, thus revolutionising local habits and economies. Today, other technologies are bringing along changes as deep as those experienced in the previous century. Automation, digitisation and the Internet of Things have already revolutionised production and assembly lines, and 3D printing, although in its infancy, promises to increase the disruptive power of 'Industry 4.0'. With D-Factory, the CZFB is now embracing the future of manufacturing, expecting to set a model for all the companies active in the area to follow.

“We want this space to become a hub for the new economy,” says Pere Navarro, the state special delegate of the CZFB. “We want it to become a centre for new forms of manufacturing that could expand throughout the zone. All the companies in the CZFB have to take note: manufacturing is changing, logistics and supply chains are changing too.”

An Industry 4.0 template

Established in 1916, the CZFB is a public estate extending over 12 million square metres of industrial and urban land in various stages of development. The CZFB company is a joint venture between the Spanish government, Barcelona’s city council and representatives of financial institutions in Barcelona whose corporate mission is to promote social progress and job creation by fostering industrial and logistics growth, boost business development and provide platforms for economic activity and technology transfer. Beyond managing the estate, the CZFB company also organises and promotes events and exhibition across the sectors active in the zone.

Today, the CZFB has transitioned to the model of an industrial and logistics zone, except for a residual tax-free area offering customs clearing services for goods coming in and out of Spain, or simply transiting through Barcelona but not entering EU territory.

The CZFB currently hosts about 300 companies spanning the automotive, basic chemicals and logistics sector, including the likes of Nissan, Seat, Bayer, DB Schenker, Spain-Tir, Molenbergnatie, Consum and 40 other multinational companies, according to the CZFB. Another 31 companies are active in the zone’s logistics park, whereas its business park hosts the headquarters of major Spanish companies such as Abertis Infraestructuras and Saba Infraestructuras.

D-Factory is now expected to pave the way for a transition to Industry 4.0 throughout the CZFB. A first phase of the project will see the new facility extend over some 17,000 square metres and open its doors in 2020, for a total investment of €17m. Successive phases should see D-Factory grow to between 70,000 square metres and 100,000 square metres, with the amount of capital invested growing to €100m, according to the company’s initial estimates. The facility’s business model has yet to be defined: it might host a single, large tenant linked to new technologies, or a number of different SMEs, ideally collaborating and sharing innovative ideas.

Another dimension

The whole plan will draw on the achievements of another innovative project already operating within the CZFB: a start-up incubator focusing on 3D printing technologies, the first of its kind in Europe, launched in February 2019. A collaboration between the CZFB and the Leitat Foundation, a local non-profit organisation promoting R&D, the incubator is hosting its first batch of 25 start-ups, whose activities include the production of industrial machine components, medical devices and electronic instruments.

Additionally, the CZFB made an agreement early in March with the Catalan Employers’ Association to create a joint commission to promote the digital economy in a business environment and support technological transformation among companies in the region.

These initiatives are expected to give new impetus to the development of the CZFB. With the introduction of EU rules that limit state aid and thus the development of typical free zones offering fiscal and financial incentives, the CZFB has already turned into an industrial area creating clustering advantages for manufacturing and logistics companies. With its latest bet on 3D technologies and innovation, the zone has further distanced itself from the traditional model of isolated free zones intended as special economic areas within a specific territory. Indeed, it has moved to strengthen its role as a champion of innovation and skills for the whole area, at a time when industries and tenants such as Nissan are reassessing and possibly scaling down their local operations.

“We are going to explore new forms of business to create opportunities for new generations who will find a different job market – there won’t be many workers left on assembly lines as robots take their place – and will have to take up different professions such as, among others, designers, software developers and professions related to the circular economy,” says Mr Navarro.

“We will nurture new professions in the CZFB that are going to differ from the jobs currently available in the area, and we are going to do that in conjunction with education institutions to foster the development of clearer career patterns so that new generations get a better idea of the jobs of the future. And with regards to incentives, our position is the most important one. We are next to the city’s port and airport and next to the city. There are no fiscal incentives, but our position is enough to lure investors.”

High occupancy

The zone’s financial performance is also creating breathing room for the CZFB to take new risks. The zone closed 2017 with its best financial result in 10 years as it hit a net profit of €31.6m. Occupation levels of industrial areas have now fully recovered from a low of 65% in the aftermath of the financial crisis to the current 99%, a comeback facilitated by a downward adjustment of the rent rates of the land plots in the zone. At the same time, the offices of the business park have reached an occupation rate of 88%, according to the company’s 2017 financial statements. Between 2011 and 2017, the CZFB’s financial debt level fell to €195m.

The management of the CZFB is now committed to looking beyond national borders. It is organising a number of major events related to international trade in mid-2019, including the annual gathering of the World Free Zones Organisation in June, where Mr Navarro aims to strengthen the CZFB’s connections with similar concerns across the globe and even champion association activities based on the nature of the production operations happening in a particular area, such as an association of industrial areas.

The cost of this report was underwritten by Consorci de la Zona Franca Barcelona. Writing and editing were carried out independently by fDi Magazine.