The industry is collapsing and only a few heroes are holding on.

PalmUntil the 1970s, one in three workers in the Balearic Islands was employed in industry. The islands manufactured a large part of what they used and even exported to mainland Spain and abroad. Today, the figures are different and show how this sector, considered strategic and essential for creating quality jobs, is practically negligible in the overall economy and continues to lose ground. Tourism has become so dominant that, at best, industry represents 5% of economic activity. According to data from the Balearic Government, which uses less restrictive parameters, there are approximately 6,000 companies. According to the Impulsa Foundation database, the figure is less than 700.

The announced closure of Agama once again highlights the problems faced by companies that are not directly involved in tourism, but rather struggle to survive by manufacturing products, either from the agricultural sector or those that focus on technology.

Businessman Biel Huguet believes it's important "not to make a hasty or simplistic analysis of the Agama case." "In Campos, everyone blames Damm. We need to be more self-critical and rigorous. Blai, Piris, and countless other farms had already closed. The agricultural and industrial sectors are facing many difficulties, but it's clear that as a society we don't invest in either the primary sector or industry, and Damm isn't to blame for that," he explains.

The question many citizens are asking is how it's possible that, with over a million inhabitants and 18 million visitors, local products like milk and nearby industries ranging from gourmet food to technological solutions aren't viable, and the trickle of closures isn't stopping. "There are three main problems we can't seem to overcome: we need innovation, we need industrial land, and we can't export because three shipping companies have an oligopoly and the prices are unaffordable," explains Toni Garí, industrialist and managing director of Poraxa.

Bernat Bonnín, CEO of the Mallorcan technology company Robot, adds another element to Garí's argument: "The very serious housing problem, since, in addition to the costs of insularity, we must add that if we don't provide accommodation for an engineer, it's simply not grounds for organization. But our sector, precisely, needs a specific profile. It creates a competitive disadvantage with the current situation in the Islands," he explains.

Widespread disillusionment

To complete the diagnosis, Biel Huguet, the entrepreneur and CEO of Huguet, considers it essential to discuss "the social disillusionment, especially among young people, regarding commitment and projects." "We have an exceptionally well-educated generation that we are unable to retain. It's a complex and profound issue, which is exacerbated in a place like the Balearic Islands, because young people seek motivation elsewhere. Here, we struggle to find that level of involvement." All of this, according to Huguet, "is compounded by the high production costs we face in the Islands, which are not easy to overcome."

The Government is neither avoiding nor ignoring public concern regarding industry. The Director General for Industry, Alfonso Gómez, is aware that "the Agama case is another blow." "It should serve to further refine public and private policies and commitments if we truly want to preserve industrial activity in the Islands," he admits. Gómez agrees with the business community's assessment of the industry's problems, but qualifies the issue concerning the lack of industrial land. "It's true that we have to find ways for municipalities to increase their industrial land, but we must also review the activities taking place in industrial parks, because a significant portion are not industrial. We've come close to emptying cities of certain activities, and a climbing wall and a recreational area are not industry. We need real industries," he says.

Industry plans

The regional government is currently preparing a new Industry Plan, following the expiration of the 2018-2025 plan. According to business leaders, the last plan was as well-conceived as it was "ineffective," as Toni Garí laments. "Plans are all well and good, but they're useless without leadership from the regional government. Now they're creating another one, and the same thing will happen. We need to be self-critical. The government represents society: it's not just the public sector that's failing, the rest of us are failing too," he argues. In this regard, the businessman believes there is a significant lack of "social and political awareness about the importance of industry and, above all, innovation." "Industry is no longer just about smokestacks and destruction. That was 50 years ago; today it's completely different. It's an activity that generates quality employment year-round. This is precisely what we're lacking, and we keep insisting on increasing the same old model: more tourism," he concludes.

In this regard, Bernat Bonnín asserts that industrial business owners are not "against tourism." "We do work for hotels, robotizing and automating some operations. What's happening is that we do have a problem with excessive tourism activity compared to industry. This is where we need to focus our efforts. Innovation is key. We have 74 employees, 14 of whom are dedicated exclusively to R&D. In other words, we don't produce what we need, but they develop what we need to compete," he affirms.

Bonnín believes that "technology and industrial companies must add value to be able to compete." "On price, someone will always come along and do it cheaper than you, because our geographical location has its costs. During the financial crisis, we reduced our staff, but not our innovation team. And we reaped the rewards. It's not easy; you have to make a firm commitment and not just rely on public aid to save you," the businessman adds.

The Director General of Industry shares this view. "The public sector must support, we must be involved. But it is the sector itself that has to stretch itself. That said, we have to make decisions to help companies become more competitive and mitigate the effects of insularity, for example," he says.

Along these lines, Garí considers it "essential that someone takes the issue of transport costs seriously." "The three shipping companies take advantage of their dominant position and charge exorbitant prices for shipping a container, even though 70% of the ships' capacity is used for the return trip from the Islands to the Peninsula, empty. This prevents us from exporting, and exporting is essential when you calculate your business's profitability," he says. Biel Huguet expresses a similar sentiment: "We internationalized by working incredibly hard, which has been key. But it's essential that public policies facilitate this, as is done in other autonomous communities," he emphasizes.

The Balearic Government points out that it has promoted "more than €13 million in industrial investment in the Balearic Islands through its grant program for industrial modernization" in the last two years. The sectors with the most projects were the wood and furniture industry (62 projects and more than €2.3 million in investment), the food industry (more than 50 projects and more than €2 million), and the repair and specialized technical services sector (more than 60 projects and more than €1 million).