Carmakers Rush to Invest in Spain

Carmakers are investing more than €6 billion ($6.7 billion) to expand production capacity in Spain, already Europe’s second-largest vehicle manufacturing country after Germany.

Carmakers credit their decisions to invest in Spain to its strong automotive supply base, relatively flexible labor laws, competitive wages and high quality.

Germany alone spent more than €4.8 billion ($5.3 billion) in Spain in 2015, The Wall Street Journal reports. And Ford plans to invest €2.3 billion to expand its factory in Valencia—the company’s largest plant in Europe—by 2020 to make Mondeo sedans and Galaxy and S-Max MPVs.

Last year Spain’s auto industry contributed nearly twice as much as construction to gross domestic product, reversing the ratio a decade ago before the housing collapse. Spain produced a record 2.7 million vehicles in 2015, 80% of which were exported. The industry currently employs 9% of Spain’s active workers, the Journal notes.