The Competitive Position of the Basque Aeroespatial Cluster in Global Value Chains: A Historical Analysis

Abstract

In this paper, based on the case study of the aerospace cluster of the Basque Country (Spain), we aimed at analysing how local industries develop a new specialization, that is, how a cluster emerges, and how it evolves over time. For that purpose, apart from considering local factors (both forces that are internal to the cluster and to the territory), we explicitly consider the role of institutional and technological changes, and how they affect industry structure and governance patterns of global value chains (GVCs). We observe that global-scale regulations (deregulation and competition policy) and technological change, together with local factors such as the existence of anchor firms, local policies, related variety and social capital at regional and cluster levels played a significant role in the emergence of the cluster and how it became inserted in the GVCs. Later on, the development of suppliers' capabilities also had a relevant role in the evolution of the governance patterns of GVCs.

Acknowledgements

Financial support from MICINN HAR2009-09264/HIS and HAR2010-18544/HIS is acknowledged. The authors also acknowledge Sandrine Labory for her comments on an earlier draft of this paper.

Notes

Humphrey and Schmitz (2002, Table 1) explain the local-level governance (or governance within the locally) as “strong local governance characterized by close inter-firm cooperation and active private and public institutions”. This includes local/regional industrial policy and governmental and non-governmental institutions.

Aerospace industry is a knowledge-intensive sector that involves a greater number of different technologies. This variety and complexity is difficult to concentrate in one place, hence the widespread diffusion of GVC in this industry.

Social capital is embedded in a social context of relationships among firms, individuals and institutions, and has several dimensions: structural (overall pattern of connections, proximity), relational (type of connections, level of trust) and cognitive (shared codes, knowledge, manufacturing standards, organizational routines). A detailed case study on the level and evolution of social capital in another Basque cluster in Valdaliso et al. (2011).

On the “myopia” of American incumbent firms and its exclusive concern on big airplanes, see National Research Council (1992).

Jackson (1997, p. 16) describes the recent developments of this industry:

The aircraft industry has in recent years seen a shift from virtually hand-made to mass produced aircraft. Although many steps in the manufacturing process of commercial aircraft parallel those for motor vehicles, design and manufacture of commercial aircraft are even more complex.Although aircraft manufacturing is a low volume process, its complexity arises from dependency on highly integrated high-technology subsystems, use of advanced material, detailed specifications, an extremely rigorous testing.

On modularity, see Langlois and Robertson (1995) and Langlois (2002).

This part draws heavily on López et al. (2012).

EADS/Airbus and Boeng in large aircrafts, Embraer and Bombardier in medium-sized aircrafts, and GE, Rolls-Royce and Pratt & Whitney in engines.

On this methodological approach, see Eisenhardt and Graebner (2007) and Burgelman (2009).

The Basque Government was considering the creation of an aeronautics cluster in the Basque Country, with the aim of taking advantage of the knowledge accumulated in special alloys in the foundries. With that purpose, in 1992 they entrusted Monitor Company, a consulting firm lead by Michael Porter, and Sener, a study on the aeronautics industry and the chances of developing a cluster in the Basque Country (Monitor-Sener, 1992). The bet of the Basque Government on this cluster was part of the new industrial policy put in motion in 1991 based on Michael Porter's cluster model, which tried to improve competitiveness by improving existing industrial sectors and establishing new ones, more intense in science and technology. Moreover, they aim at reorienting the special steels sector, which was in a deep crisis, towards new higher value added markets such as aeronautics and automotive industries (Aranguren et al., 2012).

SEPI, the Spanish Society for Industrial Stockholding, was created within the framework of the process for the reorganization and modernization of the state-owned entrepreneurial sector, in order to manage the industrial shareholdings owned by the State and which came from the former entities Instituto Nacional de Industria and Instituto Nacional de Hidrocarburos, which were liquidated.

On the historical development of these sectors, see Valdaliso (2010).

Gamesa/Aernnova got its first contract with Embraer to manufacture the wings of the ERJ 145 aircraft. Shortly thereafter, it participated in the ERJ-135. In the same period the company secured the contract with the firm Sikorsky for the construction of components, helicopter rotor blades and won the contract for the production of the fuselage of the SJ30-2 business aircraft designed by the firm Sino-Swearingen. On the other hand, ITP signed with BMW and Rolls-Royce a contract of participation in the engine BR751 that equipped the McDonnell Douglas MD95 aircraft. ITP has increased its collaboration with Rolls-Royce as a venture partner in the Trent 500 engine programme. This engine equipped the Airbus A340-500/600 (Hegan, 2008, pp. 12–15).

These are examples of relational and, above all, cognitive social capital, that helped clustered firms to enhance and upgrade their capabilities.

For example, orders for EADS for the A380 had the following consequences in the second tier of suppliers (SMEs):

• Aratz manufactured precision parts, tooling and machinery.

• Aeroteam made parts for the rudder, the elevator and reinforcements for section 19 of the aircraft.

• Burulan, TTT, Spasa, Astorkia, Burdinberri, Alfa Microfusion, Metraltec, Mesima, Tey and Siegel made and gave the finish to different aircraft components (López et al., 2012).

The risk-sharing programmes in which the cluster companies participated in 2011 were:

• AIRBUS A350XWB—Risk-sharing partners: AERNNOVA, ACITURRI, ALESTIS

• AIRBUS A380—Risk-sharing partners: AERNNOVA, ACITURRI, ALESTIS, NOVALTI

• AIRBUS A400M—Risk-sharing partners: ACITURRI, ALESTIS

• BOEING 747-8I/F: AERNNOVA

• BOMBARDIER CSeries—Risk-sharing partner: AERNNOVA

• DASSAULT FALCON 7X—Risk-sharing partners: ACITURRI, ALESTIS

• EMBRAER ERJ 135/145—Risk-sharing partner: AERNNOVA

• EMBRAER 170/190—Risk-sharing partner: AERNNOVA

• EMBRAER LEGACY/PHENOM—Risk-sharing partner: ALESTIS

• EPI TP400—Consortium member: GRUPO ITP

• EUROJET EJ200—Consortium member: GRUPO ITP

• MTRI MTR390E—Consortium member: GRUPO ITP

• ROLLS ROYCE TRENT 500/900/XWB—Risk-sharing partner: GRUPO ITP

• ROLLS ROYCE TRENT 1000—Risk-sharing partners: ACITURRI, GRUPO ITP

• SIKORSKY S-92—Risk-sharing partner: AERNNOVA

• TURBOMECA (ALL RANGE)—Exclusive transversal agreement for special gears: DMP (Hegan, 2012, p. 58).

Participation in the most advanced technological niches is measured by participation in international research programmes. In 2011 20 companies participated in 60 international research programmes, especially in the Seventh Framework Program (FP7). In turn, the technology centres of the cluster (Tecnalia and CTA) participated in 36 international programmes. Here are those Tecnalia projects within the FP7 programme, for which we have information on foreign partners:

• ADVITAC—Advanced integrated composite tail cone Development of new composite materials and technologies for the tail cone of future regional aircraft/DAHER Aerospace, Coriolis, FRT, Univ. Cranfield

• LAYSA—Multifunctional layer for safer aircraft composite structures. Developments of multifunctional laminated composite materials/Aernnova, Aries Complex, Inasco, HAI, Univ. Patras

• INMA Innovative Manufacturing of complex Ti sheet aeronautical components/Univ. Patras, Airbus, EADS, INDUSTRIAS PUIGJANER S.A.

• ELECTRICAL Novel aeronautical multifunctional composite structures with bulk electrical conductivity and self-sensing capabilities (Airbus, Univ. Patras, Aernnova, EADS, Short Brothers, Arkema)

• MAAXIMUS—More Affordable Aircraft through eXtended, Integrated and Mature Numerical Sizing Fast development and right-first-time validation of a highly optimized composite fuselage thanks to a coordinated effort between virtual structure development and composite technology. Coordinator: AIRBUS. Some other partners: BOMBARDIER: SONACA; TAI; DLR, INASCO

• CABLEBOT Parallel Cable Robotics for Improving Maintenance and Logistics of Large-Scale Products. Collaboration with EADS

• REFORM Resource—Efficient Factory Of recyclable Manufacturing composite components. Collaboration with the University of Sheffield—Department of Advanced Manufacturing Research Centre and Formtech Composites Limited

• AMAZE Collaboration with the European Space Agency, AVIOprop, AVIO S.p.A, Thales Alenia Space, BAE Systems and Bombardier.

• ESPOSA—Integrated approach to efficient propulsion and related aircraft systems for small-size aircraft. Coordinator: PRVNI BRNENSKA STROJIRNA VELKA BITES A.S. Some other participants: AVIO S.P.A, MOTOR SICH JSC, HONEYWELL INTERNATIONAL SRO, PIAGGIO AERO INDUSTRIES SPA, FRAUNHOFER-GESELLSCHAFT ZUR FOERDERUNG DER ANGEWANDTEN FORSCHUNG E.V.

• SARISTU—Integrated approach to smart airframe structures “The project proposal concerns the challenges posed by the physical integration of smart intelligent structural concepts.” Coordinator: AIRBUS OPERATIONS GMBH. Some other participants: ALENIA AERONAUTICA SPA, AERNNOVA, SAAB AKTIEBOLAG, SHORT BROTHERS PLC, GKN Aerospace Services Limited

• ACTUATION 2015—Integrated modular actuation systems for the future all-electric aircraft. Coordinator: GOODRICH ACTUATION SYSTEMS SAS. Some other participants: AIRBUS, ALENIA, SENER, HISPANO SUIZA, CESA (Hegan, 2012, pp. 44–57).