Located in the north of the Iberian Peninsula, the Basque Country is one of

Spain’s 17 autonomous communities but, in ways both obvious and subtle,

it does things rather differently from the rest of the country.

First, there is the language, Euskara, Western Europe’s only pre-Indo-

European tongue, used by a third of the region’s 2.1 million people and

unintelligible to Spanish speakers. Then, there is the landscape: limestone

peaks, fertile valleys, and fast-flowing rivers that meet the Atlantic amid

dramatic cliffs and idyllic beaches, a world away from Castille’s arid plains.

And, of course, there’s the food and drink: cod cheeks in pil pil, marmitako

tuna stew, elaborate pintxos, young txakoli white wines and aged Rioja reds

that are enjoyed worldwide, but don’t taste quite the same anywhere else.

The Basque Country is one of Spain’s most densely populated areas, home

to cities like post-industrial Bilbao, seat of government Vitoria-Gasteiz, and

Donostia-San Sebastián, 2016’s European Capital of Culture. It is one of its richest

regions too, with a GDP per capita above the European Union average and an

economy worth nearly €66 billion in 2015. It spends more per head than the rest

of Spain on education and healthcare. And it has the lowest unemployment rate,

with under 13% of the active population jobless compared to 21% nationwide.

The secret to its success is a long-term commitment to industry. While

the rest of Spain rides the boom-and-bust rollercoaster of its tourism and

construction-based economy, the Basque Country makes things we all need

and re-invests in R&D to make them better and smarter than its competitors.

Manufacturing represents over 20% of its GDP, with sectors like metallurgy,

petrochemicals, aeronautics, energy, and new technologies for healthcare

leading the way.

“It is the base on which we have built our industrial fabric,” says

Arantxa Tapia Otaegi, the Basque Government’s Minister of Economic

Development and Competitiveness. “We have been focusing on defining

our strengths and diversifying to grow. And we are working on transforming

knowledge. As the public sector, we make an initial investment to put things

in motion and then we work with private investors to make them happen.”

Since the early 1990s, the Basque Country has fostered economic

clusters to reinforce competitiveness through cooperation, supporting small

and medium-sized enterprises in a collective drive towards innovation,

excellence, and internationalization.

“Industries and manufacturing are long-term activities,” says Alexander

Arriola, the Managing Director of SPRI, the Basque Business Development

Agency. “They are difficult to create, but can last for many years. This is the

added value of the Basque region. We have 22 clusters and we are pioneers

in Europe with our policy.”

Capitalizing on decades of public and private-sector collaboration,

clusters pay dividends for Basque businesses and society alike: “From the

beginning, we tried to build a big social network to support the whole

community: high quality education, healthcare, and social services for all,”

notes politician and business leader Jon Azúa. “This enables growth and

development in an inclusive way.”

Now, in line with its EU-backed Smart Specialisation Strategy and the

Basque Industry 4.0 advanced manufacturing initiatives, the Basque Country

aims to take its industrial prowess to the next level.

“Our focus on innovation aims to add value to our business culture,

providing GDP gains and jobs,” explains José María Villate, the General

Director of Innobasque. “The Basque R&D strategy is based on intelligent

specialization, focusing experienced resources on areas with the highest

returns on investment, and efficient responsiveness to the market’s needs.”

The Basque CounTry: innovation & exceLLence Focus on industry and cooperation pays off for independent-thinking spanish region

From L to r: arantxa tapia otaegi, Minister of economic Development & competitiveness · asier alea, General Manager of trade Promotion & tourism, Government of Biscay · Gorka Urtaran, Mayor of vitoria · Juan Mari aburto, Mayor of Bilbao · Markel olano, President of the Provincial council of Gipuzkoa · alexander arriola, Managing Director, SPRi · alberto García erauzkin, President, euskaltel and chairman, innobasque Middle row: asier atuxa, chairman, Port of Bilbao · Joxe Mari aizega, General Director, Basque culinary center · andrés arizkorreta, chairman & ceo, caF · alejandro aznar, chairman, Marqués de Riscal · José María villate, General Director, innobasque · Jon azúa, Founder, e-novating · Bottom: Juan Luis cañas, owner, Bodegas Luis cañas · euken Sese, Director, Fomento de San Sebastián · Juan ignacio vidarte, General Director, Guggenheim Museum Bilbao · eneko Goia, Mayor of San Sebastián · iñigo Ucín, Managing Director, DanoBatGRoUP · Javier Sotil, President, MonDRaGon corporation

in collaboration with& Project Director Suzanna Howse produced this report

the epitome of an elegant resort town that has gracefully transformed

itself into a vibrant contemporary city, San Sebastián, or Donostia as it

is called in the Basque language, is one of the two European Capitals

of Culture in 2016, an honor it shares with Wroclaw in Poland. The city is

now aiming to capitalize on its traditional strengths as a tourist destination

to develop into an innovative cultural and technological hub.

Home to 186,000 inhabitants, the capital of Gipuzkoa province has

long been celebrated for its Belle Epoque charm, from the promenade

along iconic La Concha beach to the old-school amusements atop

Monte Igueldo. Over the last two decades, San Sebastián has undergone

a renaissance, adding new attractions, such as the Kursaal Congress

Center and Auditorium and the

renovated aquarium in the Palacio

del Mar, that have boosted visitor

numbers.

“Our tourism vocation dates

back 200 years,” says the city’s

Mayor, Eneko Goia. “We see potential for growth, but it has to be sustained

and sustainable. Hotel capacity is limited in the city, although it is growing.

We need to do this prudently, working on excellence and quality of service.

We are trying to attract visitors with cultural interests linked to gastronomy.”

San Sebastián boasts the world’s second-highest concentration of Michelin

stars, but you can also sample much of the region’s delicious fare in bite-size

portions in the old town’s numerous back-street bars. At the Basque Culinary

Center (BCC), opened in 2011 by top local chefs and Mondragon University,

500 students from 25 countries are studying the secrets of Basque cooking,

food science, and innovation, to share their knowledge with the world.

“Our gastronomy is a great asset in our country brand,” believes Joxe

Mari Aizega, the BCC’s Managing Director. “Most people know the Basque

Country for its cuisine and many of the three million visitors we had last

year came because of it. We analyzed the value chain and found it represents

10% of GDP.”

At the same time, the development of cutting-edge business centers,

like the Gipuzkoa Science and Technology Park in Miramon, has raised San

Sebastián’s profile as a leader in industrial innovation: “The knowledge to

create added value is here,” Mayor Goia notes. “With our four universities

the city must also play the role of a facilitator in innovation. We try and work

as a lab for our companies: for example, the first electric bus made by a local

company operates in our public transport system. As the image we want to

project is quality of life, this will naturally increase with innovative projects.”

Fomento de San Sebastián is a municipally owned corporation that

has strived to promote precisely that kind of initiative for more than a

century. Today, it continues to contribute to the economic and social

development of the city, supporting emerging productive sectors through

the local clustering model, and providing grants and training to foster the

next generation of entrepreneurs.

san seBasTián: a FeaSt FoR tHe SenSeS historic resort leverages culture & cuisine to develop an innovation-infused future

We see potential for growth, but it has to

be sustained and sustainable.” eneko Goia, Mayor of San Sebastián

View of the iconic La Concha beach in san sebastián.

The Basque Country,at the forefront

of EuropeTHE SMART FACTORY

A European gem of Culture, Gastronomy, History, Architecture…

www.sansebastianturismo.com/en

EXPLORE THIS CITY IMMERSED IN INNOVATION

“San Sebastián is a city that has innovation embedded in its DNA,”

declares Euken Sese, the General Manager of Fomento de San Sebastián.

“We have grown and developed around tourism. Since 2000, we have gone

from having four technological centers dedicated to applied research to

thirty-four today. Our GDP growth rate is 2.7%, higher than the European

average. The trigger has been the attractiveness of the city and this should

be our path for the future.”

“We want to attract talent to San Sebastián, create networks and work

together with cities all over Europe and in a more open way with the world,”

confirms Pablo Berástegui, the Managing Director of Donostia/San Sebastián

2016. “The more people who discover our culture, the better.”

Gipuzkoa: the destination of choice for forward-thinking industrial investment

the smallest province in Spain with a population of just over 715,000,

Gipuzkoa is also one of the country’s richest, boasting a GDP per capita

rate well above the national average. It is also a proudly Basque region, where

almost half the population speaks Euskara, the Basque language, and keeps

local traditions alive. And, according

to Markel Olano, the President of the

Provincial Council of Gipuzkoa, it has

developed an innovative industrial

economic model, based on a firm

commitment to R&D.

“We have some well-developed

areas in the advanced manufacturing

sector,” Olano explains. “We have a very important machinery and tool

industry. In this field, Gipuzkoa is the strongest area in the Basque Country

and within Spain. Nano-technology and bioscience are also important areas

of development. We have small and medium-sized companies with strong

R&D programs.”

For its part, the Provincial Council, in tandem with the Basque Regional

Government, is working to encourage an ecosystem based on innovation

and knowledge: “We have more than 5,000 researchers, which is a lot for

such a small territory,” Olano points out. “We would like the research to be

applied towards new industrial products and we have a research institution

called the Donostia International Physics Center, which is on the frontline.”

Established in 1993, BIC Gipuzkoa works with the province’s technology

centers, universities, and public and private-sector bodies to develop new

businesses and a culture of entrepreneurship. Serving as an incubator for

start-ups and a valuable source of support for existing companies looking

to be innovative, BIC Gipuzkoa has helped dozens of fledgling firms take

flight, providing subsidies and fostering collaboration.

At the end of 2015, the Provincial Council launched an Economic

Reactivation Plan, which will see €200 million invested over the next four

years to help promote additional overseas investment: “We want to attract

financing for our future development,” Olano says, “and we need to be

proactive to create relationships in Europe, the US and Latin America, but

also India and China. We are committed to generating wealth, innovation

and competitiveness.”

We are committed to generating

wealth, innovation and competitiveness.” Markel olano, President

Provincial council of Gipuzkoa

A NEW BRAND THAT DEFINES A UNIQUE TOURIST PRODUCT.

sansebastianregion.com

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AAFF_90X75_SURF_ENG copia.pdf 1 25/5/16 9:36

The Basque Culinary Center.

www.mondragon-corporation.com/eng

Home to more than half the Basque Country’s population, the

Province of Biscay was historically the industrial heartland of

the region. The discovery of rich veins of iron in the mountains

surrounding the provincial capital, Bilbao, in the mid-1800s attracted

capital from overseas to fund Spain’s first industrial revolution and made

the province one of the wealthiest in the country, fueling the development

of financial and industrial empires.

By the 1970s and ‘80s, however, Biscay was suffering, caught up in a

storm of cheaper competition from overseas steel producers, labor struggles,

and the consequences of conflict caused by the separatist group ETA seeking

independence. The region’s industrial giants fell into decline, Bilbao’s once

bustling port lost much of its traffic, and the city and the province’s fortunes

dwindled as quickly as they had risen a century before.

Then a deal signed in 1992 between the Basque Government and the

Solomon R. Guggenheim Foundation in 1992, marked the beginning of

Bilbao’s and Biscay’s renaissance. The Frank Gehry-designed Guggenheim

Museum Bilbao, which opened in October 1997, was just the first of a

succession of urban renewal projects—such as the Euskalduna Conference

Center and Concert Hall, new metro and tramway networks, and

Abandoibarra port district regeneration—that have transformed the city into

a modern business center and the motor, once again, of the province’s growth.

“Bilbao went from being a gray

industrial city to become one related

to services, culture and knowledge,”

says Juan Mari Aburto, its Mayor.

“We will no longer see heavy industry

here as in the past. Advanced services

will be dedicated to serving companies and industries. Some of the areas

that we are defining are: digital economy, logistics and distribution, applied

technologies in the health sector, tourism, and urban solutions.”

In February 2015, Bilbao became the first city in the country to be awarded

Smart City status by AENOR, Spain’s certification association. Initiatives

like Bilbao Berrikuntza Faktoria, a joint venture between the city council

and Mondragon University to promote entrepreneurship and innovation;

the planned redevelopment of the Zorrotzaurre peninsula into a ‘Creative

Island’; and the city’s varied cultural calendar, featuring major art exhibitions,

music events, and festivals year-round, are all contributing to make Bilbao

increasingly attractive to investors, professionals, start-ups, and tourists alike.

“Last year, we had over 1.1 million visitors,” notes Juan Ignacio Vidarte,

who has been the Managing Director of the Guggenheim Museum Bilbao

since its inauguration. “Bilbao put the museum at the center of its strategy to

transform itself and it has helped to transform the economic and productive

fabric of the city.”

“There was no tourism sector in Biscay before the Guggenheim,” admits

Asier Alea, General Manager of Trade Promotion and Tourism, Provincial

Government of Biscay. “Before 1997, the weight of tourism in the overall

economy was below one percent. We went from under 200,000 vistors a

year to close to 1.5 million this year. In terms of GDP, tourism’s share of the

economy is now close to six percent.”

While some 80% of visitors to Biscay limit their stay to Bilbao for now,

Alea says, the province possesses a host of cultural, historical, gastronomic

and natural attractions that are well worth discovering. There are another 29

museums to explore, from the UNESCO World Heritage-listed Santimamiñe

Cave to the nearby Forest of Oma, the brainchild of artist Agustín Ibarrola,

and from the moving Gernika Peace Museum to the Euskal Herria Museum

in the same town, which traces the history and heritage of the Basque

people. Biscay’s dramatic coastline and natural reserves, like the UNESCO

Biosphere Reserve of Urdaibai, are also must-sees.

At the beginning of 2013, the ‘Bilbao Bizkaia, Be Basque’ brand was

launched to promote both the city itself and Biscay as attractive destinations

not just for tourists, but also for talent. Positioning the province as a “boutique

territory with a premium offering”, Alea explains, the brand reflects its

inclusive attitude, easy-going lifestyle, and enviable quality of life: “Whoever

wants to ‘Be Basque’, can be,” he declares.

BiLBao and BisCay: wHeRe aRt iMitateS LiFe Former industrial powerhouse is reborn as business and tourism gateway to province

Bilbao has become a city of services,

culture and knowledge.” Juan Mari aburto, Mayor of Bilbao

They say that travelling is not just visiting places, it is letting

those places amaze you. They say that our sea is different, it is not

called the Bay of Biscay for nothing. There must be a reason.

BAY OF BISCAY:the Bay Area of Europe

The Guggenheim Bilbao has become the symbol of Bilbao for the world.

ViToria-GasTeiz and aLaVa: a GReen anD viBRant LanD This inland province is home to one of just three areas that produce spain’s rioja wines

Regularly ranked among the cities with the best quality of life in

Spain, Vitoria-Gasteiz is the historic capital of Alava Province and

the present-day capital of the Basque Country. It serves as the seat of

government for the Basque Autonomous Community and was awarded the

title of European Green Capital in 2012 by the European Commission, but,

curiously enough, the city and its surrounding province remain among the

least-visited and less well-known places in the entire region.

The city’s Mayor, Gorka Urtaran, is on a mission to put Vitoria-Gasteiz on

the map and has a long list of goals for his mandate through 2019: “We want

Vitoria-Gasteiz to be a city where we have high living standards, guarantee

diversity, generate stable employment, create wealth, enjoy efficient

transportation, and where we take into account economic, environmental

and social sustainability,” he says.

Facing inland towards the rest of Spain, rather than out to the Atlantic

Ocean, landlocked Alava is the Basque Country’s biggest province by

territory, but its smallest by population. It has few more than

320,000 residents, most of whom live in and around

its capital. In the south of the province, the

chalk and clay soils on the left bank of

the Ebro River, Spain’s second-longest,

provide fertile ground to grow the grapes

that make up some of the world’s finest

wines from the Rioja Alavesa area, like the

award-winning reds from Bodegas Luis Cañas.

The family-owned brand has been producing and marketing its wines

under its own labels since 1970 and doing things very much its own

way: “One of our major innovations has been looking back at the past,”

says Juan Luis Cañas, the owner of Bodegas Luis Cañas. “We are taking

a traditional approach to viticulture, where everything has value. Selling

wine, progressing as much as we can, and being considered a winery of

quality: this is the position we want to be in.”

Bodegas Luis Cañas exports its wines to 40 countries worldwide,

selling much of its production to Europe—especially Germany, the United

Kingdom, and Switzerland—although 30% of its market is outside the EU.

It employs four enologists and an engineer to keep its vineyards in optimum

conditions and works with experts from the University of Navarre, leading

local wine schools, and technology centers across the Basque Country.

Marqués de riscal: from local to global

For over a century and a half, Marqués de Riscal has been making

high-quality reds in Elciego, in the Rioja Alavesa wine-growing

region, adding whites from the Rueda region in 1972 and becoming

one of Spain’s most-recognized brands along the way. In 2006,

it opened The City of Wine, a spectacular winery and luxury hotel

complex designed by Frank Gehry above its historic cellars, where it

now welcomes growing numbers of wine lovers every year.

“We already have close to 100,000 visitors,” says Alejandro Aznar,

the brand’s Chairman. “We chose

Gehry to help us make the leap

from the 19th to the 21st century.

We see ourselves as a Basque,

Spanish, European and global

company, because our business is

to sell wine worldwide.” www.marquesderiscal.com

Another Basque leader in industry and innovation, in this case in the rail

sector, is CAF. Founded over a century ago, CAF today sells everything from

turn-key transportation solutions to rolling stock such as trams, subways

and high-speed trains, and from traction and communications systems to

maintenance services. It only began to sell outside Spain in 1992, but already

90% of its revenues are generated overseas from 35 territories. Having won

major projects in the UK like the Northern franchise trains and the London-

Scotland sleeper, CAF has an order book worth €5.5 billion and is aiming to

earn €1.4 billion in 2016.

“We spend 4% of our revenue on R&D,” notes Andrés Arizkorreta,

the Chairman and CEO of CAF, “and this is a constant, regardless of the

economic climate. We now want to take the jump into railway systems,

like signalling, energy acquisition and global project engineering. We need

to learn to build, operate and finance systems and this means the company

needs to invest in new things beyond our traditional area of expertise.”

CAF is currently focusing its R&D innovation on signalization,

Arizkorreta says, having developed its Auriga integral solution for the

one number explains why the Basque Country continues to

be at the forefront of industrial innovation: 2.09%. That’s the

percentage of GDP the region invests in R&D, according to SPRI,

70% higher than the Spanish figure of just 1.23% and above the European

Union average of 2.03%. As part of its Europa 2020 growth strategy, the EU

fixed a goal of 3% of GDP to be reinvested in R&D and innovation by the

end of the decade. While the Basque Country still has some way to go, many

of its largest companies already surpass the target by a significant margin.

“Of all our investments, 10% goes into R&D and innovation,” confirms

Alberto García Erauzkin, Chairman of regional telecoms operator Euskaltel

and Chairman of Innobasque, the Basque Innovation Agency. “We are a

tech company and need to be on the cutting edge. We have always been

innovative and were born from convergence. In 2015 we acquired R Cable &

Telecomunicaciones Galicia SA making us the leaders in telecommunications

in northern Spain, reaching a market of five million people.”

Established in 1995, Euskaltel provides quad-play cellular and fixed

telephony, broadband Internet and digital television services, leveraging

its 364,700-kilometer fiber-optic network and proprietary 4G mobile

coverage to reach hundreds of thousands

of homes and businesses across the region.

It has invested close to €1.9 billion over the

last 20 years and has spent more than €100

million on R&D in the last decade alone.

“The European digital agenda for 2030

states that every citizen should have 30MB

at home,” García Erauzkin says. “With 85%

coverage, we are talking about universalizing 350MB.

We are already working on fifth-play, adding home automation and

safety, and sixth-play around Internet-based leisure and gaming.”

Basque indusTry: tecHnoLoGy & inteRnationaLization Leading companies in the Basque Country spend well above the spanish & european union average on r&d

We were born from convergence and need to be on the cutting edge.” alberto García erauzkin

chairman, euskaltel

at euskaltel, cutting -edge communications are a must.

European Railway Traffic Management System for major railway lines. At the

same time, conscious of the importance of efficient energy use, it is exploring

ways to harness electric power technologies and energy accumulation

techniques to make more rational use of resources and cut costs, working

with cities like Seville, Birmingham and Luxembourg to resolve the mobility

challenges of the future.

The Basque Country is the EU’s third-largest producer of machinery and

equipment, contributing €1.18 billion annually to the region’s economy.

According to SPRI, the almost 100 companies in the sector collectively

spend €60 million a year on R&D, although

its number-one player, DANOBATGROUP,

“dedicates around 10% of our income to

R&D,” says its Managing Director, Iñigo Ucin.

DANOBATGROUP is wholly owned by

MONDRAGON Corporation, the world’s

largest industrial cooperative, which reinvests

9% of its revenue in R&D, employing 1,600

people in 15 centers to serve the needs of its

257 companies that export to 150 countries

worldwide, generating around €15 billion in annual sales: “Research has

historically been key for us,” insists Javier Sotil, MONDRAGON’s President.

Going global and thinking big, sector by sectorAutomotion—Antonio María Pradera Jáuregui, Chairman, CIE

Automotive: “We define ourselves as a ‘multi-local’ company. Even though

we are Basque in our philosophy, culture and entrepreneurship, we are a

global company. Right now, 55% of our billing corresponds to Europe,

25% to NAFTA, and 20% to emerging markets in Asia and Brazil.”

Transportation—Asier Atuxa, Chairman, Port Authority of Bilbao:

“Our strategic plan is to improve infrastructure to increase our area of

influence. We want to maintain our position as the biggest port in the

north of the Peninsula; 95% of our traffic is import-export. We have

awarded a €125-million construction project for a new quay.”

Energy—Asis Canales, Iberdrola CPO & Basque Country Deputy Director

of Purchasing and Insurance: “We invest annually €200 million in

efficiency, sustainability, and energy-based products and services, such as

smart networks and renewable offshore energy. We have a fund to develop

new ventures called Perseo, to finance start-ups and technologies.”

Aeronautics—Ignacio Mataix, CEO, ITP: “We have constantly been

above 10% of R&D investment on our revenues, making us the number-

one industrial company in Spain. Our investments in low-pressure

turbines for large trans-Atlantic aircraft have given us a 50% market

share. Every other plane you fly will have ITP turbines.”

Technology—Iñaki San Sebastián, CEO, Tecnalia: “The only way

Basque companies can differentiate themselves from their competitors

is in added value and innovation. We are a non-profit, private research

organization, funded 50:50 public and private. Our mission is to

transform technology into GDP and improve quality of life.”

Toolmaking—Aner Garmendia, Managing Director, EGA Master: “Real

innovation comes from the interaction between companies and the market

or the final user. By learning about their problems and needs, we can develop

new products or improve existing ones. Investing in safe tools and products

is profitable for clients in high-risk environments.”

We need to learn to build systems beyond our traditional area of expertise.” andrés arizkorreta

chairman & ceo, caF

The Port of Bilbao is a key driver for the economy.

how important is investment in innovation to the continued competitiveness of the Basque economy?We have built the Basque Country’s industrial policy on innovation over

the last 30 years. Our institution has two main axes: applied technology

and innovation to generate new products, processes and services and

the internationalization of our industry to promote growth.

how significant is the science and technology sector in the Basque Country?This sector represents about 2% of the GDP. Three quarters of this

comes from private investment and the remaining quarter is from

public investment, although due to the recent crisis, it is now about two

thirds private and one third public. There are about 8,000 researchers

working for the Basque Network of Science Technology and Innovation

either on a full-time or part-time basis. There are also industrial R&D

units that are contributing to this sector and great efforts have been

made to maintain and develop these human resources in spite of the

crisis.

What are the strategic aims of the science, Technology & innovation Plan 2020 (PCTi)?There are two important aspects. Firstly, our plan responds to the

Smart Specialization Strategy, RIS3

issued by the European Union. The

idea is to concentrate on our strengths

in the technology and industrial

sectors and use them to diversify and

grow. One important

sector is advanced

manufacturing, which

includes aerospace and railway manufacturing,

including machinery and machine tools. Secondly,

the energy sector is also very important especially

for renewable energy, smart grids and efficiency.

The third important sector is bioscience, especially

for human health. We are working on transforming

knowledge into industry and we need first-rate

research to be carried out on these areas. Last but

not least, we want to transfer knowledge as quickly

as possible. The largest percentage of our technology

investment should be earmarked for these three

areas.

Why did the government choose these three strategic priorities?Advanced manufacturing has now evolved into

Basque Industry 4.0 which encompasses all IT,

communications and management systems and new

business, etc. We have pilot groups for different

areas. The clusters, universities, research centers and

companies are working on various sectors for which

we provide support. They have already defined

seven initiatives. We have another pilot group in the

energy sector and we have been working with the European Vanguard

Initiative, which started with seventeen regions and is continually

growing. Our activity is based on clusters that work at an interregional

level and we are trying to define projects to bring us all together. One

of the other pilot groups will be focused on energy

efficiency, especially in public buildings. The aim

is to develop a zero carbon strategy, which will

also allow us to rehabilitate homes through energy

efficiency. Although we are still a little behind in

bioscience - because the group is carefully trying to

identify the path to take - we believe there is huge

potential in that sector.

What are the competitive advantages of the Basque Country for foreign investors?Our administration is extremely accessible and

we are also a very friendly and open country. Our

technology network has developed over a long

period of time which is an additional key factor. We

need international relationships to develop further.

There is a great network of small and medium-

sized suppliers, which means that multinational

companies can get everything that they need for their

company to work; services are good and procedures

are easy. Although land might not be cheap, the

companies who come here are not looking for cheap

land, instead they are looking for such things as our

independent fiscal policy and ease of doing business.

All these factors make the Basque Country different

and attractive.

concentrating on innovationarantxa Tapia otaegi, Minister of economic Development & competitiveness of the Basque Government

We need international

relationships to develop further.”

2% of GdP is made

up of science and technology

8,000number of employees

at Basque network of science Technology

and innovation

30years

that the Basque Country has followed

innovation policy

Why is the Basque economy outperforming the rest of spain? has euskadi exited the crisis?We are different from other regions in Spain because we have a strong,

industrial economy. Up until 2008, industry accounted for 28% of our

GDP. With the recession, this percentage decreased slightly but the

Basque Country remains a very industrial region.

What is the economic outlook of the Basque Country?We are optimistic. We forecast that we will be in 2016 among the fastest-

growing European regions. Our industrial GDP will also increase slightly

although we are working on further increasing it. However, our main

challenge remains the unemployment rate. It is now just under 14%,

which is too high, and it is a priority concern.

how internationalized are Basque companies? It depends on their sector of activity and on where they are located.

Overall, we export 33% of our GDP. We have defined five strategic

countries, which are the U.S.,

Mexico, Germany, China and India.

There is a lot of talk about the

slump in the Chinese stock market,

but I know this country quite well

having worked there for seven

years, and I also regularly meet with

Basque companies operating there.

The climate remains overall bullish:

they are opening new factories and

making new investments. As for India, it is a key

country for us, and we are very hopeful about the

growth of Basque companies over there.

how important is innovation for the economic development of the Basque Country?We invest about 2% of our GDP in research and de-

velopment, which places us among the top European

investors. But we want to improve that percentage.

Innovation and internationalization are two pillars

of our development strategy and we support Basque

companies as much as possible in this respect.

What are you doing to improve knowledge transfer between technology centers and the private sector?We have a dense network of R&D technology centers,

employing more than 3,500 people. A few years ago,

the government launched a study that revealed a

lack in knowledge transfer between these technology

centers and private companies, most of whom are

SMEs. This led us to design a modernization plan to

change the working processes and ensure that there

are more transfers. It is a bit of a cultural revolution

that takes time, but change is already palpable.

how about the innovative clusters in euskadi? did you reorganize them as well?Indeed we did exactly the same reorganization as for

the technology centers. We have 22 clusters and we can

be considered as pioneers in Europe with our cluster

policy. We are giving them targets, and have set three

main priorities: internationalization, R&D and repre-

sentativity, meaning that each cluster must be repre-

sentative of its sector, be it automotive, machine tools,

aeronautics, TICs, etc. The Basque government’s subsi-

dies depend on these criteria.

What progress are you making in another priority area, namely advanced manufacturing, or industry 4.0?Our strength is that we are already very industrialized:

we have supply chains, and very skilled,

knowledgeable people in all aspects of manufacturing,

from mechanical to electrical and electronics. We are in

this respect comparable to Switzerland, a country that

is highly specialized in nanomechanics, with which

we have close relations. Industry 4.0 is a new area in

which we want to start working, and we are already

making important steps in this direction. We call it

Basque 4.0 and it will help us improve our processes

and consequently our revenues and benefits.

Basque industrial Sector investing in innovation and internationalizationalexander arriola, Managing Director of the Basque Business Development agency (SPRi)

Basque 4.0 will help us improve

our processes and consequently our revenues and

benefits.”

4,000+Basque

business projects abroad

1,660internationalized

companies

12,000researchers

What are the main strengths of the Basque Country in the global economy?The Basque Country defined its strategy 30 or 40 years ago when it

achieved self-government status. We decided to introduce innovation

into all our processes, business models, and technology, whilst

maintaining the core values and activities that the manufacturing

sector had always enjoyed.

We also understood that although globalization is important for

market access, the local effect is essential for competitiveness. We

therefore realized that a cluster-based economy was key to break

down the traditional set-up of sectors and build connectivity between

different economic activities.

We also realized the importance of not separating economic and

social policies. Social policies are not only about providing justice or

equity, but are also key for competitiveness. Providing high quality

education, healthcare, social services and minimum salary for citizens

allows growth and development in an inclusive way. Today, all mindsets

are moving in that direction. I would therefore say our competitive

advantage is the previous long-term work that the Basque Country has

undertaken to build the future.

how have clusters transformed the economy over the past 25 years?Clusters are not just about organizing the economy. They require a new

mindset and way of doing things. We had to understand the territory

where we work and put our efforts into

microeconomics. Macroeconomics are

naturally important and relevant, but

the decision-making takes place outside

of the Basque Country. The important

thing was to create microeconomics

for the micro and SMEs as 90% of our

economy is made up of this type of

company. It is very difficult for them to

be international, carry out research and

reach the capital markets. Clusters make

all of this easier; they change the business models of these companies

and allow them grow.

Michael Porter, the renowned economist and expert

in clusters, has stated that the Basque Country is the

best place in the world for clusters, because we have

really adopted the necessary strategy and philosophy.

Can you tell us about the orKesTra institute?We created ORKESTRA because we needed an

independent institution to work in three main

areas; to research our competitiveness, to provide

instruction and framework, and to create a real

impact on Basque society. It is a very international

institution and related to a whole network of think

tanks and universities which share and learn together.

Michael Porter is part of the Institute for Strategy

and Competitiveness at Harvard. We strategically created an advisory

board with key international people who have a different outlook than

the people in the Basque country. They make and publish a lot of

different research which historically hasn’t been done in the past.

how can the enovating Lab help the Basque country in competitiveness and what kind of projects have you worked on?

The Enovating Lab was created in 2002. It is a platform for ideas,

original development and competitiveness. The Enovating Lab

Academy is where we learn from the key think tanks, institutions

and universities. The Enovating Lab is a member of the ISC, Harvard

University, World Economic Forum and we contribute to research and

to sharing information across the world. It is not

a consultancy, but it participates on international

advisory boards.

Since we began, we have been involved in many

different projects and clients. We work on a wide

range of projects, boards of directors and advisory

boards around the world in industries such as

biotech, energy, health, financials, technology,

manufacturing etc. We also take part in nonprofit

organizations, international institutions and

governments on matters including competitiveness

strategies, cluster development, S&M Companies,

health coverage and venturing. We have also worked

on R&D share collaborative initiatives. Interacting

with international key players provides a wealth of

knowledge for all involved.

creating a platform for strategy and competitiveness Jon azua, President of enovating Lab

We work on a wide range of projects, boards of directors and advisory boards

around the world.”

2002date of creation of

enovating Lab

90% of economy

made up of sMes and micro-companies

san sebastián, the Basque Country capital, is european Capital of Culture for 2016. how does this benefit tourism in the region? Being European Capital of Culture places us in a position where we have

always wanted to be: culture has always been very important to us and we

have our own, very specific culture. The program designed for the event is

very rich and focuses on coexistence, with a strong social dimension. Like

all international events, this will surely be very positive for San Sebastián

and the Basque Country as a whole, even though San Sebastián is already

quite renowned in part because of its film festival, which is one of the most

important in the world.

What is the ratio between international and domestic tourism in the Basque Country?Overall, between 55% and 60% of visitors come from Spain and the

rest from abroad, with variations according to the seasons and the cities.

For example in San Sebastián, international tourism reaches 40%-60%

all year long. All international markets

are interesting but our top priorities are

France, our neighbor, the UK, Germany

and the U.S. For these markets, our

efforts aim in particular at increasing

airline connections. Last year, British

Airways opened a route between London

and Bilbao, which serves customers

not only from the UK but also from the

U.S. Apart from online and traditional

marketing, we carry out activities in

our target countries. In the U.S., we will

be promoting our tourism in Washington D.C. during the Smithsonian

Folklike Festival, which is held each year outdoor on

the Washington Mall. The dates this year are 29 June

to 10 July. We also have attended tourism fairs in New

York City in the past two years.

you just revamped your website... Indeed. It is available in Euskera, Spanish, English,

German and French. Some material is also available

in Russian, Japanese, Chinese and Arabic. Euskadi is a

small destination but it has a very diverse offering, and

the website reflects this diversity.

The Basque gastronomy is well known and the region has a record number of Michelin-starred restaurants. is it an important facet of your tourism offer?Gastronomy is deeply rooted in the Basque Country;

it is an essential part of our culture. It is not just that

you can eat well here; you can eat well in a lot of

places. Gastronomy is really part of our DNA; it runs

in our veins, and we want visitors to experience this.

We have a number of Michelin-starred restaurants but

also scores of others at all price ranges, including very

affordable ones. We place a lot of importance on the

quality of our products and we treat every step of the value chain with

great care, from the raw products to how food is presented to customers.

On another level, we have a world-famous culinary

university, the Basque Culinary Center, that has some

of our most renowned chefs on its board. We believe

our gastronomic offer is unique in the world.

What has been the impact of the Bilbao Guggenheim Museum on tourism in the city and in the Basque Country as a whole?It has been huge, to the point that people here

speak of “before the Gugggenheim” and “after the

Guggenheim” when they refer to any given period of

time. Bilbao was an industrial city up until the 1980s,

when it was hit hard by the general movement of de-

industrialization that affected many industrial regions

in Europe. It was a wealthy city that saw its largest

source of wealth disappear. Local authorities had

this vision of doing something new to revive the city

and someone thought of bringing the Guggenheim

Museum here. It was a seminal moment in which the

old, industrial Bilbao “died” and a new city was born

as a tourist destination focused on services. Bilbao

has since become a world-famous model for urban

renewal. The Guggenheim placed us on the map of

the world.

Basque country appeals with Unique culture and Gastronomyarantza Madariaga, Director General of Basquetour

Gastronomy is deeply rooted

here, which explains why we

have a record number of

Michelin-starred restaurants.”

2.2million

people live in the Basque Country

1 millionvisitors

each year at the Guggenheim Bilbao

oldestThe Basque language is the oldest in europe

san sebastián is european Capital of Culture for 2016. What will be the impact on the local economy?It is difficult at this stage to quantify the economic impact of being

European Capital of Culture. What is certain is that it will go a long way

to raise awareness about our city and make it known for positive values.

Being named European Capital of Culture is in itself a way to increase

coexistence and to promote local culture. So in this sense, it is bound to

bring economic value because we expect more visitors this year, hence

more commerce and tourism-related activities. This is the immediate

benefit but there is also a long-term benefit for the image of our city.

how important is tourism for the economy of san sebastián?Tourism is already an important sector and it is growing. It is an old

tradition here since tourism started in the 19th century. But over the

past decades up until recently, the political situation and violence took

their toll. Fortunately, now this negative backdrop has disappeared and

we already see that occupation rates have been steadily going up for the

past few years. Apart from the natural and architectural beauty of our

city, gastronomy is also a strong draw. There is potential for growth in the

tourism sector but we want to do it in a sustainable way. San Sebastián

is not Benidorm! We have a permanent population of 186,000 and we

are aiming at attracting quality tourism linked to culture and gastronomy

rather than mass sun-and-beach tourism. Our priority is the excellence

and quality of service in the hospitality sector.

you said that san sebastián “wants to be the city of knowl-edge and innovation.” r&d already accounts for 5% of the jobs here. What do you do to support innovation and r&d?We are the capital of the region of Gipuzkoa, in the Basque Country, a

region that is very industrialized. Innovation and R&D

are essential for us because all the studies show that

the best-performing

countries and regions

are those that invest a

significant part of their

GDP in those areas. We

have developed urban

zones dedicated to in-

novation such as the

Technological Area of

Miramon. We also have

four important univer-

sities. The role of the

city is to be a facilitator, for example by making it as

easy as possible for companies to acquire land here.

Furthermore, we act as a laboratory for local com-

panies. For example, the city public transportation

system uses electric buses made by a local company,

and we are starting a driverless bus service connected

with the city transportation system, which circulates

around the Miramon Tech Area. In June we established

a Department for Innovation and New Technologies

to manifest our deep commitment but also to increase

our role as a test lab and to push for schemes that will transform San

Sebastián into a smart city by involving both the public and the private

sectors.

What plans do you have to digitalize the admin-istration of the city and make it a smart city?As far as digitalization goes, we have many projects

because clearly, we need to progress in this area. We

have a plan to provide more services through digital

platforms, and we also want to increase transparency,

an area in which digital technologies can really bring

an advantage.

As regards the transformation of San Sebastián into

a smart city, we are working on several fronts. There

are ongoing projects in public transportation, in the

parking system – such as mobile payment –, in smart

lighting and meters control, and in energy savings in

the historic center.

What will be the legacy of being european Capital of Culture? We hope it will show how culture can help us to

coexist peacefully as a community, and that the world

will know San Sebastián for positive values. We want

to show that although we do not forget our recent

history, we have now moved on.

european capital of culture ambitions to Become innovation Hubeneko Goía, Mayor of San Sebastián

The city acts as a facilitator and a test lab for innovative companies in

sectors such as transportation.”

186,000people live in

san sebastián

2ndcity in the world

with the mostMichelin-starred

restaurants

5% of local jobs

linked to r&d

What are your expectations for this year in which san sebastián is european Capital of Culture? and what impact has it already had on the city?We are not looking for short-term impact so I can’t say yet. Our project

for this year as Capital of Culture is long term: everything we do has

long-term objectives. The essence of our project is firstly to build on

San Sebastián’s strong local Basque culture, on what we already have,

and secondly to promote culture among its citizens as a tool to learn

to live together better, to be more respectful, more benign, more eager

to get out of our comfort zone and experiment new things. It is a very

ambitious and political project that goes beyond culture and tackles

the issue of how to live together in society. It is of course particularly

relevant here in the Basque Country.

so the project in essence is about using culture to overcome the violent past of san sebastián and the Basque Country?Yes, we hope to encourage people to look at each other from each

other’s perspective; it is about empathy. There are a lot of conflicts

and sometimes it is easier to solve

them through a representation rather

than facing them directly. For example,

in theater, we will use the ‘Theater of

the Oppressed’ methodology that was

developed in South America in the

1970s, whereby the public directs

the actors of the play in a situation

where a conflict needs to be solved.

The audience cannot leave the theater

before a solution has been reached. It

is one way of promoting coexistence.

Learning to walk in someone else’s shoes to understand where they

come from and why they do what they do is the unifying idea of our

whole project and I believe the reason why our bid was chosen.

how do you evaluate the economic impact on san sebastián of this year’s event?The project was not designed to achieve an economic impact. Similarly,

the main objective is not to generate more tourism or business. San

Sebastián is already a tourism destination and in economic terms, it

has proven very resilient in the wake of the crisis. Rather, our project

addresses other issues which are more difficult to handle: we want

this city to be able to live with itself, to overcome the difficulties it

went through in the past, and to be able to provide a space in which

people who were against each other are once again able to look at

each other in the eyes. We believe that in the long term, these cultural

changes will bring economic benefits, but it is not what we are seeking

as European Capital of Culture.

so in a way, the programming for donostia/san sebastián 2016 is a social experiment?Yes you can say that. For example, cultural institutions that were used

to working separately have been collaborating and taking decisions for

the first time together. So apart from the program itself, which is very

rich, what is interesting is how it was built. For example, we set up a

Citizen Committee, whose members were selected by lot, and choose

the projects to be included in the program. Our program is the means

to the end, not the end itself: the activities are of course important but

not as much as how they were built, and what can be achieved through

them in the long term. We are a society that has suffered a lot, for a

long time, and we need now to recover the lost connections between

the different components of our society. It is also very important to

address the issue of victims, whatever their origin or belief, but to do

so with utmost respect. Ultimately, we hope this year will contribute to

accelerating the recovery and normalization process of San Sebastián

and the Basque Country.

citizens at the Heart of San Sebastián capital of culture’s Program Pablo Berástegui, Director General of San Sebastián 2016

We want to promote

culture as a means to strengthen

coexistence among all the components

of the Basque society.”

how important is innovation for san sebastian’s development? San Sebastian has innovation embedded in its DNA. By 1926 San

Sebastian had the first automated telephone exchange and was one

of the first cities in the whole of Europe to develop underground

telephone wiring with copper wires. This is key to understanding who

we are today and what we might become in the future.

The city’s culture has also been shaped by innovation and the

International Film Festival and International Jazz Festival are now over

50 years old. Numerous sporting events also go all the way back to

the beginning of the twentieth century. I think if you had to describe

San Sebastian in terms of innovation, it would be that it is a city with

a high quality of life.

In terms of the more traditional type of innovation - science and

technology - in 2000 we had four technological centers and today

we have thirty-four with over 5000 employees. We also have four

universities. We also see innovation in the people that migrate to

San Sebastian to start up businesses; international learning linked to

innovation. We are also taking steps to transform the city’s tourism

sector through innovation.

The attractiveness of the city is definitely

the trigger and I believe that innovation

should be our city’s path for the future.

I think we could be facing a potential

growth crisis caused by mass tourism. We

are a small city and not able to receive

too many tourists without a conflict of

interests. We therefore need to shift from

being an attractive city to

an innovative one.

how important is the young generation for innovation in san sebastian? The new generation is looking for different things in

life, and the type of companies that we see are being

created as a result of this new take on life. These new

sectors attract people with different core values, and

so this social innovation has become very important

for the city.

We are also promoting ‘talent return’ as we want to

encourage people from our city who are now living

all over the world, to return to San Sebastian. Some

people don’t want young people to leave in the first

place, but I believe people who have expanded their

culture and education internationally represent a

higher value for the city once they return.

how will san sebastian as the european City of the Future 2016 raise the international profile of the city? If you look at the last few European capitals of culture,

the title has had an effect at a national level but only

5% of the European capitals generate attractiveness

at an international or European level.

Therefore, I think it is more important being San

Sebastian itself than the culture capital, although

it will help us reinforce our image. Compared to

many of the cities that have had the honour over the

past few years, San Sebastian is a city that is more

solidly consolidated. In urban terms, when I speak to

different architecture schools, they agree on the fact

that we cannot do anything more here, because we

do not have any more space.

how would you sum up san sebastian’s image?I would like people to have an image of San Sebastian

as an innovative city which is full of talent. Our

future lies on these two factors. We want people

to come and share our quality of life. We want

them to experience our day-to-day life with great

food, markets, optimal sporting facilities and great

infrastructure; a place where you can develop. These

are our key assets, and we want to share them with

the world, with people who want to come to San

Sebastian to live and work with us.

San Sebastian: innovation in its Dna euken sese, Director of Fomento de San Sebastian

innovation should be our city’s path to the future.”

2016san sebastian is

european Capital of Culture

5,000 employees in

technological centers in san sebastian

1926san sebastian installs

first automated telephone exchange

how international is the BCC?The Basque Culinary Center is a foundation which was created in 2009

and now promoted by the top Basque chefs along with the Mondragon

University.

We have 500 full-time students split between the degree and the Masters

program. International students from 25 different countries make up 27%

of the degree program and 50% of the Masters. Our board is presided

by Joan Roca and includes such internationally renowned chefs such as

Heston Blumenthal, Dan Barber and Rene Redzepi amongst others.

What is the Center’s main focus?Our focus is on interdisciplinary training. All our students learn about

cuisine, service, management, applied science and food culture and thus

gain a wide knowledge of all aspects of gastronomy and food. This provides

them with the skills to enter different areas of the culinary profession,

either as chefs, restaurant managers or even researchers. There are many

different possibilities and opportunities available.

What are the main features of Basque cuisine? Basque cuisine today maintains a balance between tradition and

innovation. The Basque Country only has two million inhabitants, yet

you can find both traditional “pintxos” as well as some of the best avant-

garde restaurants in the world such as Mugaritz or Azurmendi. This really

demonstrates what a gastronomic region we are.

The majority of the three million visitors we received last year came

because of our gastronomy. A

recent study has showed that

gastronomy represents 10% of

our GDP, from production to

distribution, restaurants and

related tourism.

What are the main research areas in the Center and how important is r&d in Basque Cuisine in general?We have a research center called BCC Innovation

and different research lines comprising of food and

health, sensorial perception, customer’s behaviour, new

gastronomic developments and design and technology.

We cover the whole area of innovation.

The Basque Country has been a pioneer in

innovation since the 1970s when a group of chefs

got together to start creating innovative cuisine. This

culinary innovation experienced a real boom in the

1990s. We currently have four restaurants which hold

three Michelin stars, and the sixth best restaurant in

the world. If you look at the culinary excellence in

the Basque Country in comparison to the number of

inhabitants, the ratio is extremely high.

What is “Culinary action!”?Culinary Action! is our initiative to help promote

entrepreneurs and new businesses. We want to support

young people who want to create new businesses and so Culinary Action!

works as an incubator whereby we welcome 10 new companies every

three or four months and help them turn their ideas into business plans

and help them launch their companies.

What is the Basque Culinary Center’s World Prize and what are you looking for in the winner?

This prize will award chefs who are involved in projects

that are transforming the environment either through

cooperation in education, sustainability, social projects,

or by improving the quality of life of the communities

of food producers. We believe that food can be a

transformational tool and we want to acknowledge

chefs who help make these changes. We are receiving

nominations from all over the globe.

how do you envision the future of the Center? We started the Center from scratch only five years

ago, and it is now an international reference in

gastronomical education, research and innovation.

We provide training that didn’t previously exist and

we believe that this will continue to yield results. By

concentrating further on research, we aim to be a

center where new ideas for products, companies and

services are brought to fruition. Our next challenge

is to cooperate with other countries in Latin America

and Asia who are just beginning this whole process of

gastronomical innovation.

innovation in Basque Gastronomy Joxe Mari aizega, General Director of Basque culinary center

Basque cuisine today maintains a balance

between tradition and innovation.”

2009year of creation of

the BCC

500 number of students

at the BCC

25number of countries

from where students originate

you took the helm of the Gipuzkoa regional Council in June 2015. What are your immediate priorities, in particular regarding innovation and the promotion of a knowledge-based economy?Gipuzkoa is mainly an industrial territory, although it also has an

important service sector. All the counties of the region have a good

balance in the industrial sector. We have small and medium-sized

companies with strong R&D. Our strategy to develop our economic

activity is to encourage the development of an ecosystem based on

innovation and knowledge. There will be two lines of work. The first one

will provide support to the science, technology and innovation network,

which includes technology and research centers and universities, with

specific support programs. The second line of work is to support

innovation in companies, which is all the more important since many of

them invest greatly in R&D. The Gipuzkoa Regional Council agrees with

the definition that the Basque government has given regarding Smart

Specialization strategy. There are three areas in relation to this: advanced

manufacturing, energy and bioscience. In Gipuzkoa, we will back each

of these areas. Furthermore, we have started an Economic Reactivation

Plan with an innovative approach. We have a budget of about

€800 million per year, with €50 million going into the action plan and

€27 million directly supporting our industry.

What can the regional government do concretely to support innovation in companies?We provide the institutional support to create a structure that fosters

innovation, and we address most of the knowledge development needs.

However, we have to make a significant effort to obtain more results, in

particular concerning patents, an area in which we are behind compared

to European standards. This said, we are proud of our

research center, the Donostia International Physics

Center, which is really on the front line. It was inspired

by the scientist Pedro Miguel Echenique, who used

to say that basic

research is also

important and that

we should not be

always obsessed

with results. We

need to achieve

a good balance

between applied

and fundamental research. We also have centers

dedicated to the creation of companies, in particular

BIC Gipuzkoa, and I believe we should encourage

further research that leads to the development of new

products.

Another aspect in which public institutions play an

important part in fostering research is in taxes. Taking

advantage of the fact the Basque territories have fiscal

autonomy, we have given tax exemptions to R&D

to encourage investment, and this has strong public

support.

What are your priorities and strategy concerning foreign investment in Gipuzkoa?We have a program called “Making Gipuzkoa” aimed

at attracting capital and financing for our future

development. The regions we are most interested

in are Europe, the U.S. and Latin America, but we

will also prospect in India and China. Many of the

companies based here have branches and production

plants all over the world, so we already have global

relationships. What we need now is to develop them.

Furthermore, we want to make Gipuzkoa and the

Basque Country known as an area for investment

potential, where there is social and political stability

and a strong industrial ecosystem. We want to get

the message across to foreign investors that we now

have political stability, and that we are committed to

generating wealth, innovation and competitiveness

for the local economy. Also, we want to showcase our

advanced social model that is designed to fight against

inequality.

Gipuzkoa at the Forefront of innovation Markel olano arrese, President of Gipuzkoa

We provide the institutional

support to create a structure that fosters

innovation.”

707,000inhabitants

2.23% of Gipuzkoa’s GdP

invested in r&d

6,200 people in the

research communityincluding 3,900

researchers

What role does euskaltel play in the Basque economy?Euskaltel’s main role is to serve Basque society as an entrepreneurial

and competitive company. We need to generate cashflow for our new

investments which will create and maintain jobs, pay taxes and connect

suppliers. The company’s main objective is to create economic wellbeing

for everyone.

Innovation-wise, Euskaltel is focusing on two areas. One is to be

innovative in what we are able to offer our customers, and the other is to

be innovative in our social responsibility.

how does euskaltel invest in r&d&i?We spend approximately 10% of all our revenues on R&D&I. This is

well above the percentage spent by most other companies and countries.

We are a tech company and so naturally we always need to be at the

leading edge of technology. We are as autonomous as possible in terms

of our network. The fixed network belongs to us and we own as much

of the mobile network as we can.We are leaders in telecom services in

the Basque Country.. We are also the company with the biggest growth

in mobile phones in the Basque Country.

is there anything new we can expect this year from euskaltel?The European digital agenda stipulates

that every citizen should have 30MB at

home by 2030. Euskaltel provide 85%

of homes with access to broadband, and

therefore our first main goal is to ensure

that 350 MB is available universally.

Our second goal is to extend our WiFi

network, and the third is to ensure

that our television

decoders have the

capacity to retrieve shows from the previous week

without storage.

What are euskaltel’s competitive advantages?Technology can be bought, and products, services

and prices can be copied. You cannot buy or copy

the global and differential experience with which we

provide our customers.

how did the economic crisis affect the Basque Country?As a European region, the Basque Country suffered

less during the crisis than the rest of Spain because of

the weight of industry in our economy. This delayed

the arrival of the crisis and made it easier to withstand.

how international is the ownership structure of euskaltel since going public?Although we have internationalized the share capital,

we still have majority shareholders who maintain their

roots in the Basque Country.

as President of innobasque, how well is the Basque Country positioned for new technologies?Basque companies have approved a tech and

innovation plan that takes us up to 2020. This plan

defines our strategy for smart specialization in line with

Brussels, and establishes certain areas of innovation to

keep everyone headed in the same direction.

Why should investors come to the Basque Country?The Basque Country is a land of opportunity. There

are many macroeconomic differences compared

to Spain, such as higher incomes and higher

employment levels. We also have our own tax system

and a higher percentage of industry in our GDP.

Furthermore, in spite of their size, Basque companies

have internationalized and are renowned throughout

the global market. These companies offer an access to

the international market at the same time as staying

close to their roots and the local market. This gives

them a competitive edge and that is proving very

attractive to investors. It is a great country to invest in.

creating economic wellbeing for allalberto García erauzkin, President of euskaltel

you cannot buy or copy

the global and differential

experience with which we provide our customers.”

10% of revenues are spent on r&d&i

85% Basque homes have access to euskaltel’s broadband service

350MB offered to every

euskaltel customer

4%of sales revenue is spent on R&D&I

90%of CAF’s activity is

outside of Spain

1,400 million Euros

CAF’s expected revenue for 2016

What is CaF’s business model?We are committed to the development of technology, innovation and new

sectors. We also plan to continue our nationalization of the company.

Ninety percent of our activity is outside of Spain and we would like to take

this internationalization a step further so that we become more embedded

in the culture of the countries where we are present.

What is the importance of r&d&i in CaF’s success? The company spends 4% of its sales revenue on R&D&I, and this is a

constant regardless of the economic climate. We now want to take the leap

into producing railway systems. We need to learn to operate, build and

finance these systems, and this means the company has to invest in learn-

ing new things beyond our traditional area of expertise.

Our current R&D&I projects are mainly related to railway signaliza-

tion. We have developed a European Railway Traffic Management System

(ERTMS) and we are working on transit systems that require the develop-

ment of a signalization system. As mass transit is moving towards a bigger

predominance of electric vehicles, this means a more rational use of energy

and a reduction in infrastructure costs. It is here and in the smart cities

where we are finding a new challenge to sort out the mobility problem

within cities.

how has CaF been so successful on a global level?We have analyzed exactly who we are. The key to our success lies on the

fact that we are very aware of the market and conscious of what we can

and can’t do. We began by developing trams and this led to traction sys-

tems, energy accumulation, automatic systems, and everything related to

comfort and information systems. We have to think bigger, because people

keep asking us to design and operate their whole sys-

tems. We are present in 35 countries around the world

and being smaller

than our competi-

tors gives us growth

potential.

The UK is our

number one client

at the current time.

We won the license

to renew London’s

Northern Line trains

and for the Caledonian sleeper train project which

connects London and Scotland. There are other up-

coming projects that we would like to get involved in.

Our second market is the Netherlands, where we are

renewing commuter trains. We are also concentrating

on the US and Brazil markets.

Can you tell us about CaF’s high-speed plat-form, oaris? We have less experience than others in high-speed, but

we have taken advantage of being behind to learn from

our experience. We have 250km/h trains in Spain and

Turkey and we have sold our Oaris trains for the Oslo-

airport connection. It is a family of products with flex-

ible options for different markets.

What are your CiViTy and urBos products?CIVITY is a platform for regional commuter trains. We

are using it as a base line that we then adapt to different

clients. The URBOS platform is for city trams and they

are found all over the world.

What are the ecological advantages of modern railway?This sector is full of environmental advantages. Every

train potentially frees roads and airways from fuel-

based traffic using an electric system. Trains have an

edge as far as energy consumption and lower environ-

mental impact are concerned. Furthermore, the man-

ufacture of trains is not so energy-expensive as with

other vehicles.

What is CaF’s outlook for 2016?Our portfolio is around 5,500 million Euros, which is

a record. Our expected revenue for this year is 1,400

million Euros. The forecast for 2016 is very good.

The key to our success lies on

the fact that we are very aware of

the market.”

innovation in Railway Systemsandrés arizkorreta, President of caF

What does the City Council do to encourage talent, innovation and creativity in Bilbao?We are creating a strategic path for the

development of Bilbao towards a new

economy closely related to talent and

knowledge. Therefore, an important element

of our strategic plan is to build on Bilbao as a

university town. Also, we want to grow new

economic sectors geared towards the digital

economy, which is based on innovation. In

this respect, one of our main projects was

launched in association with the University

of Mondagron; it is the new center called

Bilbao Berrikuntza Factory, which aims at

becoming a new ecosystem for innovation

and enterprise. In terms of our aspirations, we

want the new talent island, Zorrozaurre, to be

a space dedicated to innovation and the digital

economy. The masterplan for this large urban

regeneration development was conceived

by the late

renowned architect Zaha Hadid.

how will you encourage new technologies in the smart City Bilbao concept?Our strategic plan also includes the Smart

City project. We believe that many things

have been done in Bilbao in relation to

this but it should all be included within

a global strategy. We want to integrate

different projects related to transport, economy or culture into a more

holistic vision of what the Bilbao municipality is, so it can truly become

a Smart City in every way.

how are you supporting startups and entrepreneurs?We are planning to open an entrepreneurship

center very soon, which will be the nucleus

for the City Council’s policy in regards to this

matter. We believe that it is important to work

together and to help entrepreneurs by giving

them physical premises because apart from

the support to their ideas, startups also need

an actual space where to work. One of these

buildings or centers is already functioning in

the Matiko neighborhood. Rekalde will be the

next one and we are looking at other areas.

Making these spaces available is important

because it is a way to generate common

services, synergies and contacts among

entrepreneurs.

how are you using private-public financing to create companies and to encourage investments in Bilbao?The financing and the private-public collaboration have been Bilbao’s

hallmark. The partnership with the University of Mondragon for the

Bilbao Berrikuntza Factory is a clear example. Bilbao reached this

agreement with the university so that it would come here and offer a

special degree related to entrepreneurship and innovation. At the same

time, the Factory generates economic activity through the creation of

startups that are installed in the same building. Bilbao is not a financing

entity. However, it collaborates towards finding alliances that can

generate projects. Our financing projects are related to small companies

and startups, which are supported in part by the City Council.

What are Bilbao’s competitive advantages in terms of knowledge economy?With three universities, Bilbao has a great

number of students, above both the European

and the Spanish average. It is a critical mass.

This in itself is already a huge competitive

advantage. Furthermore, the city is very stable.

We are a reference as far as transparency and

government are concerned; we are always the

first city council in Spain in this respect. Thirdly,

Bilbao is consistently ranked as the safest city in

Spain. All these elements make Bilbao attractive.

Now we want to build on all these assets – which

include also our landmark, the Guggenheim

Bilbao museum – and attract people from other

countries to come here and study, and have the

opportunity of staying here to develop their

projects.

Forward-thinking Bilbao invests in intelligence and innovationJuan Mari aburto, Mayor of Bilbao

We want to grow new

economic sectors geared towards

the digital economy.”

350,000inhabitants

(source: eustat)

€30,890GdP per capita

2.5%economic growth

What impact on has san sebastian being the european Capital of Culture in 2016 had on Biscay?Most visitors to Biscay and Bilbao are attracted by its culture and gastronomy

and obviously the Guggenheim museum. San Sebastian is considered as

the beach of Bilbao. Therefore, the fact that San Sebastian is the cultural

capital of Europe helps us to reinforce this image and indeed San Sebastian

is really the cultural capital city for the entire Basque Country this year .

In parallel to this, we are hosting several small events. Furthermore, at the

end of June, there will be a two-week long Smithsonian Folklife Festival

in Washington DC that will portray the evolving Basque culture, identity

and, obviously, economy. It is the 20th anniversary of the Guggenheim in

2017, and so we feel that this year is a great preview to the celebrations

next year.

how has the Guggenheim Museum raised the profile of Bilbao and Vizcaya? There was no tourism sector in Biscay before the Guggenheim; it is as

simple that. Before 1997, the weight of the tourist sector in Biscay didn’t

even reach 1% - it couldn’t even be considered to be an infant industry.

After 1997, we went from under 200,000 visitors per year - with most

of those being businesspeople as we

are a heavily industrial economy - to

today receiving 1.3 million visitors.

This year we expect close to 1.5

million visitors. The contribution

of the tourism sector to the GDP is

now well above 5%.

Today, we can truly say that there is

a tourism sector. The Guggenheim has become an icon

for the entire Basque Country like the Eiffel Tower is

to Paris or Big Ben is to London. Building it changed

our frame of mind and made us believe in ourselves

at a time when we needed it the most. It also meant

that a territory that had never had a tourism industry

previously, was able to create a success story with the

right vision. This new sector also opened a door to new

industries which before may not have seemed tangible

enough to the locals

What are the aims of the “Be Basque” marketing campaign?We do not aspire to massive tourism. We are a

“boutique territory” with a boutique premium offering.

If you are interested in visiting a highly cultured place

and being able to carry out many different activities in

one day, then this is great place to come. Be Basque is

how we want to position ourselves vis-à-vis the rest

of the world.

We are looking for the 30-something young

professional. We are also a very inclusive destination;

one of our objectives is to increase LGBT tourism.

Our target market are people who aren’t so much

looking for luxury rather than a premium offer.

Around 80% of the tourists who come to Biscay only

come to Bilbao and we want to encourage visitors

to visit the whole of our territory. We are a nation of

mountains, but we also have the sea. One of the brands

that we are working is the Bay of Biscay and surfing is

a big part of that.

Who are the Basque country’s most important trade partners?Historically, our main market has always been the

European Union, but this is losing weight to North

America. Africa, South America and the Far East are

also increasing their weight in our export pattern.

What do you think are the competitive advantages of Basque products and services?Many of our international firms are medium-sized

companies who have had to specialize in order to

increase their competitiveness. We are very competitive

on industrial products of medium and medium-high

technical content which is why our exports in this

particular range are increasing by three to five percent

each year.

Biscay: Much more than the Guggenheim asier alea, Director of trade Promotion & tourism of Biscay

We are a ‘boutique territory’

with a boutique premium offering.”

2017is the 20th

anniversary of the Guggenheim museum

5%tourism’s contribution

to the Biscay’s GdP

3%-5%rate at which exports of industrial products

are increasing

how did the crisis affect the Port? The crisis between 2008 and 2012 affected us greatly, and consequently

the Port’s traffic fell by 25% given that 95% of our traffic is import-

export. It is a very strategic port for the closest area of influence and

the local industries, but also for the furthest area of influence, because

all ports try to increase their influence area.

Between 2013 and 2015 we recovered some of our lost traffic. Even

counting for the fall in bulk solids due to the crisis in the iron and steel

sectors coupled with high power prices, we still believe that we will

close 2016 with a 3% increase.

What are the Port of Bilbao’s competitive advantages?The Port was expanded in 1992 and a four-million square metre port

was created with natural water depths which can receive oil and gas

tanker and container ships of any size. Our competitive advantage is

that the port is extremely diversified; 50% is made up of bulk liquid,

and the rest is made up of container goods, general goods, big presses

and bulk solids. We can deal with virtually any goods or products

and we are connected to 900 international ports. We are extremely

efficient, but we are aware that ports are mini-states that have to

become increasingly more flexible in order to provide individual tailor-

made solutions for each client. The era of making clients comply with

established commercial criteria, is definitely over.

What are the passenger traffic prospects this year?Our ferry terminal provides services mainly to England and we re-

ceive around 80,000 annual passengers this way. Brittany Ferries calls

four times a week and their cargo is

mixed; RO-RO goods

and passengers. This

year we are expecting

95,000 passengers.

We are building a new

cruise ship terminal

and we think we will

close the year with a

20-21% increase in the number of cruise ships and a

27% increase in the number of passengers.

These are extremely high numbers considering that

tourism in the north of Spain is very different to that

of the Mediterranean, as we both have very different

niches and markets. We want to integrate the Port of

Bilbao’s tourism strategy within the Basque Country’s

regional tourism strategy to maximize synergies and

commence homeport cruises, which would generate

a bigger economic impact. Therefore our expectations

for this year are to increase the number of both ferries

and cruise ships.

What are your plans for the expansion of the Port?Occupation levels in the port are close to 80%,

while the national average is 60-65%. We expect this

figure to reach 85% within 12-18 months and so

we need to generate more space. We have therefore

invested €125 million to construct a new quay for a

further 340,000 sq. m., which is the first phase of

a €200 million construction project for a total area

of 600,000 sq. m. We also plan to improve the rail-

port connections with the rest of the peninsula to

expand our hinterland, generate more activity in the

port, more import-export tonnes and improve the

economy. We also want to have a strategic position

in dry ports.

how big is your area of influence?Our area of influence includes 30 million people.

While the ports in the southern part of the peninsula

are transit ports, we are a 95% imports-exports

port and therefore highly strategic for the country’s

industry. Indeed without the Port of Bilbao many

Basque industries would not exist. Last year, even

though we were the fifth port at national level, we

were third in import-export number of containers.

We count for about 2% of Biscay’s GDP and 1.2% of

the Basque Country’s as a whole.

connecting to the worldasier atutxa, chairman of the Port of Bilbao

Without the Port of Bilbao many Basque

industries would not exist”

95% of traffic is

import-export

30 millionnumber of people in our area of influence

27%increase in the

number of passengers expected this year

1997is when the

Frank Gehry-designedmuseum opened

1.1million

visitors per year

the collectionspans from the

mid-20th century to the present day

The Guggenheim Bilbao is known the world over and has played a key part in the regeneration of the city over the past 20 years or so. how many visitors do you receive each year?Ever since we opened in 1997, the number of visitors has been relatively

constant at about one million a year. We received 1.1 million visitors

in 2015 and we plan to reach the same number this year. About two-

thirds come from outside of Spain and this ratio remains stable. The

main country of origin is France, which is not surprising given it is our

immediate neighbor.

san sebastián is european Capital of Culture for 2016. does this have an impact on the museum?It is still a bit early in the year to know precisely but it will certainly have

a positive impact on the museum, if anything because it will enhance the

visibility of San Sebastián and of the Basque Country in general.

are you planning special exhibitions related to that?Not exactly related but we do have a strong program this year, which

follows a new strategic orientation whereby the Museum’s third floor is

devoted to the foundations of the art of today, with a permanent installation

of the most significant pieces from the Bilbao Collection accompanied by

exhibitions of pre-war art. We will show

an exhibition focusing on the School of

Paris with works from the Guggenheim

Collections. Also, at the end of the year, we

will present the Rupf Collection from the

Kunstmuseum Basel.

The second floor will

be dedicated to two

ambitious temporary

exhibitions on Louise

Bourgeois and Francis

Bacon, and the first

floor will showcase the most contemporary artistic

expressions with exhibitions devoted to Andy Warhol

and Albert Oehlen, as well as video installations by

Eija-Liisa Ahtila, Sam Taylor-Johnson, and Fiona Tan

in the Film & Video gallery.

in what ways would you say the Guggenheim has influenced the revival of this once industri-al city and of the Basque Country as a whole? When the New York-based Guggenheim Foundation

decided in 1991 to expand in Europe, Bilbao was

an option among others but I think the Foundation

chose it because the museum was key in Bilbao’s

redevelopment strategy. At the time, the notion of

a museum being part of a transformation process

was quite groundbreaking, and it is testament to

the innovative spirit of the Basque Country and its

institutions. Since then, the museum has indeed

played a central role in the city’s revival but it was

not an isolated project; rather, it was part of a much

broader plan. It has provided the city and the region

with a cultural institution that has an international

appeal. For example in 2014, about 27,000

news items were published about the museum in

international media, reaching an estimated audience

of 4 billion. This has undoubtedly an impact on the

image of the region.

Another important point is that it was a project

put forward from here, and this was a sign that the

Basque society was ready to start moving on after

years of violence. In terms of urban renewal, the

museum was the first renovation project carried out

in the old industrial neighborhood of Abandoibarra,

which was then a marginal urban site, and it made it

attractive. Economically, the Guggenheim generates

365 million euros a year in added economic activity.

next year will be the Guggenheim Bilbao’s 20th anniversary. how do you plan to celebrate?We want to mark the occasion and to look to the

future. We are planning three types of events:

firstly a very strong art program, secondly a series

of special events with local cultural institutions

that existed before the Guggenheim – not only art

but also music, dance, theater –, and finally, we are

planning a major event in the autumn of 2017 that

will also be a celebration with the city of Bilbao.

The role of the Guggenheim

in Bilbao’s transformation is testament to the

Basque Country’s innovative spirit.”

the Guggenheim Bilbao’s appeal Stronger than ever Juan ignacio Vidarte, General Director of the Guggenheim Museum Bilbao

The Mondragon Corporation, the world’s largest workers cooperative, has been remarkably recession-proof. how did your cooperative business model help you weather the crisis?Indeed we are a group that incorporates some 260 cooperatives in a wide

variety of sectors. We work just like any other capitalist company in

the sense that we need to be competitive. But as a cooperative, we hold

some values dear that other enterprises are only starting to integrate such

as participating in the company’s management. Moreover, we practice

internal solidarity – companies within the corporation that do well help

those doing not so well –, and inter-cooperation, which besides joint

ventures involves the creation of common institutions that help us all

such as technological centers, a university, and mediating institutions.

The corporation’s tagline is “humanity at Work”. What does it mean concretely?

A lot of companies nowadays have their own set of corporate values.

We were created on humanistic values, so our tagline expresses that.

Our values are to create more competitive

companies with internal values of

integration, involvement and participation

like any corporation that wants to be

competitive. But we have a fundamental

principle: these values

must serve to distribute

wealth in a fairer way. The

current concentration

of wealth in just a few

hands that we observe

around the world is not

sustainable in the future. We are very proud that the

wealth we generate is supported by our values that

serve to distribute it better. In our company, there are

no rich people and neither are there poor people. I

am profoundly convinced that these values based on

fairness are key for the future.

What is the strategic role of r&d in Mondragon and how much do you spend on it?Research has historically been key for us. Our

first technological center, Ikerlan, was created

in 1974 and was a pioneer here. We invest 9% of

our industrial sales revenue in research. Today we

have 15 centers, some generic and some sectorial

– machine tool, automotive industry, and lifting

sector – with some transdisciplinary centers. Sixteen

hundred people work in research, a number that has

remained stable in spite of the crisis. We have also

innovated in our organization and are particularly

proud of our ecosystem. We have clustered together

our university, tech centers and companies. Our

aim is that they work closely together and it is an

approach that, although it works better at times than

other, has proven very beneficial. For example it has

allowed us to break ground in the “lean production”

concept whereby our industrial sector offers whole

production technologies rather than mere product

technologies. Our expertise in this area has made us

competitive throughout the world.

how much do you depend on the Basque and spanish economy?Seventy-two percent of our sales are international, out of which 40%

go to Europe. Outside of Europe, our main markets are China, Mexico

and the U.S. This means that we do not depend heavily on the Basque

and Spanish markets. The crisis affected different countries and sectors

in different ways. For example in our distribution activity, Eroski has

been badly hit by the crisis in Spain, but other companies that are very

competitive actually benefitted from the worldwide downward spiral.

Globally, our sales have remained stable and more importantly, we have

gone through the crisis without any social impact because we have used

our principle of internal solidarity to move people from companies that

were experiencing difficulties to others that were doing well.

Mondragon Proves that the cooperative Business Model works Javier sotil, President of Mondragon corporation

Fast innovation is key

to our survival in a competitive

business environment worldwide.” 260

businesses and cooperatives

€11.8 bnin total revenues

15technology centers

danobatGroup is a machine tool manufacturer that is part of the Mondragon Corporation, which is a cooperative. did this cooperative business model help you weather the crisis?DanobatGroup has gone through the crisis without too many problems

and indeed, we did benefit from the solidarity principle of the cooperative.

For example, LagunAro helped us when our workload was low by taking

on board some of our staff and we have done the same for them. It is very

important for us because the machine tool sector is highly fluctuating.

Our staff is a key asset for us and the relocation and solidarity mechanisms

within the corporation allowed us to overcome critical moments without

much difficulty.

What are your fastest-growing sectors, and your most important foreign markets?The fastest-growing sectors are equipment goods, automotive, aeronautics,

and railway where we work on big, complex and cutting-edge projects.

About 50% of our income comes from Europe, in particular Germany, and

our main non-European markets are the U.S. and China.

What percentage of your income do you invest in r&d?We dedicate about 8% of our income to R&D. We have our own tech

center, IDEKO, where over a hundred highly qualified people work on

basic research, including about 30 PhDs. In addition, we have people in

every business unit who develop new products, and there are around 150

people dedicated to developing new applications, models and processes.

The results speak for themselves, not just in numbers, but also in the

challenging projects that our staff have managed to provide solutions for.

how will you use the innovfin funds from the european Bank of investments (eBi)?Very carefully! This funding, apart from being very

competitive, brings us some stability. In our business,

we have seen that

most companies

that go bankrupt

do so not so

much for lack of

competitiveness,

but because at

times of low cash

flow, they take

risks with bad

projects in bad conditions. We have been lucky and

have enjoyed financial stability so that we can still

choose the projects we embark on.

how important is innovation in the industrial equipment sector?Innovation, internationalization and upsizing are key to

our future. We do not compete in volumes and we are

not trying to compete with low-cost countries. Rather,

what we want to do is easy to define, not so easy to

find, and much more difficult to achieve: to get projects

focused on high technology market niches and to cater to the demand for

highly customized, highly technological products.

What are the main innovation trends in your sector?Everybody is talking about industry 4.0 and the Internet

of Things. It is a constant race because machine tools

make pieces that are used to make other machines,

such as trains, planes, cars, hip and dental prosthesis,

etc. There have been huge changes in pieces, in the

materials utilized, in the way they are being produced

and in the technologies employed. We have been

mastering a large part of the new technologies such

as big data, digitalization and robotics, although there

are some in which we still need to improve. We took

a share in a startup specialized in the treatment of big

data and sensor systems for machines. We have made

great developments of very complex and completely

automatized lines that are now operational for some

clients. For example, the Soraluce milling machine with

the DAS application, which has won several prizes in

Europe, has improved productivity, avoiding vibrations

and spectacularly increasing the longevity of the tools.

So indeed, we devote a large share of our investment

effort to 4.0.

High tech coop DanobatGroup Ready for industry 4.0 Revolutioniñigo ucin, Managing Director of DanobatGroup

everybody is talking about

industry 4.0 and the internet of Things.

it is a constant race.”

120researchers and

more than 30 Phds

8% of the turnover

dedicated to r&d

35th machine tool

manufacturer in the world

Created at the end of the 1920s by your grandparents, Bodegas Luis Cañas is one of the best wineries in spain. how would you define its personality?I would say that our standout characteristic among Spanish wineries is

that we are reliable. By this I mean that the quality of our wines is always

reliable. Obviously the fact that we are in the Rioja, the most prestigious

certificate of origin in Spain, is also an important part of our identity. And

we are unbeatable on price and quality.

is being Basque an important part of your business and your wines?Without a doubt. We are from the Rioja Alavesa in the Basque Country. I

cannot say we are better here than the wineries in the proper Rioja Valley,

but we are different. The climate is different, in fact. We are on the other

side of the Ebro River, up against the Cantabrian mountain range where

we have both an Atlantic and a Mediterranean climate. Our soil is unique,

too. But that aside, I think we are different because of the people who

work here. I’m not saying we are better or worse, but we are different. For

example, we have certain criteria, we are serious and hardworking, and we

have word of mouth on our side.

you also have a reputation for being innovative, ever since 1970 when your parents first had the idea of bottling young wine rather than selling it in bulk...Ironically, one of our major innovations has been to look back at the past

and take a traditional approach to

viticulture, for example by banning

the use of pesticides in order to regain

the authenticity of the fruit itself.

Looking back at how our parents

used to work,

we decided some

years ago, to only

pick grapes from

vines that had just one, two or three bunches of less

than 250 grams. We also made some innovative steps

in grape harvesting technology, setting up sorting tables

once the grapes are boxed up. They first separate the

bad bunches and then the bad fruits. In the new winery

we are setting up in Samaniego, called Amaren after

my mother, all the wines will pass through a double

sorting table and everything will be done in cement

tanks instead of stainless steel in order to ensure quality

and authenticity.

apart from making and selling wine, you also offer tasting tours. is oenological tourism an important part of the business?It is extremely important. We have a good base

of visitors, mostly French and German, and now

increasingly Americans and Canadians, who love to eat

and drink well. When they come here, we receive them

very well, and we offer them an array of typical dishes

from this region, each paired with a different wine. The

range of wines we serve are from Bodega Luis Cañas,

named after my father, from Bodegas Amaren, and from

our winery in the Ribera del Duero. These gourmet

customers enjoy this experience and we treat them as

ambassadors of our bodegas.

Would you say your winery contributes to the push for innovation in the Basque Country?Yes, definitely. We work with the University of Navarra

and with several innovation and technology centers in

the Basque country. One of the most important things

for us is that our directors, oenologists, and engineers

get a good education and stay up to date. We collaborate

in particular with the wine school of La Rioja and the

School of Oenology of Navarra.

Bodegas Cañas export to 40 countries. What are your priority foreign markets?Europe is our main market, notably Germany, the UK,

and Switzerland. About 30% of our market is outside

Europe, mainly in North and South America, and we

are also getting a lot of attention in Asia.

Marrying tradition and innovation to create Great wines Juan Luis Cañas, owner of Bodegas Luis cañas

one of our major innovations has been to take a

traditional approach to viticulture.” Best

spanish bodega in 2015*

1928is the year whenthe winery was

founded

2,000 tons

of grape processedevery year

* in the ranking of Spanish

magazine “vivir el vino”

The Marqués de riscal brand is among the most renowned in spain, not only for its wines but also for the City of Wine built in 2006 by Frank Gehry, the architect of the Guggenheim Bilbao museum. This groundbreaking initiative was part of a rebranding that you masterminded. Why was it necessary?It was necessary because we are now in a global world, and we need

strong, global brands. Marqués de Riscal had a strong brand at a

national level, and has always been a strong exporter. But we realized

that promoting our products in

a conventional way had become

limited, especially because as a mid-

size company, we cannot afford to

advertize throughout the world. So

we chose unconventional advertizing

through architecture and Frank

Gehry because of the success of the

Guggenheim Museum in Bilbao,

which relaunched the city. As a Basque company, it made a lot of sense

to emulate this success.

how important are Marqués de riscal’s tourism-related activities (wine tasting, wine therapy, tourism) compared to wine producing?

When we started wine tasting and oenotourism in the 90s, these activities

were residual. We had about 3,000 visitors a year. When we launched

our strategic development plan Project 2000, one of the objectives was

to introduce oenotourism as was already done at the time in the U.S., in

particular the Napa Valley. We will never equal the number of visitors

they have over there because of our size but nevertheless, we are now

close to 100,000 a year. So it has definitely become a key activity for us;

it represents about 20% of our turnover. At the Frank Gehry Marqués de

Riscal Hotel, about 80% of guests are foreigners and when they come,

they also visit the Basque Country. So it has become an important asset

for the region.

Winemaking is a traditional craft. how do you combine the traditional with the need to innovate?We do our own research and development and we also collaborate with

research institutions here in the area of agriculture. This said, innovation

is good of course but in the world of wine, you have to be careful. And

actually, some of our innovations consist in going back to our roots and

revisiting 19th century techniques. For example, our wine Baron de Chirel

is made with traditional methods, all hand-made, with organic agriculture

and no fertilizers. Obviously, you cannot produce huge volumes with such

methods but the quality, the taste are unique and distinctive.

do you think spanish wines have the reputation they deserve in international markets?I don’t think so, not yet. Spanish wines deliver a great quality-price ratio

but we have to increase awareness worldwide and do more campaigning.

Now, we have a great asset in the fact that Spanish gastronomy has

become renowned the world over in the past 20 years or so and indeed,

the Basque Country is clearly at the forefront in this respect. The Basque

Academy of Gastronomy has made great efforts to promote our regional

cuisine and with great success. We should do the same with our wines

and go hand in hand with the many talented chefs and restaurants we

have, and also promote our wines internationally as do the Spanish and

Basque gastronomy.

how much of your production do you export and what are your priority markets? It depends on the year but overall, we export about two thirds of our

production in about 100 countries. The U.S. is our main export market

in volume but there are other key countries such as Germany, Mexico,

Switzerland and Japan. We are also noting very good results in Latin

America, in particular Colombia and Peru. Asia is becoming increasingly

important. We have been present in Japan for many years, and we are

now growing our sales in China, the Philippines and Vietnam.

Spearheading the Rise of the Spanish art of winemakingalejandro aznar, chairman of Marqués de Riscal

innovation is good but in the

world of wine, it can also mean using 19th century techniques.”

The Marqués de riscal City of Wine in elciego.

how much is invested in innovation in the Basque Country and what are the most advanced sectors?The Basque Country invests approximately 2% of its GDP in R&D

and 4% in innovation. This is close to the European average. The

administration is responsible for about a third of this investment and

the rest is funded by the private sector. The most innovative sectors

are of course the ICTs, the energy sector, the iron and steel industry,

the automotive sector and the telecommunications sector. The Science,

Technology and Innovation Plan Euskadi 2020 chose three main

strategic sectors which are energy, advanced manufacturing and health

applied biosciences.

is there a unique approach in Basque innovation?The Basque Country has 2.1 million inhabitants and 160,000

companies. Only 10,000 of these companies have more than ten

employees, so the approach can vary a great deal.

One of our goals is give exposure to small-scale entrepreneurs who

have big ideas, because they are

unknown and they themselves do

not know the system. Therefore,

one of our goals is to boost the

innovation ecosystem and generate

relationships between our members.

What distinguishes the Basque

Country is our ability to network

and that we all have an innate sense

of innovation to grow our nation.

When we opened our doors in 2007, we wondered how the public and

private sector could transform the Basque Country

using innovation as the driver. The Basque Country

wants to become a European reference in innovation

by 2030 and this has made Innobasque the whole

country’s project in spite of our sectoral, political or

geographical differences.

What is the Basque Country’s competitive edge in innovation?The Basque Council of Innovation, Science and

Technology is very wide-reaching and helps us

interact with each other. There is also an active

entrepreneurial network. After the crisis in the

1980s we put the emphasis on clusters, industry and

R&D. In 2005, we realized that innovation could be

an engine to transform the country. John Kao, the

innovation guru, says that other than innovation to

develop new products and services, there is another

innovation model that applies to cities and nations.

This is their ability to continuously create their

best desired future, and this is the motto we have

adopted. We all have to cooperate as we are a small

country with close-knit connections.

Innovation is extremely important for everyone. According to the

Basque Innovation Index survey, Indizea, it is not just about R&D,

which accounts for 33% of the increase in productivity, but also in-

novation in a wider sense in terms of management, organizations, cli-

ent relationships and so on. Innobasque was founded in 2007. Our

members include all the clusters, universities, com-

panies, SMEs, members of society, etc. We have the

strength of a thousand members and a community

of 40,000 more through social networks.

What activities does innobasque carry out?Innobasque plays a relevant role in the design,

deployment and evaluation of innovation policies.

We also organize countless activities to promote

a culture of innovation and boost collaborative

innovation in our region. Furthermore, we also try

to ensure that social innovation is behind every step

that is taken in this field. In June, we will be holding

the fifth edition of Global Innovation Day and every

month we gather hundreds of people around an

innovative topic to show the best Basque practices

in innovation. Overall, 20,000 people are involved

in the activities of Innobasque each year.

Since 2008 we have taken part in international

events and organizations such the I-20, which is a

group started by John Kao to gather the 20 most

innovative nations, and the SIX (Social Innovation

Exchange).

innobasque: creating a Better Future through innovationJosé Maria Villate, Managing Director of innobasque

one of our goals is to boost the

innovation ecosystem and generate

relationships between our members”

2007year that innobasque

was founded

1,000members of innobasque

20,000number of people

involved in the activities of innobasque

each year

you took office in the wake of the May 2015 municipal elections. What were your first priorities?I had three main challenges. The first one was to guarantee the well-being

of the citizens who have suffered from several years of economic crisis.

We refocused the overall policy of the city to help everyone improve

their lives as much as possible. The second challenge was to overcome

this economic crisis and return to a path of growth and job creation,

but creating jobs that are stable and respectable. We focus our efforts on

the industrial sector, which has always been a strong point of Vitoria-

Gasteiz. Indeed, before the crisis, industry contributed 27% of the local

GDP and 25% of the jobs. The third challenge is the modernization of

the city, both from a social point of view and in terms of equipment and

infrastructure. We want to become a 21st century city that is plural,

open and tolerant, and we want to encourage healthy and sustainable

mobility through the expansion of the tramway, the bus and public

transport system, the improvement of the older neighborhoods, and the

regeneration of public spaces.

Vitoria-Gasteiz was named as european Green Capital in 2012. how important is this award to your administration and how do you plan to build on this legacy?Indeed, this prize was given to the city thanks to the work carried out by

many previous governments and mayors, but also, and especially, thanks

to the work of the citizens themselves. Also

thanks to the work of our predecessors, we

attended the United Nations Climate Change

Conference in Paris in December 2015, and

we signed in April the Basque Declaration

adopted at the conclusion of the eighth

European Conference

on Sustainable Cities

and Towns, which is the

flagship event in Europe

in 2016 for discussion

and knowledge exchange

on urban local sustainability and which was held

this year in the Basque country. The award is not the

ultimate objective but rather, we have to use it to keep

improving every aspect related to sustainability. One

important objective is that we want to become a city

that is neutral in carbon dioxide emissions and since

transportation is one of the sectors that generate most

CO2 emissions, sustainable mobility is a key priority

for us. For example we will expand the tramway, which

is already a huge success, and we plan to implement a

Rapid Bus Transit system to offer high quality service

to all the residents of the surrounding neighborhoods.

in what areas apart from environment and sustainability do you consider that Vitoria-Gasteiz is particularly innovative?Vitoria-Gasteiz benefits from the presence in the Basque

Country of the Miñano Technological Park, where the

Center for Enterprises and Innovation of Alava (Centro

de Empresas e Innovación de Álava, CEIA) is based,

as well as the Basque government-funded Center for

Cooperative Research in Biosciences (CIC Biogune),

based near Bilbao. The City Council works with CIC

Biogune in projects such as the improvement of the

heating system of municipal pools, of public lighting,

etc. But then we also innovate in less high tech areas.

One shining example is the renovation of our 14th

century Santa María Cathedral, which drew a lot of

attention.

What would you like to have achieved at the end of your term, in three years time?When we reach 2019, if we can look back and see

that the public policies we implemented have really

made Vitoria-Gasteiz a better city, with a higher

quality of life, more jobs, more economic activity and

a higher respect for the environment, I would be more

than proud.

a city that Builds its economic Future on Sustainability Gorka urtaran, Mayor of vitoria-Gasteiz

We want to become a

21st century city that is modern,

sustainable, open and tolerant.” 246,000

inhabitants

1st GDP per capita of spain (135% of the average eu)

2.08%of the GdP

invested in r&d(higher than eu average)

how important is tourism for the economy of the city of Vitoria-Gasteiz? Tourism is an important sector for our economy, and it is thriving. It has

grown by 15% in the last five years and, more interestingly, the amount

of overnight stays has increased: people used to stay one night only

and now they stay longer, which is encouraging. We actively promote

tourism but one key aspect is that we focus on developing sustainable

tourism. Vitoria-Gasteiz was named European Green Capital in 2012,

a prestigious award that I believe

was well deserved. We also obtained

the Biosphere certification, the first

municipality in Spain to do so,

which makes Vitoria-Gasteiz very

attractive to anyone concerned about

sustainable tourism. Indeed, we

have an entire infrastructure based

upon sustainable tourism, not only

environmentally-speaking because

of our parks and the green belt that

surrounds the city, but also in terms of policy. We believe that tourism

must be controlled, selective and of high quality and we want to avoid

what happened to other Spanish cities where mass tourism is affecting

the life of local residents.

What type of tourism are you seeking to promote, for which categories of clientele?Our strategy is based on three pillars: sustainable tourism, sports and

family tourism.

As regards sustainable tourism, another aspect I would like to

highlight is our recently inaugurated Europa Congress Hall, in the city

center, which is innovative in several ways, notably the environmentally

friendly way in which it was built. There are many other aspects in our

tourism infrastructure that contribute to sustainable tourism, but the one

I would like to mention in particular is our public transportation system,

which enables visitors to move around town easily.

Regarding sports, every year Vitoria-Gasteiz hosts a world-class

triathlon event, which has positioned us as a renowned sports tourism

city. People come from as far away as Hawaii weeks before the triathlon

in order to acclimatize. It is a very popular event here, and it contributes

to our feeling of belonging. Hundreds of residents volunteer each year

to participate in its organization and the streets are lined with people

cheering the athletes.

Concerning family tourism, we believe Vitoria-Gasteiz is well adapted

to this type of visitor because it is very comfortable and safe. Here,

children can play in parks while their parents have coffee without any

risk. There are also scores of events organized in the city and by the

various neighborhoods that are appealing to families, and our civic

centers also offer a wide array of activities, many of them for free. Also,

people can enjoy all kinds of sports in the green belt surrounding

Vitoria-Gasteiz, notably cycling along the many bicycle paths. Actually,

a third of local journeys are made by pushbike.

Would you say Vitoria-Gasteiz is innovative in the way it promotes tourism in the city?Yes I believe we are. We are innovative because the city and many of the

products that people can buy here are environmentally sustainable. Our

certification means a lot to us: it is difficult to obtain and you have to

meet exacting criteria, and this is something we are keen to promote. As

I mentioned before, our new Europa Congress Hall is a new, innovative

infrastructure for congress tourism. But more broadly, we are innovative

because we are making use of the local and social fabric of the city. There

are many cultural events here that are deeply rooted in our traditions,

for example the Kaldearte, which means “art in the street”. We have a

great quality of life here and this is what we want to share with visitors.

Green vitoria-Gasteiz wants to Promote Sustainable tourismnerea Melgosa, councilor for tourism, employment & economic Development at the vitoria-Gasteiz city council

We believe that tourism must be controlled, selective and of high quality, as opposed to mass

tourism.”

how is the demand for financing growing in the Basque business sector? are you seeing an increase in demand for loans, in particular from sMes?In the second semester of 2014 and in 2015,

solvent demand has increased. There is

clearly a growth trend in retail, mortgages

and personal consumption, but also in

the business sector, both for short term

commercial investment and for financing

fixed company assets. We are having a two-

digit growth at the moment, linked to the

fact that 2015 has been a very good year for

the Spanish economy, both in comparative

and in absolute results. With a 3% growth

in the Basque Country, the third most

industrial region of Spain after Madrid and

Barcelona, the demand for business lending

has increased.

Our growth

is around 30-

40% but the lending/investment balance

is not growing yet because amortizations

for intense lending activity in the past are

higher than the new lending concessions.

This balance however, may grow in 2016

and 2017, even though 2016 is not as

good as 2015. There is liquidity today;

there is solvent demand and good prices.

I don’t think there are any business projects in the Basque country that

fail because of lack of financing.

Following the 2008 crisis, the spanish banking sector went through an intense period of restructuring. how did it affect Kutxabank?The banking crisis has had an enormous impact

on the whole financial system, which translated

into the reduction of over 30% in the number of

branches and staff. The restructuring of Spanish

banks has been one of the biggest in Europe: the

number of savings banks shrunk from 45 to just

two. But Kutxabank has been one of the least

affected. There are about 137 financial entities

in Spain, very few in comparison to Germany or

Italy. In the case of Kutxabank, which is the result

of the loose merger of three regional savings

banks, this restructuring did not affect us. We

carried out the merger of those three savings

banks, but it was not compulsory; it was healthy.

Unlike many entities that needed restructuring

to access funds, we did not need any help.

However, the financial business environment

with negative interest rates compels banks to find new ways to reduce

their structure, and I think that the restructuring process is not quite

over yet. For Kutxabank, this means we are reducing staff and branch

numbers in locations where there is no business.

how does Kutxabank support investments in r&d in the Basque Country?We have signed a series of agreements with the Basque institutions to sup-

port and finance business investments in R&D. For

example, we have an agreement called Makina Berria

(New Machine) to finance SMEs looking to invest in

the purchase of new equipment. These are financial

agreements in which companies and banks take part,

and they are also stimulated by public entities.

how does Kutxabank innovate in its processes and services to customers?Digitalization is key for banking innovation:

customers demand more friendliness and

competition which puts pressure on us. We have

a comparatively high digitalization level: 64% of

our customers have subscribed to online banking

contracts, and 30% bank only online. Mobile

payment is the most advanced area. A unified

platform for immediate payments via mobile is about

to be launched in Spain that will enable customers

to transfer money to whoever they want, whether or

not the recipient is a client of Kutxabank’s. This ties

to the use of the mobile to pay in shops: we have an

add-on reader for mobiles that allows you to pay just

by passing the phone over the point of sale terminal.

Riding High on the Growth of the Basque economyGregorio Villalabeitia, President of Kutxabank

i don’t think there is any business project

in the Basque Country that

fails for lack of financing.”

€75.2mprofit in first

semester of 2016

16.5% increase comparedwith first semester

of 2015

38%increase in financing

for businessesfirst semester of 2016

Bilbao Bizkaia Kutxa (BBK) was created 108 years ago as a savings bank and it is now one of spain’s leading banks. What is the role of BBK in the Basque economy and society? It is impossible to understand the Basque economy without considering

BBK. We were founded to provide loans and banking services to people

who could not access the traditional banking system. BBK also invested

in the creation of important companies such as energy provider Iberdrola

and the oil and gas company Petronor, among others. The dividends

obtained went back to the shareholders in the form of social works.

spain’s banking sector has gone through a period of tremendous restructuring in the wake of the 2008 crisis. What was the impact for BBK?Indeed, there has been a profound restructuring process in Spain, which

was mainly due to poor management in banks. The number of banks

has shrunk from 55 to 14. However, our case is special because we have

always been very well managed and we were never in need of financial

rescue. Furthermore, we have always been one of the most solvent

establishments in Spain. We are the second largest banking institution in

Spain. We created Kutxabank in 2012, which is 100% owned by us, in

order to retain our legal personality as a savings bank. With the new law

introduced in 2013, we had to transform into a banking entity. We will

now have a banking foundation that will carry out social work, as well

as majority shares in Kutxabank and diversification investment plans.

how does BBK support investment in r&d in the Basque Country?We fully support R&D, as we believe that it prepares us for the future.

In today’s globalized world, technology is fundamental to make a

difference. If you are prepared, it doesn’t matter

whether you are in Bilbao or in Kentucky. We notably

have two programs

aimed at fostering

innovation, and in

particular young

talent: “Change the

World”, which we

also call BBK 5.0,

and BBK Talent.

We are particularly

concerned about

youth employment, which is a pressing issue here in

Spain. Through “Change the World”, we are looking

for people who want to create new businesses and we

will support them financially and in terms of equity,

as partners. We are mainly interested in three areas:

artificial intelligence, biotechnology, and fashion.

do you have plans for international expansion? We believe in globalization because this is the world

we live in, and we do not think that being a small

country is an impediment but rather, an opportunity.

Our market today is bigger, in particular because

Basque people have created companies overseas.

There is a strong work ethic here and people are quite

competitive.

What is the role of sala BBK and the Mediateca?Sala BBK is the emblem of our sociocultural activities.

The idea is to showcase and offer a series of cultural

activities that are generally not programmed by

commercial entities because of their cost, without

competing with major cultural institutions such as the

Opera. As for the Mediateca, it is part of an important

project called Escuela Centro de Bilbao, which targets

an underprivileged area of the city. Through the

Mediateca, residents can borrow a book, work, watch

foreign television channels, and access national and

international press, among other things. It is free and

open almost every day.

What is the biggest challenge this year?In April, we concluded the end of the restructuring

phase. We are ready. We have no debt and have

more than 3.5 million euros in funds to finance new

investments, BBK 5.0 and other social works, so we

can keep growing sustainably.

one of Spain’s Healthiest and Most Sustainable BanksXabier sagredo ormaza, President of BBK

We are ready; we have no debt and

have more than €3.5 million to

finance new investments.”

€218.8mnet income 2015

6,400employees

1,013branches

Cie automotive is one of the biggest companies in the Basque Country and a true success story. Would you say it is a Basque company or a multinational one?We like to define ourselves as a “multi-local” company. In the automotive

sector, it is very important to live each market with its specific characteristics.

For example the needs in India are very different from those of the United

States. This said, we are Basque people in our philosophy and our culture.

We descend from families that created this business fifty years ago, and

then we took the baton, finishing the process of making CIE Automotive

into a multinational company.

in 2015, you broke all of your turnover records with a net result of €129 million, a 59% increase compared to 2014. how did you achieve such an exceptional result?2015 was the consolidation year, during which everything we had carried

out in terms of corporate operations and a series of greenfields around the

world began to yield results. But this is only the first step to something

much more important. We have announced that in the next five years,

we will again double our net result, notably through the improvement of

our processes, in particular in India and Germany. Another aspect that we

are improving is everything that relates to the digital world and the smart

workplace. We believe we have very good years ahead of us.

how do you benefit from the presence in the Basque Country of a strong automobile cluster?Not only do we have the cluster but we

also have the Automotive Intelligence

Center (AIC), which shows how public-

private partnerships

can be done in an

excellent way. There

are few countries in the

world that have such

a cooperative movement as the Basque Country, for

example with the leading cooperative Mondragon, and

it benefits the whole society.

What are the main trends that will impact your business in the short and medium term?Probably the strongest trend we will see in the next

five years will be hybrid cars; I mean those you can

actually connect to the electricity grid to get energy.

What does it entail for us? With two engines – electrical

and combustion –, cars will need a larger space and a

smaller engine. So we will probably see a downsizing

of all the engines, which means we will have to work

with higher pressure. This in turn will lead us to shift

from casting to forge and everything else that relates to

a better use of the space and the production of smaller

engines.

The group is present throughout the world. What is the proportion of europe vs. the rest of the world?More than half, 55%, of our turnover is made in Europe, 25% in the

NAFTA* area and 20% in emerging markets, including

13% in Asia and 7% in Brazil. We want to grow the

proportion of our business in emerging markets, in

particular India where we acquired a component firm,

Mahindra Auto Parts. All the forecasts predict double-

digit growth in India for the next 20 years, and we

believe it has a great future. Regarding the rest of Asia,

we are focusing on Thailand and Indonesia rather than

on China, even though we have four factories there

catering to a niche sector.

Why is the Basque Country’s economy doing so well compared to other spanish regions?The main reason is that we have a strong industry. In

the automotive sector, which is key both for the Basque

Country and Spain, we have enjoyed a high degree of

social dialogue and peace that has enabled companies

to adopt a flexible model, which is fundamental to

respond to the ups and downs of our market where

some months, you have to work six days a week and

some others, maybe only four. Also, our sector is

constantly innovating.

* North American Free Trade Agreement between the U.S., Canada and Mexico

Giant Basque automotive company takes on the worldantonio Pradera Jaúregui, chairman of cie automotive

in the next five years we will again double our net result through the improvement of our processes.”

€129mnet result

in 2015

22,812employees

(2015)

45%of the turnover

outside of europe

eGa Master was founded in 1990 in Vitoria-Gasteiz. it is a family company making high quality industrial tools and has clients in more than 150 countries with a business volume of about 20 million euros. Why was the company founded? We identified a gap in the market and so we wanted to facilitate integral

tool solutions for the most demanding industrial companies through

innovation in safety and efficiency.

We offer flexible, integral solutions, which can be personalized to our

clients’ specific needs. This is what makes us different.

eGa Master’s baseline is “art in innovation”. how are you innovating in both your products and management? People think that innovation comes from scientists in a white lab coat.

Real innovation comes from the interaction between companies and

the market or the end user. By listening to their problems and needs,

we can develop new products or improve existing ones to respond to

these issues. The best way to do this is by having a strong international

expansion policy. Most companies are founded at a regional or local

level and at a later stage they start to look at international markets. EGA

Master started the other way around. My father decided to forget about

the national market and to focus exclusively on international markets,

even though he knew it would be more difficult.

Companies learn a great deal and have to

adapt themselves when they are in a hostile

environment such as an international

market. Learning mechanisms are

activated and they become competitive in

a sustainable manner. Another advantage

that comes from internationalization is

that by being present

in many different

countries you gain

information about the

market in terms of new technologies, tendencies and

demands and this allows you to be a step ahead in your

processes. The third advantage of internationalization is

that it provides a diversification of risk as it is unlikely

that all markets collapse simultaneously. There is a

clear link between internationalization and innovation

as these two strategies strengthen each other. Global

presence and direct contact with the market allows for

more innovation, and the more innovative you are, the

easier it is to develop at an international level. This

is how we have managed to innovate in small market

niches but which have great value.

eGa Master dedicates about 6-7% of its revenues to research and development and you have about 200 patents. What are your priority innovation areas? Our priority areas are safety, both for companies

and for people. If we can reduce risk, companies

are prepared to pay more to ensure a safe work

environment. We have therefore been developing

non-sparking and explosion-proof tools. We have also

developed tools for high-altitude works so that if they

fall they do not hit anybody or break any machinery.

We have also developed safe tools for working with

high voltage. Our clients mainly work in mining,

petrol, oil and gas, and electrical generation; industries

which are high-risk and where even a small accident

can be catastrophic.

eGa Master grew by 18% in 2015 which was impressive. What are your objectives for 2016?Our objectives for this year are even more ambitious

as we want to grow by 25%. We aim to do this in

areas which have been negatively affected by the fall

in oil prices such as Africa, the Middle East and Latin

America. Oil, mining and gas companies have to be

even more efficient and productive during difficult

times. We are a new company in comparison to some

of our competitors and we believe that our message

about safety, efficiency and productivity will be well

received as we can help them improve their product.

innovation through internationalizationaner Garmendia, ceo of eGa Master

Global presence and direct contact

with the market allows for more

innovation.”

1990year eGa Master

was founded

150number of countries

where eGa Master

has clients

6-7%of revenues spent

on r&d

Founded in 2010 in san sebastian, Graphenea is one of europe’s main producers of graphene, exporting to 40 countries. Graphenea is part of a growing cluster of nanotechnology companies based at the Basque nanotechnology research center CiC nanoGune. how important was it to be based there when you started up? It was critical: it is one of the state’s nanotechnology and research

centers, comparable to other centers such as MIT in Boston. We would

not have been able to start up without the support of CIC nanoGune,

which gave us access not only to the necessary equipment but also to

people, knowledge and other companies with which we were able to

network. When you are starting a company, it is very important and it

has a huge impact on your progress and development speed.

how do you fund your growth and to what extent do Basque authorities and institutions help you?We have had very good relations with banks and institutions right

from the start. For example, we

benefitted from the Business Innovation

Center (BIC) network in the Basque

Country, in particular BIC Berrilan.

The Basque Country is small so it is

easy to develop close relationships:

you have easy access to decision-

makers both in the private and public

sectors. The Basque authorities helped

us too at the start, with a grant from

the Department of Industry. After the

first round of funding, mainly from private investors and business

angels, we obtained investment from Repsol Energy

Ventures. And last year, we were awarded a grant

from the European Union’s Horizon 2020 program

for SMEs. We used some of these funds to finance

our participation in the Graphene Flagship Project,

which is supported by the EU. It was an important

milestone because this project gathered some of

Europe’s main industrial companies such as Nokia,

BASF, Bosch, and STMicroelectronics, to name a

few. As the demand for graphene grows, this gives

us very good opportunities to work with all these

companies.

What segments are you focusing on?At the moment, we are focused on three industry

segments: semiconductors, batteries and advanced

polymers. As regards semiconductors, we are

focusing on how to comply with the stringent

regulations and standards governing production

fabs and foundries. At the moment, manufacturing

is mainly done in laboratories. But the next stage

will be to integrate the production of graphene

semiconductors in industrial facilities. As regards

batteries, we are working on advanced cathodes, post-lithium ion

batteries and other types of electrochemical batteries that are of

much better quality than the current, lithium ones. In the polymer

industry, we are in close relationship with several

producers, in particular in electrochemicals, to

introduce graphene materials in their polymers. As

far as mobile telephony is concerned, the next big

challenge is flexible electronics. Soon, our mobile

phones and tablets will be as flexible as a sheet of

paper. Graphene is part of the solution to achieve

that, in particular regarding touch screens and

batteries.

What are your plans for international expansion? We have opened an office in Cambridge,

Massachusetts in order to be near those customers

who are deciding on the technology for the next

generation of devices. Also, we have a close

relationship with the Massachusetts Institute of

Technology (MIT). In addition, we have a strong

presence in Japan, where a lot is happening

regarding graphene. According to industry analysts,

our market share is at present around 10%. We want

to achieve at least a 25-30% share and be leaders in

the market.

Basque company aims to Become Market Leader in GrapheneJesus de la Fuente, ceo of Graphenea

Being based in the Basque nanoscience

research center was decisive when

Graphenea started up.”

2004 is when graphene

was isolated at the university of

Manchester

1 milliontimes smaller

than a human hair

200 times

stronger than steel of the same thickness

irizar Forge is one of the Basque Country’s most renowned industrial companies, created 93 years ago by your family. you are the fourth generation at the helm. What challenges are you faced with today, compared with your parents?I took the role of Managing Director after a successful succession process.

My parents and I had been working closely together for some 12 years

before deciding to basically swap our roles: I took executive leadership,

managing the day-to-day operations, and they kept a more long-term,

strategic role on the board of directors. Obviously, over the course of

almost a century, the market has profoundly changed. My grandfather’s

market was local; my parents’ market was European, and I deal with

global, international markets. These are turbulent markets in which oil

prices in particular affect everybody and everything.

indeed, irizar’s sector, metallurgy, is particularly hit by competition from asia. how do you manage to stay afloat?Competition from China and other Asian low-cost countries is not

recent; it has been going on for 25 years. We are not suffering from it

but rather living with it as best we can. I consider these countries as our

partners. We are not fighting; on the contrary, we have identified similar

companies, competitors, who are doing more or less the same as us, and

we negotiated deals: I buy from you, you buy from me; I distribute your

products, you distribute mine. It works; it is a way of protecting our

business and to survive.

your sector is quite traditional. how do you innovate?Our core business is very traditional technology: forging is centuries old

but automation and complementary technologies make the difference.

In our case, the most significant recent innovation has been in our

business model. From being specialized in catering

for the onshore industry, we made the jump to the

offshore industry,

targeting more

niche markets.

Our main product

for that market is

the hook. When

we started in the

offshore industry,

we saw that many

components – lifting components for heavy-duty

works, mooring lines, pieces on which other pieces

are hooked – were cast rather than forged. Casting is

quite simple: you put liquid steel in a mold, a bit like

a muffin. Our technology is different, more costly but

it provides longer lifetime, greater lifting capacity, few

maintenance costs. This is particularly interesting for

the marine industry and offshore platforms since they

work in difficult, very demanding weather conditions.

What are irizar Forge’s unique advantages compared to its main competitors?I think the main differentiator resides in who we are:

we are 100 years young and headed by a woman.

Clients and prospects who visit us are often surprised

by how young our staff is, and I believe this gives us an

edge. In the onshore industry, our main competitors

are traditional crane and hook manufacturers, most of

whom are in Italy and Germany. In heavy equipment,

there are really only two main actors: Irizar and a

German company.

are you looking for investors?We made a significant investment of €15 million two

years ago when we decided to go into the offshore

market. Before that, we had a turnover of €10-

12 million with an EBITDA of 15%. Our goal is to

increase sales by at least 50% but we have not reached

this objective yet even though our EBITDA remains at

the same level. We are indeed looking for a partner,

but rather than a financial one, an industrial one.

Given our track record, and even though the market

is difficult right now because of the oil price slump

that affects the offshore industry, the potential of Irizar

remains huge.

Boutique Forge irizar Shows Resilience in competitive MarketsMaria irizar, Managing Director of irizar Forge

our most important innovation

of late has been to move in the

offshore industry.”

1923year irizar

was founded

€12mannual turnover

50employees

Created in 1989, in just 25 years, iTP has achieved a leading position in the global aeronautics sector. headquartered in Bilbao, it is also a major player in the Basque space and aeronautics cluster hegan. What are the strategic advantages for iTP to be based in the Basque Country?Hegan is a cluster that was created by three companies: ITP, Aernnova

and Sener, the three of them being at the top of the engineering industry.

Its objectives are to foster collaboration among companies operating in

the aerospace sector in the Basque Country, and to promote the sector

as a whole. It works quite well not only for the companies that are part

of it but also for the Basque Country. For ITP, there are many advantages

in being based here. The Basque Country has a long industrial tradition

and is very “industry-minded”. Industries have a very supportive

environment here, not only among public authorities but also the people

themselves. Furthermore, there is a lot of dedication and interest from

the Basque universities and from entities that provide funding. It is a

combination of good support, good talented people and a good working

environment.

What is the economic impact of the space and aeronautics industry on the Basque Country? Hegan contributes a little under 2% to the GDP of the Basque Country.

Now, from an R&D point of view, it is one of the sectors where

investments are the highest. ITP invests consistently above 10% of its

sales revenue in R&D. Indeed, we have also consistently been among the

three top companies both in the Basque Country and in Spain in terms

of R&D over sales.

What are the main sectors in which you invest in r&d?We have four core products: low-pressure turbines, radial structures,

externals of the engines, and compressors. A substan-

tial part of our in-

vestment goes into

the technology to

develop our prod-

ucts, in particular

low-pressure and

high-speed tur-

bines. In addition,

and this is very

important for us,

we invest in indus-

trial technologies to increase the efficiency of our fac-

tories, to improve manufacturing with new, stronger,

more environment-friendly materials. We have created

a special unit, the Center for Advanced Aeronautical

Manufacturing (Centro de Fabricación Aeronáutica

Avanzada, CFAA) precisely to explore new technolo-

gies, which has been sponsored by the Basque gov-

ernment. Another very important area for investment

is the European Clean Sky 2 project, which will re-

ceive 50% of our investment in R&D over the next

five years.

Can you tell us a bit more about your involvement in Clean sky 2?It is a €4 billion project sponsored by the European

Union to develop breakthrough technologies

to significantly increase the environmental

performance of airplanes. We will invest €40

million over the next five years mostly to make our

turbines more environmentally-friendly, lighter and

more efficient in order to reduce CO2 and NOX

emissions and meet the European requirements for

2020 and 2050.

you are operating in a sector where there are huge companies such as Boeing, airbus, rolls royce, which is one of your partners, and many others. What would you say defines iTP? Although we provide about 20% of an engine, we

are still a small company competing with very large

companies that have many more years of experience

than us. But in just 25 years we have succeeded in

taking a significant role in the aeronautics sector.

Today, the sector believes in us: we deliver our

products to all the leading companies in the world.

I think it is a great achievement.

Basque aeronautics Sector Leader invests in clean Skiesignacio Mataix, ceo of itP

a combination of good support,

good talented people and a good working

environment.”

€710min turnover (2015)

3,054employees

10%investment in

r&d over sales

Tecnalia is quite a young applied research institution, created in 2011. What is its purpose and what are your priority objectives?Tecnalia is the result of the merging of eight

research centers, most of them in the private

sector. In the early 2000s, seeking to improve

their output and the quality of their research,

they started to cooperate ever more deeply

and finally, in 2009, they decided to merge.

Thus Tecnalia Research and Innovation was

created. We are quite a young organization

although some of the original research centers

that merged had been around for more than 50

years. We are now one of the largest Research

and Technology Organization (RTO) companies

in Europe. Our strategic plan for 2015-2020 is

focused on three main areas. Firstly, to increase

our impact on the local market and industry

and transform technology into GDP. The second

objective is technological excellence.

We are aligned with the smartest specialization, which means we have

to focus on the fields where we can really add value for our customers

and industry, and at the same time be relevant and international. The

third point is to engage our staff. We have about 1,400 researchers. It

is important to emphasize we are a non-

profit organization,

which means that

our core mission is

to improve quality

of life in society. In

terms of figures,

our objective is to

increase our activity

by 30% between now

and 2020.

how does Tecnalia contribute to increasing the competitiveness of the Basque industry?We have advanced technological services and

can help companies in many fields to obtain

certification in order to sell their products.

Typically, we can provide this service to almost

3,000 companies in a two-year period. In addition,

we provide guidance to companies that are in the

process of reorganization, whether it is opening

a new business line, changing their portfolio

or diversifying, for example. We provide risk

assessment, or a business plan, or develop a new

product. Our business plan includes the objective

of having an impact of €1 billion in the Basque

economy for the period 2015-2020 and we have

the methodology that enables us to measure it.

What are the main technological areas on which you are focused?Three of our divisions are 100% aligned with the Basque Country

Intelligent Specialization Strategy (RIS3) and are industry and transport,

energy, notably of course renewables, and health. We have a division

working on sustainable construction, which is

quite an active sector as there are important needs

for innovative solutions both for rehabilitating

buildings and for new, more efficient and smart

buildings. Our ICT division is involved in big

data and smart products. And the sixth division

provides advanced technological services. The

largest sector for us is industry and transport, which

includes aeronautics: we work on manufacturing,

machining, robotics, and automation.

Why is innovation important for Basque enterprises and industry?The only way Basque companies, taking into

account their economic constraints in terms of

costs and wages, can differentiate themselves from

their competitors is in added value and innovation.

They have to invest in R&D. But it often takes a

leap of faith, in particular for SMEs. This is where

Tecnalia can help them assess the risks and carefully

plan their innovative project up until it is rolled

out. We help companies get to the closest point to

the market, although there is always a point where

they have to take the leap themselves. The Basque

Country invests about 2% of its GDP in R&D and

both the Basque government and the private sector

agree that we should increase it to 3%.

the Lab where technology is transformed into GDPiñaki san sebastián, ceo of tecnalia

Tecnalia will have an impact

of about €1 billion in the Basque

economy between now and 2020.”

€103mannual turnover

1,400highly qualified

professionals

#23 among the eu’s

32,000 organizationsinvolved in the

FP7 horizon2020 framework program

The first university founded in the Basque Country, in 1886, deusto is a Jesuit institution. What are its unique competitive advantages compared to other Basque and european universities?What really distinguishes us is our teaching

model. Beyond the proper curriculums, we are

very attentive

to help our

students develop

as a person in

all meanings of

the term. To do

so, we pay close

attention to the

experience and

conceptualization

of each course.

Closeness to each

of our students, tutoring and follow-up are also all-

important. Another aspect is that our degrees are

crafted to respond to the needs of society and the

economy, which is why we offer a series of combined degrees, for example

in business and economy, business and law, law and communication, etc.

They attract a lot of candidates because they lead to good jobs. Unlike

other universities, we do not have a lot of funding for research although

we have started to gain some resources and have gone from 0.5% to 6% in

the scale of our participation in the research output of the Basque Country.

you were named rector in 2013. What were your objectives then, and how far have you gone in achieving them?One of the objectives was to open the university to the

outside world, to business, social organizations and

administration. Indeed, twenty years ago, Europe told

its universities to get out of their ivory tower and to

serve society. We have improved in research but we

need more research that will have a social impact.

Bringing research closer to industry is a challenge

we have before us, and we are reorienting our R&D

departments towards business.

The Basque Country is consistently ranked as spain’s most innovative region. how does deusto university contribute to this effort?To begin with, there is innovation within the

university itself, in particular in the way we teach:

our whole educational model has shifted to be more

student-centered so that we support and evaluate our

students better. Deusto is really a leader in this respect.

Now, concerning our impact on the economy, we

have entrepreneurial programs in San Sebastian and

Bilbao, with business incubators in both campuses.

Furthermore, we have now a series of new Master’s degrees on a range of

novel subjects, all linked to innovation and the new economy.

one of the leading projects carried by deusto is FabLab, which is part of a network headed by the Massachusetts institute of Technology (MiT). What is the purpose of this initiative?Inaugurated last year, FabLab is an instrument in the new industrial

engineering degree created by Deusto in Bilbao. It is

part of MIT’s worldwide network of labs where people

can learn flexible manufacturing, which combines

mechanical engineering and innovative creation.

Offering different know-hows and cutting edge

machinery, FabLab gives students an opportunity to

create and make something.

spain has one of the highest rates of youth employment in europe. how does deusto contribute to give young spaniards a future?Economy and education are two separate matters. As

regards education, the main problem in Spain is not

university but secondary school, where our ratings

are relatively low compared to the leading OECD*

countries. Another problem is the suitability between

what people study and the needs of employers. At

Deusto, we gear our students towards the realities

of the market, taking into account the fact that the

Spanish economy has changed in the past few years,

with industrial jobs disappearing in favor of the

service sector. That said, the Basque Country is in a

better position than the rest of the country.

* Organization of Economic Cooperation and Development

Growing the Seeds of innovation and Humanistic valuesJosé María Guibert, Rector of the University of Deusto

our teaching model is student-centered:

we are very attentive to help

our students grow as persons.”

11,000students

92.7%graduate

occupancy rate

22research groupsin collaboration

with spanish andinternational universities

how important is innovation to iberdrola?Iberdrola has been recognized as the most innovative utility in Spain and

the fifth in Europe. The energy sector has great potential for evolution

given that environmental challenges around the world require great

technological and social innovation. It is therefore logical that our

company is committed to innovation in renewable energies and that we

have been recognized for these practices.

how does iberdrola invest in r&d&i?We have a global R&D&I center and have invested 200 million Euros

in innovation in the areas of efficiency, sustainability and energy-based

products and services. We have a link with the Basque Science and

Technology Network. We also set up Perseo, which is an 80 million Euro

fund to finance new ventures and interesting start-ups for technologies

that can be immediately applied to the market. Investments have been

made in smart networks, renewable offshore energies, energy efficiency

and maintenance efficiency for our plants.

Could you tell us more about the “innovation with suppliers” program?We identify our needs and we present them to local suppliers and

manufacturers who find a solution to our needs. We are technology

users, not makers. We are innovative in our process and we pass on that

innovation to our suppliers. This synergy between a utility company and

the local supply chain has been a great success.

What do you think are Basque companies’ competitive advantages in innovation?The Basque Country went through a crisis in its traditional, heavy-indus-

try sector during the 1980s that left many companies

destroyed. Industry was reborn through technology,

the creation of clusters and a network of technologi-

cal centers linking the universities with the industry’s

needs. This allowed

the creation of a

tech-based industrial

fabric, that although

small, maintains its

position in the auto-

motive, electrical and

machine-tool indus-

tries. This is a skill

differential where we

can compete world-

wide. The electrical

equipment sector is in constant innovation and we

need to be at the leading edge to maintain our mar-

ket position. Furthermore, the collaboration between

public institutions and the private sector is exemplary

in the Basque Country.

how is iberdrola helping the internationalization of the spanish and Basque supply chain?

Iberdrola is a multinational company with operations

in the UK, Brazil, Mexico and the US. We identify

markets where local demand is not fully covered by

local manufacturers and we see this as an opportunity

for Spanish companies to access these markets with

their products. Ormazabal and MESA are two good

examples, but there are others of varying sizes such as

ZIV, Ingeteam and Artetxe. In order to introduce their

products, they may have to adapt their equipment to be

competitive in overseas markets as well as ensuring that

the market is not too restrictive.

how has iberdrola made a commitment to renewable clean energies?We see ourselves as a company that can generate

value for the stakeholders and for the supply chain.

We started investing in renewable energies in 2001. In

2015 in Paris, world leaders agreed to fight man-made

climate change. At Iberdrola, we have been doing

it for 15 years now. This is good news both for our

stakeholders, and for the Basque Country as a whole,

because Iberdrola and the Basque manufacturers have

the know-how to put this country on the leading edge

of renewable energy. It is a real success story.

the Most innovative Utility in Spainasis Canales, Director of iberdrola

We see ourselves as a

company that can generate value for the stakeholders

and for the supply chain.”

200 million euros

spent on innovation

5thmost innovative utility in europe

2001year iberdrola began

investing in renewable energies