0
Interview
11 September 2022 2.00 h

Antoni Cañete

PRESIDENT OF PIMEC CATALONIA

“We live in a false reality, because storm clouds are gathering”

The head of the confederation of SMEs in Catalonia warns of major changes in the economy that will lead to the closure of many companies while also creating new business opportunities

“Firms will only be able to finance themselves by delaying payments” “WE NEED TO READ THE CHANGES TO TURN THEM INTO OPPORTUNITIES”
How are Cata­lan SMEs doing?
Gen­er­ally speak­ing, SMEs have emerged from the pan­demic with cer­tain mech­a­nisms that allow them to con­tinue their busi­ness ac­tiv­ity, but it has been done in such a way that some com­pa­nies have lit­tle vi­a­bil­ity. Firms are af­fected by the cur­rent sit­u­a­tion of ris­ing com­mod­ity prices, soar­ing en­ergy prices and a lack of sup­plies. There are those that are doing very well, that have shown re­silience and been able to over­come it. But there are oth­ers that, while still in busi­ness, do not have a clear idea of the changes that will take place.
For ex­am­ple?
The thing with the econ­omy is that we’re in a false re­al­ity be­cause storm clouds caused by this sit­u­a­tion we’re going through right now are gath­er­ing and will bring changes that we will have no choice but to face.
What are these threats?
One is liq­uid­ity. Com­pa­nies have ap­plied for ICO loans [from the gov­ern­ment’s Of­fi­cial Credit In­sti­tute] worth over 140 mil­lion euros, 90% of which have gone to SMEs. But these loans have to be re­paid and many will be re­newed. Yet the re­newal of these debts will not be like pre­vi­ous ones, be­cause now when you renew an ICO loan, fi­nan­cial in­sti­tu­tions will clas­sify the com­pany as being under fi­nan­cial over­sight or in­sol­vent. It’s like mak­ing some­one choose be­tween a fright or death; ob­vi­ously every­one chooses a fright be­cause no one wants to die but the mo­ment the fi­nan­cial in­sti­tu­tion clas­si­fies you as in­sol­vent or under fi­nan­cial over­sight, this con­di­tions the vi­a­bil­ity of your com­pany and is a death sen­tence. In ad­di­tion, the mora­to­rium on bank­ruptcy law is now end­ing and when a com­pany be­comes fi­nan­cially un­vi­able and en­ters into loss, it must be de­clared bank­rupt.
So the bor­row­ing hasn’t been good?
We’ve be­come ac­cus­tomed to a mon­e­tary pol­icy aimed at get­ting over the fi­nan­cial cri­sis, which is all about bor­row­ing at zero in­ter­est. How­ever, once in­fla­tion be­gins to rise, there’s no other so­lu­tion but to also raise the in­ter­est rate to cor­rect it. So we’ll find our­selves with high in­fla­tion, ris­ing in­ter­est rates, ris­ing debt and ris­ing com­mod­ity and en­ergy prices. With all this, com­pa­nies will no longer be able to pass on the extra costs to the con­sumer, be­cause the mar­ket will not ac­cept such large price rises and so the com­pany will lose mar­gin and liq­uid­ity. By the time all of these vari­ables occur, we’ll be wit­ness­ing busi­ness clo­sures. And the only way firms will be able to fi­nance them­selves will be to delay pay­ments. In eco­nom­ics, this is called break­ing the pay­ment chain and caus­ing struc­tural prob­lems. I am very pes­simistic.
And when could all this hap­pen?
I think all of these vari­ables will likely begin emerg­ing in the au­tumn. We’re in a very im­por­tant time of de­mand right now be­cause we’re com­ing out of a sit­u­a­tion where some sav­ings have been gen­er­ated and peo­ple want to go out and enjoy them­selves. And this has caused sud­den major de­mand. Yet the de­mand we’ve been see­ing does not come with the same prof­itabil­ity we’ve ex­pe­ri­enced until now. Restau­rants, for ex­am­ple, have been work­ing like never be­fore and yet there’s less money in the cash reg­is­ter at the end of the day, which means they have less liq­uid­ity and so in the long run open­ing will mean los­ing money and all this will have an im­pact on the weak­est firms. Those with­out the vol­ume and fi­nan­cial ca­pac­ity will have a bad time, log­i­cally.
But we al­ways hear that bad times also bring op­por­tu­ni­ties.
Many sec­ond chances can come out of it. We need to start think­ing about how we han­dle the sit­u­a­tion, be­cause there is a se­ries of changes on the way that can bring a lot of op­por­tu­ni­ties. What we need to do is know how to read them. There will be a need, for ex­am­ple, to re­lo­cate com­pa­nies and many sup­pli­ers. After what’s hap­pened, every­one is start­ing to re­alise that you can’t have a sup­plier 4,000 kilo­me­tres away, be­cause you can’t con­trol the sup­ply. So this will lead to the need for local sup­pli­ers and the ef­fect of prox­im­ity will lead to a dif­fer­ent re­al­ity. What’s more, if be­fore the pan­demic bring­ing a prod­uct from China meant pay­ing the cost of the prod­uct and trans­porta­tion, from next year there will also be a car­bon tax and there­fore the price will change.
Give us an idea of how the econ­omy is doing in each of Cat­alo­nia’s re­gions.
Lleida, for ex­am­ple, is see­ing a sig­nif­i­cant im­pact on the pri­mary sec­tor from ris­ing costs and weather af­fect­ing crops. It’s a sec­tor of small busi­nesses that do not get the media at­ten­tion that other sec­tors do. An­other issue is the “Aragonese Strip” be­cause com­pa­nies in Aragon have seen eco­nomic ac­tiv­ity growth of 8%, while in Lleida it has only been 3%. From the point of view of the air­port, Lleida Air­port has very spe­cific fea­tures, as it has ter­rain that al­most no other air­port in Eu­rope has, mak­ing it a can­di­date for a cargo and lo­gis­tics air­port.
What about in Tar­rag­ona?
Tar­rag­ona is closely aligned with the issue of en­ergy, as we pro­duce over 80% of our en­ergy from the nu­clear plants in the area, but they will be shut down and that will have an ef­fect. And so we should work on the issue of en­ergy tran­si­tion but that is not hap­pen­ing. The port of Tar­rag­ona has a lot of po­ten­tial, as does tourism, which I think has real prospects if the nec­es­sary in­fra­struc­ture is put in place to max­imise the con­sid­er­able power of the sec­tor. Tar­rag­ona has a clear prob­lem of in­fra­struc­ture and es­pe­cially of com­mu­ni­ca­tion and so that needs at­ten­tion.
And Barcelona?
Barcelona has mas­sive po­ten­tial, es­pe­cially the met­ro­pol­i­tan area, and it must turn the com­ing changes into op­por­tu­ni­ties. We’re in a phase of re­defin­ing the changes that are tak­ing place in the world, and the Cata­lan cap­i­tal is such an im­por­tant dri­ver for the coun­try, so we must know how to react to its trans­for­ma­tion. Barcelona ,has con­di­tions that make it a mag­net for tal­ent and dy­namism, due to its lo­ca­tion and in­fra­struc­ture, such as the port and the air­port. All of this is great, but we need to read the changes to turn them into op­por­tu­ni­ties.
And what about Girona?
It has more po­ten­tial than we might think. Girona has con­di­tions that make it strate­gic in many areas. It is one of the best cities to live in, and the ways in which Girona could be pro­moted is an at­trac­tion that could pro­vide many op­por­tu­ni­ties that we are not yet even aware of. Yet the province is very de­pen­dent on the tourism sec­tor and has felt the im­pact of the cri­sis caused by the pan­demic. We must ap­proach tourism with a dif­fer­ent vi­sion than we have so far and that means max­imis­ing what we can offer the vis­i­tor, be­cause Girona not only has sun and beaches but also an in­land area and a city for shop­ping. Work also needs to be done on the issue of the air­port, be­cause it’s been very de­pen­dent on a sin­gle com­pany, while it’s also nec­es­sary to deal with the issue of con­nec­tions that could gen­er­ate ac­tiv­ity. The mas­ter plan al­ready pro­vides for a high-speed train link at the air­port, and so Barcelona will be 25 min­utes away. We need to recog­nise Girona air­port as a key piece in the puz­zle.
What about the dif­fi­cul­ties the tourism in­dus­try is hav­ing to find work­ers?
Dur­ing the pan­demic, many peo­ple work­ing in the hos­pi­tal­ity in­dus­try lost their jobs and moved to other sec­tors. And as this is a sec­tor in which you have to work on week­ends and at unso­cia­ble times, those who have found other jobs with bet­ter work­ing con­di­tions have not gone back. The prob­lem is that 12.9% of Cat­alo­nia’s work­force is un­em­ployed and yet we can’t find peo­ple to cover these jobs. We’re doing some­thing wrong. The sec­tor needs to de­velop con­di­tions that make it at­trac­tive and with higher salaries. Yet re­cently, the short­age of work­ers has not been lim­ited to the tourism sec­tor.

in­ter­view busi­ness

Public, private and institutional

Born in Barcelona in 1963, Antoni Cañete is an industrial engineer who graduated from the Polytechnic University of Catalonia (UPC) and teaches intermediate and higher professional training courses. He is the president of Pimec Catalonia and also first vice-president and spokesman for the Conpymes SME association. During his career, he has worked in the public, private and institutional spheres. In the public sphere, he was an associate professor at the Institute of Education Sciences of the University of Barcelona, the Autonomous University of Barcelona and the Polytechnic University of Catalonia, as well as working at other institutions, including the Barcelona Chamber of Commerce. In the private sector, he was the managing director of the consortium of manufacturers of electrical equipment, Cofme SA, while in the institutional field he is a member of the governing board of the ACC10 business promotion agency.

Sign in. Sign in if you are already a verified reader. I want to become verified reader. To leave comments on the website you must be a verified reader.
Note: To leave comments on the website you must be a verified reader and accept the conditions of use.

Published on

Most Viewed