Sardinia may seem an unlikely starting-point for a piece on this blog, but bear with me. The island of Sardinia, which is not named by the way after sardines (they were named after it), lies some 260 or so miles to the east of Mallorca. It is quite a bit bigger than Mallorca, but it has some similarities - a Catalan dialect (and an obscure language of its own); it was once under Aragonese dominance; it witnessed a major battle against the Moorish Turks; it is an autonomous region; and it is also a tourism centre and a place for the rich to flaunt themselves, their money and their properties. Maybe you can start to see where I'm coming from.
Some days ago there was en editorial in "The Bulletin" which spoke about the property market in Mallorca. It enthused that the luxury end of the market is holding strong. And this at a time when the market for the ordinary man and woman is floating adrift. Good for the luxury market. The fact that individuals are willing to part with seven figure sums or more was evidence that the island was in grand shape despite other problems. Loadsamoney, fine investment prospects, blah-blah; it was similar to the notion that Freddy Shepherd's one-time interest in Real Mallorca was in some way indicative of wider British confidence to invest in the island. Pass me those straws and let me clutch them; but not for long, they're going in the bin with the rest of the rubbish.
Be careful what you wish for. That wealthy people may wish to line the pockets of estate agents, existing landowners and some professionals is evidence of no more than a desire to purchase a luxury pile. It is not, by some vague implication, the creation of some form of Thatcherite distribution of wealth through entrepreneurialism for the good of all. Some builders, some gardeners, some pool-maintenance firms and a scattering of menials may also benefit but that's it. If I can come back to yesterday's piece, are the wealthy purchasers like to be integrating with Mallorcan society? They take but what do they give back? Are they going to establish high-tech new businesses with high employment opportunities? No they are not. At least Paul Davidson, the likely new owner of Real Mallorca, seems to have the right attitudes. And let us certainly not decry the benevolence and humility of some of the wealthy. I once bumped into the German rock star Peter Maffay as he was getting off his push bike to unlock the gates to the Trencadora in Pollensa; his foundation is lauded for its good works and one only hears good things of the man.
Be careful what you wish for. And who are these wealthy people? Perhaps some warning bells should have been ringing when Matthias Kühn of Kühn & Partner, purveyors of property to the filthy rich, spoke about the opportunities afforded by the new wave of the industrial-scale-minted foreign buyer. Russians, in a word. And Heaven forbid that there is some high-rent, high-security gated villa on the go or perhaps Mark Thatcher will pitch up, giving the luckies the possibility of diversifying into a bit of bounty-hunting in the form of kidnapping on behalf of some God-forsaken African basket case of a nation. Mallorca has a long reputation as a millionaire's playground. There are plenty of wealthy Mallorcans. And now there's this new wave.
Be careful what you wish for. A while back a local politician expressed a concern that the current economic difficulties could lead to increased crime. It was over-blown scare-mongering perhaps, but civil disobedience ...? Which brings me back to Sardinia. What's happening there? "Arrogant ostentation of the super-rich." "These people think they rule the world." Hugely expensive properties, Russian oligarchs and celebrity Italians such as Flavio Briatore who recently was greeted as his motorised dinghies were making shore with cries of "louts, go home" and a barrage of wet sand.
Economic difficulties can create strong reactions. The mega rich are not necessarily the solution to these difficulties; in fact far from it. The Sardinians have had enough of those who show off their wealth. Be careful what you wish for Mallorca.
* The quotes and some Sardinian references are from an article by Alexander Chancellor in "The Guardian" - http://www.guardian.co.uk/commentisfree/2008/aug/15/italy.globaleconomy.
QUIZ
Yesterday's title - Paul McCartney and Stevie Wonder (http://www.youtube.com/watch?v=sssqBjaTzOU). Today's title - album by a Scottish band.
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
Showing posts with label Mallorcan economy. Show all posts
Showing posts with label Mallorcan economy. Show all posts
Saturday, August 16, 2008
Sunday, July 27, 2008
With Good Company
Which are the great Mallorcan companies? Great in terms of size, profit or renown? Go on - name them. Outside of Mallorca, the Balearics or Spain, you might be hard pushed. Yet there are some. Which company is the most profitable (for the year to the end of 2006 anyway)? Iberostar, a hotel chain with an international presence and generally a byword for immaculate quality. Its profits in 2006 were skewed somewhat by the sale of various businesses, such as the Viajes Iberia travel agencies, but it stands some distance ahead of the second placed concern, the energy company GESA. Another hotel business - Riusa - occupies third place.
There may be problems at Spanair, but the airline registered the highest sales figures for a single company, though the three business comprising Globalia, which include Air Europa, were ahead of them. Yet another hotel chain, Sol Meliá, employed the most people.
These then are the crème of the Mallorcan corporate crème. You can add some other names, such as Barceló, also a hotel organisation, and in so doing a pretty clear picture emerges. Hotels and airlines - tourism. It is not exactly surprising for islands that are built on tourism and built with hotels that such businesses should be at the top of the pile. But a strength can as easily be a weakness; wealth-creation within the economy as a whole is dependent on a clutch of companies performing well. If there is a downturn, they just go to emphasise where the weakness resides in that whole economy. Spanair is a current example.
Strip away the hotels and airlines (and it is perhaps interesting that construction firms do not register at the very top) and, internationally at any rate, Mallorca and the Balearics are virtual non-players. I say virtual, as there are other businesses that have forged something of an international reputation - the Inca-based Camper shoes company is an example. Leather is a not unimportant sector of the Mallorcan economy but one often overlooked.
But to come back to construction. This sector is littered with companies, most of them family concerns. Many grew on the back of the drive towards modernisation and tourism. They were the vital suppliers of skills to creating the Mallorca of today, one far removed from the tracks and decrepit infrastructure of the sixties. Yet their proliferation is, in the current climate, something of an anachronism. Just as businesses pass through life cycles, so do whole sectors of business. The Mallorcan construction industry is well into its mature phase, but it is still structured as though it were in its youth. The sector could do with some rationalisation, which means (or can mean) merger and takeover. A trimmed-down, leaner to use the business term, construction industry may be able to take advantage of size and economies of scale. As importantly, perhaps, this may lead to governance that can help to prevent the mess that the sector is currently in. There is rationalisation by default, caused by bankruptcy, but this is not how to manage a business, an industry sector or an economy. Company collapse is a kind of Malthusian principle of population applied to business. For Malthus, war, famine and the rest were inevitable and necessary forms of correction. There is no such inevitability, or need not be, in a soundly functioning economy. Rationalisation through combination is an antidote to the Malthusian apocalypse.
The Balearic president, Francesc Antich, is due to announce measures to support and stimulate the economy. There needs to be some blue sky amongst the short-term. Recently, there was a suggestion that the tourism sector will be able to absorb the job losses in the construction industry. How? Especially in winter. More fundamentally though, we just seek the comfort of the mother industry to see us through the dark nights. It cannot continue indefinitely. Antich is being pressed to demand more handouts from Madrid. There may indeed be the hand of parsimony when it comes to those central funds, but a deserving request for more simply helps to paper over the cracks of the half-built properties and other faultlines in the local economy - or it would were the monies to be forthcoming. A quick glance at those company-performance figures tells all that is needed to be known. The economy is top heavy. And that is its weakness.
QUIZ
Yesterday's title - Justin Timberlake - http://www.youtube.com/watch?v=FKXm3Qg7sBo. Today's title - you couldn't probably get further away from Justin Timberlake than this folk musician: Scottish and "incredible".
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
There may be problems at Spanair, but the airline registered the highest sales figures for a single company, though the three business comprising Globalia, which include Air Europa, were ahead of them. Yet another hotel chain, Sol Meliá, employed the most people.
These then are the crème of the Mallorcan corporate crème. You can add some other names, such as Barceló, also a hotel organisation, and in so doing a pretty clear picture emerges. Hotels and airlines - tourism. It is not exactly surprising for islands that are built on tourism and built with hotels that such businesses should be at the top of the pile. But a strength can as easily be a weakness; wealth-creation within the economy as a whole is dependent on a clutch of companies performing well. If there is a downturn, they just go to emphasise where the weakness resides in that whole economy. Spanair is a current example.
Strip away the hotels and airlines (and it is perhaps interesting that construction firms do not register at the very top) and, internationally at any rate, Mallorca and the Balearics are virtual non-players. I say virtual, as there are other businesses that have forged something of an international reputation - the Inca-based Camper shoes company is an example. Leather is a not unimportant sector of the Mallorcan economy but one often overlooked.
But to come back to construction. This sector is littered with companies, most of them family concerns. Many grew on the back of the drive towards modernisation and tourism. They were the vital suppliers of skills to creating the Mallorca of today, one far removed from the tracks and decrepit infrastructure of the sixties. Yet their proliferation is, in the current climate, something of an anachronism. Just as businesses pass through life cycles, so do whole sectors of business. The Mallorcan construction industry is well into its mature phase, but it is still structured as though it were in its youth. The sector could do with some rationalisation, which means (or can mean) merger and takeover. A trimmed-down, leaner to use the business term, construction industry may be able to take advantage of size and economies of scale. As importantly, perhaps, this may lead to governance that can help to prevent the mess that the sector is currently in. There is rationalisation by default, caused by bankruptcy, but this is not how to manage a business, an industry sector or an economy. Company collapse is a kind of Malthusian principle of population applied to business. For Malthus, war, famine and the rest were inevitable and necessary forms of correction. There is no such inevitability, or need not be, in a soundly functioning economy. Rationalisation through combination is an antidote to the Malthusian apocalypse.
The Balearic president, Francesc Antich, is due to announce measures to support and stimulate the economy. There needs to be some blue sky amongst the short-term. Recently, there was a suggestion that the tourism sector will be able to absorb the job losses in the construction industry. How? Especially in winter. More fundamentally though, we just seek the comfort of the mother industry to see us through the dark nights. It cannot continue indefinitely. Antich is being pressed to demand more handouts from Madrid. There may indeed be the hand of parsimony when it comes to those central funds, but a deserving request for more simply helps to paper over the cracks of the half-built properties and other faultlines in the local economy - or it would were the monies to be forthcoming. A quick glance at those company-performance figures tells all that is needed to be known. The economy is top heavy. And that is its weakness.
QUIZ
Yesterday's title - Justin Timberlake - http://www.youtube.com/watch?v=FKXm3Qg7sBo. Today's title - you couldn't probably get further away from Justin Timberlake than this folk musician: Scottish and "incredible".
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
Saturday, July 19, 2008
Tears For Souvenirs
A 60 per cent fall in turnover. This is a figure quoted yesterday in the "Diario" in respect of souvenir and jewellery stores. The source of the statistic was a spokesperson for the Partido Popular. One takes the figure at its face value, but, as always, statistics disguise a multitude of alternative stories. 60% is a hell of a decline though. It is true that some of these souvenir places sell a load of tat, so perhaps it's not completely surprising, while jewellery is probably something the purchase of which can be deferred for more plentiful times. However you wish to interpret the fall, it is, nevertheless, a real cause for concern.
The PP cites the problems at Spanair to suggest that the "crisis" is affecting sectors other than property and construction; the spokesperson points also to a fall of 15% turnover for restaurants. The party, in addition, has demanded that the Balearic Government provides data regarding all-inclusives. By implication, the PP is moving to a position of seeing them as the devil of the piece, which is a bit rich given their support in the past.
At some point the current malaise in Mallorca would switch its political attention to the Aunt Sallys, of which the all-inclusives are most obviously one. Maybe that time has come; the all-inclusives have been the target of ire for many businesses for some time but the politicians have preferred to keep their heads in the sands of the still heavily populated beaches. Personally, I see all-inclusives as just one factor, but to deny their impact on local businesses is to deny logic and common sense. One can argue, as I have, that the all-inclusives will cause a market correction in terms of over-supply of bars, souvenir shops etc, but such a market perspective is cold comfort to a bar-owner during a long, hot and slow summer. I have defended all-inclusives from the point of view of the family on a limited budget, and in the current economic climate they have much to commend them in this regard. But the outside-hotel spend is seriously restricted; of course it is. Just by how much might be gauged from an exchange I found on a forum. Someone, staying AI, was asking about spending money. 500 pounds for a fortnight was enough, it was reckoned. That's 500 pounds for a family of five! Everyone deserves a holiday, and the cheaper it is the better. But there is a point at which goodwill subsides. Why, some businesses may ask, should my island and my resort be the ones that are exploited by the cheap option of an all-inclusive while my business is by-passed by brigades branded by wristband? There are those who holiday at all-inclusives who, aware of their impact, bridle at the suggestion that they do not spend outside the hotel. But whatever spend they do make cannot and does not compensate for the overall loss.
The PP is right to ask for clear numbers. No one really knows. In the case of Alcúdia, there are certain hotels where the numbers are clear - the Macs, Lagomonte, that part of Bellevue that is AI - but there are others where it is not. I would hazard a guess that some 40% of Alcúdia's stock of hotel places are AI. In Can Picafort I dread to think. One supposes that they don't wish to make public the true figures for fear of the outcry. The AI takeover has been almost by stealth. In my part of Playa de Muro, the wristbands on the people on the beach tell it all; I don't remember seeing them with such regularity even a couple of years ago.
In times of crisis there is a search for a scapegoat. A political call for a restriction or more on all-inclusives would curry massive favour. It would probably be futile. There are doubtless mechanisms that could be deployed that could effect a restriction or ban, but there is always European law and restraint of trade clauses to say no, and the Spanish government is currently in the European naughty chair because of its flagrant breach of law in the case of the blocking of a foreign takeover of the energy company Endesa. Perhaps more importantly there is the clout of the tour operators. Some hotel chains, such as Iberostar, may well offer AI as an option, but it has been the tour operators, responding to consumer "demand", that have been the main instigators of all-inclusives; the very tour operators that have helped to create much of Mallorca's wealth. Antagonise them at your peril. With the tour operators it is a case of "ah made thee and ah can break thee".
A point once made to me was that the politicians were only too happy to see a growth in all-inclusives if this meant that the numbers coming into Palma airport were at healthy levels. The investment in the further development of the airport had to be justified in terms of traffic, and the press regularly publish figures as to that traffic. Similar levels as the previous year or an increase, and these indicate that the airport is doing well and that tourism is also doing well. It's camouflage. Economic conditions across Europe, combined with the market distortion created by all-inclusives, have finally caught up with Mallorca. Politicians and other authorities rarely plan for or contemplate bad-case scenarios. But now they have one, perhaps some are jumping ship and condemning practices that have added to the current problems. An apocalyptic vision for the island is overdoing it, but the day may yet arrive when the only souvenirs being taken back through the airport are replica wristbands.
QUIZ
Yesterday's title - Steely Dan, "Parker's Band" (http://www.youtube.com/watch?v=vnwRpIqBLaU). Today's title - who? Comedian-cum-crooner.
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
The PP cites the problems at Spanair to suggest that the "crisis" is affecting sectors other than property and construction; the spokesperson points also to a fall of 15% turnover for restaurants. The party, in addition, has demanded that the Balearic Government provides data regarding all-inclusives. By implication, the PP is moving to a position of seeing them as the devil of the piece, which is a bit rich given their support in the past.
At some point the current malaise in Mallorca would switch its political attention to the Aunt Sallys, of which the all-inclusives are most obviously one. Maybe that time has come; the all-inclusives have been the target of ire for many businesses for some time but the politicians have preferred to keep their heads in the sands of the still heavily populated beaches. Personally, I see all-inclusives as just one factor, but to deny their impact on local businesses is to deny logic and common sense. One can argue, as I have, that the all-inclusives will cause a market correction in terms of over-supply of bars, souvenir shops etc, but such a market perspective is cold comfort to a bar-owner during a long, hot and slow summer. I have defended all-inclusives from the point of view of the family on a limited budget, and in the current economic climate they have much to commend them in this regard. But the outside-hotel spend is seriously restricted; of course it is. Just by how much might be gauged from an exchange I found on a forum. Someone, staying AI, was asking about spending money. 500 pounds for a fortnight was enough, it was reckoned. That's 500 pounds for a family of five! Everyone deserves a holiday, and the cheaper it is the better. But there is a point at which goodwill subsides. Why, some businesses may ask, should my island and my resort be the ones that are exploited by the cheap option of an all-inclusive while my business is by-passed by brigades branded by wristband? There are those who holiday at all-inclusives who, aware of their impact, bridle at the suggestion that they do not spend outside the hotel. But whatever spend they do make cannot and does not compensate for the overall loss.
The PP is right to ask for clear numbers. No one really knows. In the case of Alcúdia, there are certain hotels where the numbers are clear - the Macs, Lagomonte, that part of Bellevue that is AI - but there are others where it is not. I would hazard a guess that some 40% of Alcúdia's stock of hotel places are AI. In Can Picafort I dread to think. One supposes that they don't wish to make public the true figures for fear of the outcry. The AI takeover has been almost by stealth. In my part of Playa de Muro, the wristbands on the people on the beach tell it all; I don't remember seeing them with such regularity even a couple of years ago.
In times of crisis there is a search for a scapegoat. A political call for a restriction or more on all-inclusives would curry massive favour. It would probably be futile. There are doubtless mechanisms that could be deployed that could effect a restriction or ban, but there is always European law and restraint of trade clauses to say no, and the Spanish government is currently in the European naughty chair because of its flagrant breach of law in the case of the blocking of a foreign takeover of the energy company Endesa. Perhaps more importantly there is the clout of the tour operators. Some hotel chains, such as Iberostar, may well offer AI as an option, but it has been the tour operators, responding to consumer "demand", that have been the main instigators of all-inclusives; the very tour operators that have helped to create much of Mallorca's wealth. Antagonise them at your peril. With the tour operators it is a case of "ah made thee and ah can break thee".
A point once made to me was that the politicians were only too happy to see a growth in all-inclusives if this meant that the numbers coming into Palma airport were at healthy levels. The investment in the further development of the airport had to be justified in terms of traffic, and the press regularly publish figures as to that traffic. Similar levels as the previous year or an increase, and these indicate that the airport is doing well and that tourism is also doing well. It's camouflage. Economic conditions across Europe, combined with the market distortion created by all-inclusives, have finally caught up with Mallorca. Politicians and other authorities rarely plan for or contemplate bad-case scenarios. But now they have one, perhaps some are jumping ship and condemning practices that have added to the current problems. An apocalyptic vision for the island is overdoing it, but the day may yet arrive when the only souvenirs being taken back through the airport are replica wristbands.
QUIZ
Yesterday's title - Steely Dan, "Parker's Band" (http://www.youtube.com/watch?v=vnwRpIqBLaU). Today's title - who? Comedian-cum-crooner.
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
Thursday, June 19, 2008
Fiddle About
Economic woe follows the British tourist and lands with him at Spain's airports. There may be more sun in Spain, but the clouds of economic hard times are as in evidence as they are in the UK; indeed, more so.
There was a fine article in "The Bulletin" yesterday; fine, that is, if you like your economics reporting coloured by imagery of doom and gloom. "The Spanish economy is in for a ferocious fall." "It's going to suffer more than Europe and take longer to recover." There is nothing necessarily that new in the article, but it does act to emphasise both the sudden decline of one of Europe's golden economies and the structural impediments to turning that economy around on anything more than an ever-deeper lake of debt.
According to the IMF, Spain is the developed country that will be "hardest hit" by the credit crunch. And it's not difficult to understand why. The reliance on construction, as a driver of the economic boom, has turned to a millstone, with construction companies unable to get the credit they had long used and the housing market all but drying up. There are, of course, those who fiddle while the country may not exactly be burning but is at smouldering point, and insist that all will be fine, including President Zapatero, but his predictions for growth are at variance with those of the IMF, which forecasts stagnation. And the problem is more than the fiddle-playing of wishful thinking, it is the fiddle-playing that drowns out the noises calling out for structural improvements that would give the country a truer sense of economic well-being, rather than what it has known - which is one based on low-skill sectors, such as construction, and all that Brussels benevolence. An extra whammy awaits in the pipeline for Sr. Zapatero: further interest rises imposed by the European Central Bank.
To place the current economic malaise in a Mallorcan context, it is difficult not to be even more pessimistic. To return to a previous theme on this blog: the Mallorcan economy is sustained by two main sectors - tourism and construction. The latter is suffering as elsewhere, but the fiddle-players can point to the value of the luxury housing market to cover up deficiencies. The tourist sector will probably enjoy a year as good as 2007, at least in terms of overall numbers, and so the fiddle-players will say all is well. But both sectors are essentially low skill. There is, or has been, a complacency that these sectors can continue to fuel growth, while quelling any impetus to seek ways of shifting to a more diverse and competitive economy based on higher skills and also higher salaries. Recently, there was a call for the local government to set about a new round of construction in order to assist the flagging economy. This is economics of the madhouse. There may well be a need for social and affordable housing and also for further civil construction projects, but where does the money come from? More borrowing. Mallorca is but a part, but Spain overall has the second-largest current account deficit in the world. To seek a remedy in yet more construction would be to compound the economic problem that already exists while simultaneously papering over the cracks of an unbalanced economy. Among other sectors of the local economy, agriculture for example, there is also uncompetitiveness. The island's almond-growers have seen their market attacked by California, hardly a low-cost producer. The key to this has been the use of technology. In the same way that Californian wine producers exploited technology to attack the French wine market, so have their almond-growers. Technology and skills.
One has a sense of unrealism about the local economy, and about much of the country's economy. European development funds have been both an advantage and a disadvantage. They have created the grounds for the economic boom but they have also seem to have acted as a disincentive to establish a more meaningful economic basis - one of skills, competitiveness and productivity. One wonders just how far the island has really progressed. And I come back to that observation (17 April: "Wonderland") about Puerto Pollensa and about kids' futures in a place where they enjoy a laidback, beach upbringing and believe that to be their futures. There has always been the beach, and for the last couple of decades a nice open cheque from Europe has made the beach even more agreeable.
The local government does at least seem to "get it" in that they have a plan, albeit vague, for innovation and development. But then, on the other hand, there's the language issue. Is competitiveness really compatible with a bias towards the local language?
It is hard, at times, to avoid an image of wanting the cake of the playa, the fiestas and the traditions and to eat it too, with the bread and jam of easy credit, whoever supplies it. When I talk about progress, I mean the extent to which society here is fronting up to the nature of the global economy and its role in it. This weekend, many Mallorcans will decamp to Menorca for Sant Joan, and thereafter the summer is one round of fiestas. It has been easy to maintain all this tradition and all this party so long as the credit line is long. But maybe that party is coming to an end.
QUIZ
Chain - "Man On The Moon" to "Moon River" to "Breakfast at Tiffanys", which was the name of the song by Deep Blue Something. And what links breakfast to Paul Young? Yesterday's title - Jack Nicholson. Today's title - where's this from? Had it only recently.
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
There was a fine article in "The Bulletin" yesterday; fine, that is, if you like your economics reporting coloured by imagery of doom and gloom. "The Spanish economy is in for a ferocious fall." "It's going to suffer more than Europe and take longer to recover." There is nothing necessarily that new in the article, but it does act to emphasise both the sudden decline of one of Europe's golden economies and the structural impediments to turning that economy around on anything more than an ever-deeper lake of debt.
According to the IMF, Spain is the developed country that will be "hardest hit" by the credit crunch. And it's not difficult to understand why. The reliance on construction, as a driver of the economic boom, has turned to a millstone, with construction companies unable to get the credit they had long used and the housing market all but drying up. There are, of course, those who fiddle while the country may not exactly be burning but is at smouldering point, and insist that all will be fine, including President Zapatero, but his predictions for growth are at variance with those of the IMF, which forecasts stagnation. And the problem is more than the fiddle-playing of wishful thinking, it is the fiddle-playing that drowns out the noises calling out for structural improvements that would give the country a truer sense of economic well-being, rather than what it has known - which is one based on low-skill sectors, such as construction, and all that Brussels benevolence. An extra whammy awaits in the pipeline for Sr. Zapatero: further interest rises imposed by the European Central Bank.
To place the current economic malaise in a Mallorcan context, it is difficult not to be even more pessimistic. To return to a previous theme on this blog: the Mallorcan economy is sustained by two main sectors - tourism and construction. The latter is suffering as elsewhere, but the fiddle-players can point to the value of the luxury housing market to cover up deficiencies. The tourist sector will probably enjoy a year as good as 2007, at least in terms of overall numbers, and so the fiddle-players will say all is well. But both sectors are essentially low skill. There is, or has been, a complacency that these sectors can continue to fuel growth, while quelling any impetus to seek ways of shifting to a more diverse and competitive economy based on higher skills and also higher salaries. Recently, there was a call for the local government to set about a new round of construction in order to assist the flagging economy. This is economics of the madhouse. There may well be a need for social and affordable housing and also for further civil construction projects, but where does the money come from? More borrowing. Mallorca is but a part, but Spain overall has the second-largest current account deficit in the world. To seek a remedy in yet more construction would be to compound the economic problem that already exists while simultaneously papering over the cracks of an unbalanced economy. Among other sectors of the local economy, agriculture for example, there is also uncompetitiveness. The island's almond-growers have seen their market attacked by California, hardly a low-cost producer. The key to this has been the use of technology. In the same way that Californian wine producers exploited technology to attack the French wine market, so have their almond-growers. Technology and skills.
One has a sense of unrealism about the local economy, and about much of the country's economy. European development funds have been both an advantage and a disadvantage. They have created the grounds for the economic boom but they have also seem to have acted as a disincentive to establish a more meaningful economic basis - one of skills, competitiveness and productivity. One wonders just how far the island has really progressed. And I come back to that observation (17 April: "Wonderland") about Puerto Pollensa and about kids' futures in a place where they enjoy a laidback, beach upbringing and believe that to be their futures. There has always been the beach, and for the last couple of decades a nice open cheque from Europe has made the beach even more agreeable.
The local government does at least seem to "get it" in that they have a plan, albeit vague, for innovation and development. But then, on the other hand, there's the language issue. Is competitiveness really compatible with a bias towards the local language?
It is hard, at times, to avoid an image of wanting the cake of the playa, the fiestas and the traditions and to eat it too, with the bread and jam of easy credit, whoever supplies it. When I talk about progress, I mean the extent to which society here is fronting up to the nature of the global economy and its role in it. This weekend, many Mallorcans will decamp to Menorca for Sant Joan, and thereafter the summer is one round of fiestas. It has been easy to maintain all this tradition and all this party so long as the credit line is long. But maybe that party is coming to an end.
QUIZ
Chain - "Man On The Moon" to "Moon River" to "Breakfast at Tiffanys", which was the name of the song by Deep Blue Something. And what links breakfast to Paul Young? Yesterday's title - Jack Nicholson. Today's title - where's this from? Had it only recently.
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
Friday, October 26, 2007
And They’re Messing With My Heart
Francesc Antich, leader of the Balearic Government, was yesterday asking for more dosh for the Balearics and was also railing against over-development which places at risk quality of life and which is also incompatible with quality tourism. According to a report in Diario de Mallorca, what Sr. Antich wants to see is a new model of tourism which, whilst maintaining the beach and sun aspect, will embrace also cultural and sports tourism. He then goes to say that he intends to make an agreement with developers for “thousands of dwellings” accessible to the general public.
Now, one cannot help but feel that there is perhaps a bit of a contradiction here. Admittedly, he appears to wish to see an end to development that destroys too much territory, so one has to presume that these thousands of dwellings will somehow arise from currently developed areas - a bit like the urban versus green-belt argument perhaps.
The problem with this is that, as I noted a few days ago, there has been “orgiastic construction” in centres such as Puerto Pollensa. These are not so much ripping the heart out of the town as blocking its arteries. Does the crowding of ever more apartment blocks into confined areas really add to quality of life?
Antich describes the tourism industry with his own heart metaphor; it is what pumps the social and economic body. Quite right. A question is, would the cessation of further tourist expansion and therefore developments harm the desire for quality of life which, by implication, he sees as linked to property for the public?
A while ago, the Balearic Government announced its Plan Turismo 2020 with its aim of greater added value and a stated goal of “fewer tourists and higher income”. But would this be compatible with Antich’s heart-beat motif? Cut numbers of tourists - cut jobs, cut ancillary services, cut suppliers? I don’t know, maybe it wouldn’t, but I would take some convincing. Would such a model be able to underpin quality of life in its wider economic sense as in, for example, generating sufficient employment and income to support the affordability of thousands of dwellings?
Mallorca (and the Balearics) economy is based on tourism, more than any other sector. Construction may also be vital to the economy, but it is tourism that helps to spawn it, not the other way round. Despite the talk of innovation and development, to which Antich also referred again yesterday, there is not, and is unlikely to ever be, a Silicon Valley or some such equivalent. It is tourism which drives Mallorca and which drives quality of life. This does not have to mean unchecked development, but further development is almost certainly a consequence.
But then one runs into another issue. As so often on this blog, there is a coincidence. Also in the Diario is a report about the ongoing battle as to the construction (or not) of a golf course on the Son Bosc finca that abuts the Albufera nature park on its Muro wing. The environmental lobby group, GOB, and some local politicians are against this, but is it not this sort of development that Antich is alluding to when he talks about quality and sports tourism? Only a few weeks back, the proposal for a golf course and hotel at nearby Son Real was turned down, and the chances are that Son Bosc will never be developed, or it might even if takes several years. Let it not be ignored that, on the other side of Albufera, after some fifteen years of wrangling, they have started to develop an industrial estate. Though strong environmental standards are to be imposed on the industrial estate, is it really the case that a golf course is in some way more of an environmental threat?
Mallorca is a small island with an increasing population and an increasing demand for infrastructure, be it transport, housing or other. Tourism is a rapacious beast that grabs for itself whole chunks of this infrastructure and land. But it is the beast that beats the heart of Mallorca. The challenge is to increase this heart-rate or rather perhaps to relieve it of the tourism strain, and only increased economic diversification and competitiveness can help to achieve this. Whether it can be achieved is an entirely different matter.
QUIZ
Yesterday - Robert Louis Stevenson, “Treasure Island”. Today’s title - this is a line from a frantic record by?
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
Now, one cannot help but feel that there is perhaps a bit of a contradiction here. Admittedly, he appears to wish to see an end to development that destroys too much territory, so one has to presume that these thousands of dwellings will somehow arise from currently developed areas - a bit like the urban versus green-belt argument perhaps.
The problem with this is that, as I noted a few days ago, there has been “orgiastic construction” in centres such as Puerto Pollensa. These are not so much ripping the heart out of the town as blocking its arteries. Does the crowding of ever more apartment blocks into confined areas really add to quality of life?
Antich describes the tourism industry with his own heart metaphor; it is what pumps the social and economic body. Quite right. A question is, would the cessation of further tourist expansion and therefore developments harm the desire for quality of life which, by implication, he sees as linked to property for the public?
A while ago, the Balearic Government announced its Plan Turismo 2020 with its aim of greater added value and a stated goal of “fewer tourists and higher income”. But would this be compatible with Antich’s heart-beat motif? Cut numbers of tourists - cut jobs, cut ancillary services, cut suppliers? I don’t know, maybe it wouldn’t, but I would take some convincing. Would such a model be able to underpin quality of life in its wider economic sense as in, for example, generating sufficient employment and income to support the affordability of thousands of dwellings?
Mallorca (and the Balearics) economy is based on tourism, more than any other sector. Construction may also be vital to the economy, but it is tourism that helps to spawn it, not the other way round. Despite the talk of innovation and development, to which Antich also referred again yesterday, there is not, and is unlikely to ever be, a Silicon Valley or some such equivalent. It is tourism which drives Mallorca and which drives quality of life. This does not have to mean unchecked development, but further development is almost certainly a consequence.
But then one runs into another issue. As so often on this blog, there is a coincidence. Also in the Diario is a report about the ongoing battle as to the construction (or not) of a golf course on the Son Bosc finca that abuts the Albufera nature park on its Muro wing. The environmental lobby group, GOB, and some local politicians are against this, but is it not this sort of development that Antich is alluding to when he talks about quality and sports tourism? Only a few weeks back, the proposal for a golf course and hotel at nearby Son Real was turned down, and the chances are that Son Bosc will never be developed, or it might even if takes several years. Let it not be ignored that, on the other side of Albufera, after some fifteen years of wrangling, they have started to develop an industrial estate. Though strong environmental standards are to be imposed on the industrial estate, is it really the case that a golf course is in some way more of an environmental threat?
Mallorca is a small island with an increasing population and an increasing demand for infrastructure, be it transport, housing or other. Tourism is a rapacious beast that grabs for itself whole chunks of this infrastructure and land. But it is the beast that beats the heart of Mallorca. The challenge is to increase this heart-rate or rather perhaps to relieve it of the tourism strain, and only increased economic diversification and competitiveness can help to achieve this. Whether it can be achieved is an entirely different matter.
QUIZ
Yesterday - Robert Louis Stevenson, “Treasure Island”. Today’s title - this is a line from a frantic record by?
(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)
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