Finance&Economics: Editorial - For the good of Spain, not the party

For the good of Spain, not the party



The FinanciaTimes

Like Greece, Ireland and Portugal before it, Spain appears unwilling to make a formal request for international financial aid – beyond that agreed for its banks – unless its slide into the abyss becomes irreversible. Doubtless this reflects the government’s view that such an application would constitute the nation’s greatest humiliation since the end of Francoism in 1975.

But it also reflects the assessment of Mariano Rajoy, the centre-right prime minister, that to tap Europe’s rescue funds might prove a political catastrophe for his ruling Popular party. The electoral maulings suffered by governments in Athens, Dublin and Lisbon that were ultimately compelled to ask for aid indicate that Mr Rajoy’s fears may not be wide of the mark.

Regrettably, such calculations of party political advantage have shadowed the Rajoy government’s behaviour in the eurozone crisis since its landslide election victory last November. Early in his premiership they prompted his defiant pose against a freshly adopted set of stricter eurozone fiscal rules. They also accounted for his hesitancy in addressing the turmoil in Spain’s public sector banks, where Popular party politicians wielded much influence.

Now they are intensifying tensions in the central government’s relationship with Spain’s regions. Even those ruled by local Popular party barons suspect the party leadership of harbouring excessively centralising instincts. But more serious trouble is brewing in regions such as Catalonia that are not under Popular party control and which suspect Mr Rajoy of trying to exploit their fiscal woes to curb the autonomy granted to them more than 30 years ago.

Mr Rajoy has compounded his difficulties with an incoherent communications policy that has eroded his government’s popularity and damaged investors’ confidence in its competence. He should borrow a leaf from the book of neighbouring Portugal, whose government has made a better job of speaking with one voice and persuading the public that it is ruling in the national interest.

On Mr Rajoy’s watch Spain has made encouraging progress on several fronts, with exports buoyant, the current account deficit shrinking and unit labour costs improving. Unemployment is uncomfortably high but the government’s labour market reforms are on the right track. No less essential are the courage and consistency to govern for the good of Spain, even if this involves measures that harm the Popular party’s short-term interests.

Current Affairs: The charisma of La Coruña

The charisma of La Coruña

Often-overlooked La Coruña in northern Spain is just the place to find good food, fabulous beaches and a dash of culture



The Guardian

"La Coruña is one long sea front," said my taxi driver as we rounded the headland towards Riazor, the huge urban beach that is the major natural feature of this northern Spanish city. On the sand, surfers were polishing their boards and pale-skinned families, enjoying the sudden Atlantic summer, were energetically doing what families do on beaches.

From my hotel, I could see the crouching form of Riazor stadium, home of Deportivo La Coruña ("el Depor") and one of Spain's cathedrals of football. And at the end of the beach, the new Museo Nacional de Ciencia y Tecnología (Muncyt), glittering in the afternoon sun. The museum, opened in May, is a masterpiece of take-no-prisoners modernism by architects Victoria Acebo and Angel Alonso, and the city's most talked-about new attraction. Outwardly it is a stunning concatenation of glass and concrete; inwardly, it's an engaging attempt to make Spain feel good about its technological heritage.

La Coruña is hardly a great techno-metropolis, but it has the big-town brashness of a place that still lives mainly on manufacturing. It also has the bracing saltiness of a harbour city, and a Brighton-like feel in the bric-a-brac and street-fashion shops of the grungy Orzán district behind Riazor beach. For centuries it lived under the long shadow of Santiago de Compostela, whose clerical pomp and cultural dominion it fiercely resented. But La Coruña is fighting back. For two summers (in 2010 and 2011) it hosted a satellite version of Barcelona's Sónar festival, capitalising on the busy local club scene. Now the city is hoping that the Muncyt will put it on the map, Guggenheim-style, as an exhilarating and original short-break destination.

As night fell I set out for Calle Estrella, La Coruña's prime tapas territory. It was Monday, but the bars on Estrella were heaving, the mild July night filling the terrace tables with good-natured, raucous crowds. At Cunqueiro, a cheery old tavern with slate floors and stone walls, I ate a first-night supper of octopus with potatoes (pulpo á feira) accompanied by a glass of Albariño. It felt like a culinary "welcome to Galicia".

El Depor recently won promotion from the Spanish second division, but in gastronomic terms La Coruña is always in the primera liga. From the cheap-as-chips tascas of Calle Barrera, where locals go for china bowls of Ribeiro wine and platters of winkles, to top-end marisquerías (shellfish joints) and restaurantes de autor (chef-driven restaurants) such as Domus and Alborada, there is quality at every level.

The city is handsome yet somehow rough-hewn, with islands of gentrification around Plaza de Lugo, where a decorative modernista style adorns the facades of early-20th-century mansion blocks, and the picture-pretty medieval Ciudad Vieja.

La Coruña has a number of surprising strings to its bow – not least the Zara connection. The global-village high-street fashion brand was born here, and rag-trade aficionados might want to check out the first-ever Zara store (opened in 1975 at Calle Juan Flórez) and the old-town house of Amancio Ortega, godfather of the brand, who started out selling aprons to housewives and is now one of the world's 10 richest men.

For insight into La Coruña's history and culture, I called Suso Martinez, whose tours of his city are more like theatrical performances. For the first of three sorties, Suso appeared in fancy dress as Sir John Moore, the British general fatally wounded at the battle of La Coruña in 1809, to lead me round the general's granite mausoleum in the garden of San Carlos, high above the battlements.

On the second day he materialised as Mil Espáne, a mythological warrior in helmet and skimpy kilt, to illustrate the importance of La Coruña to the ancient Celts. "To the lighthouse!" he intoned gravely as we headed for the square-sided Torre de Hércules, the world's only functioning Roman lighthouse and a symbol of the city on its lonely promontory.

In Suso's most convincing role, that of 19th-century philanthropist Eugenio da Guarda, he brilliantly conjured up the liberal, economically buoyant La Coruña which the Picasso family found when they arrived from Málaga in 1890. Here is another of the city's surprises: the Pablo Picasso connection. The artist lived here for five years when his father was a master at the art school.

For three days the weather in La Coruña had defied Galicia's (increasingly unjustified) reputation for inclemency. From a bakery I picked up one of the world's best picnic foods, an empanada – a flat pie with a range of fillings from tuna and peppers to ground meat and onions – and headed to Riazor beach with a few cold cans of Estrella Galicia, La Coruña's signature beer. I nipped between the surfers and the families and plunged into the sea. The water was, rather like the city and its people, a good deal less chilly than you might think. La Coruña is, in every sense, a breath of fresh air.

Current Affairs: Obituary: Neil Armstrong, Moon landings astronaut

Obituary: Neil Armstrong, Moon landings astronaut



BBC

In 1969, Neil Armstrong became the first man to walk on the Moon and arguably the most famous man in the Universe.

Asked how he felt that day, he replied "very, very small".

He later questioned the value of his legacy as he witnessed the thirst for space exploration become increasingly embroiled in politics and battles for funding, what he called "hucksterism and other attendant nonsense".

Neil Alden Armstrong was born in Ohio on 5 Aug 1930. His father worked for the state government and the family were constantly on the move as he took up new positions.

Armstrong took his first flight aged six with his father and formed a passion for aeronautics that would last all his life. His hero was Charles Lindbergh, and by the age of 16 he could fly before he could drive.

Already a decorated hero after flying Navy fighters in the Korean War, Armstrong became a test pilot for the National Advisory Committee on Aeronautics, Nasa's forerunner.

'One small step...'

Armstrong served as one of an elite group selected to pit technology against nature's limitations.

In 1961, John F Kennedy had promised to have a man on the Moon by the end of the decade.

With the Russians already sending men into space, Americans were determined to fulfil this pledge, so money and support for the Nasa Apollo programme were plentiful.

During an earlier Gemini 8 mission, Armstrong had managed to correct a spinning space capsule and save the lives of himself and his co-pilot. He was famously shy, almost taciturn, but his flying skills made him the natural commander of Apollo 11.

By 1969, the team was ready to fulfil Kennedy's promise. In a spacecraft which had control systems with less than a thousandth of the computing power of a modern laptop, Armstrong and his colleagues Buzz Aldrin and Michael Collins made for the Moon.

People across the world bought television sets for the first time to witness their endeavour, and more than 500 million watched every moment of Apollo 11's arrival on the lunar surface on 20 July.

Private man

After steering to avoid large rocks, Armstrong had only 20 seconds of fuel left when he finally landed the module safely between boulders. From inside the capsule, he reported back to an emotional Mission Control in Houston that "the Eagle has landed".

And as he disembarked from his lunar nest, he uttered his carefully prepared phrase, that what he was making was "one small step for man, one giant leap for mankind". He meant to say "a man" but, in the circumstances, most people forgave the fluff.

Instead, they watched awe-struck as, with Aldrin at his side, Armstrong planted an American flag on the Sea of Tranquility.

Back on Earth, the crew received global adulation and honour, and were feted like movie stars wherever they went. But, after the initial publicity round, Armstrong refused to cash in on his singular celebrity.

The man who was revered as a hero by the American public and awarded the Presidential Medal of Freedom for his work, shunned the limelight and the prospective fortune that came with it.

Instead, he lived in the seclusion of his Ohio farmhouse, taught engineering at the University of Cincinnati and later went into business.

Inspiration

He refused to give interviews or sign autographs and disappointed many fans with his requests for privacy. He gave only occasional speeches and his most surprising sortie back into the public arena came in the form of a series of Chrysler commercials.

He once explained, "I don't want to be a living memorial," and while his fellow astronauts trod a precarious path through post-Moon renown - Buzz Aldrin suffering alcoholism and a breakdown - Armstrong remained happy to "bask in obscurity".

Only reluctantly did he join his fellow astronauts for anniversary celebrations of the Moon landing. In 1999, 30 years later, he stood with Aldrin and Collins to receive the Langley medal for aviation from then Vice-President Al Gore.

Marked by a personal humility that meant he scarcely mentioned his own space voyages, Armstrong was nonetheless able to inspire a group of students that met him that day. He told them, "Opportunities will be available to you that you cannot imagine."

No-one has walked on the Moon since 1972 and, for many people today, the idea of landing there again has been overtaken by the prospect of missions to Mars and beyond.

But, the millions around the world who sat glued to their television sets in July 1969 saw their most fantastic dreams made real. For them, the shy man from Ohio opened a fresh frontier and there will be no forgetting Neil Armstrong and his awe-inspiring achievement.

Video : The 2012 Summer Song ?

It´s arrived just in time for the end of the Summer ... It´s from South Korea ! and it´s called Gangnam Style. I think it might just catch on !

Current Affairs: Spanish fresco restoration botched by amateur

Spanish fresco restoration botched by amateur



BBC

An elderly parishioner has stunned Spanish cultural officials with an alarming and unauthorised attempt to restore a prized Jesus Christ fresco.

Ecce Homo (Behold the Man) by Elias Garcia Martinez has held pride of place in the Sanctuary of Mercy Church near Zaragoza for more than 100 years.

The woman took her brush to it after years of deterioration due to moisture.

Cultural officials said she had the best intentions and hoped it could be properly restored.

Donation

Cecilia Gimenez, who is in her 80s, was reportedly upset at the way the fresco had deteriorated and took it on herself to "restore" the image.

She claimed to have had the permission of the priest to carry out the job.

"(The) priest knew it! He did! How could you do something like that without permission? He knew it!"

BBC Europe correspondent Christian Fraser says the delicate brush strokes of Elias Garcia Martinez have been buried under a haphazard splattering of paint.

The once-dignified portrait now resembles a crayon sketch of a very hairy monkey in an ill-fitting tunic, he says.

The woman appears to have realised she was out of her depth and contacted Juan Maria Ojeda, the city councillor in charge of cultural affairs.

Teresa Garcia, granddaughter of Elias Garcia Martinez, said the woman had painted the tunic before, but the fresco got disfigured when she painted Christ's head.

'Good intentions'

Art historians are expected to meet at the church soon to discuss how to proceed.

Mr Ojeda said: "I think she had good intentions. Next week she will meet with a repairer and explain what kind of materials she used.

"If we can't fix it, we will probably cover the wall with a photo of the painting."

The fresco is not thought to be very valuable, but has a high sentimental value for local people.

Our correspondent says that to make matters worse, the local centre that works to preserve artworks had just received a donation from the painter's granddaughter which they had planned to use to restore the original fresco.

FINANCE&ECONOMICS: Ortega - The man who dresses the world

The man who dresses the world



- Inditex founder Amancio Ortega is now the world's third-richest man

- The Spaniard owes his success to a business model no rival has been able to replicate

EL PAÍS

Eighteen months ago, local media reported a rare sighting of Amancio Ortega. The founder of Inditex, the world's largest high-street fashion retailer, spent a morning at a shopping mall on the outskirts of A Coruña - close to the company's headquarters - looking round Zara. Ortega wanted to experience firsthand the new shop concept the company was formulating, and would soon be announced to the world with the opening of Zara's flagship emporium on New York's Fifth Avenue a year later amid great fanfare.

The new Fifth Avenue Zara is the retailer's largest outlet in the United States, encompassing more than 3,000 square meters spread over three floors. The shop opens on to Fifth Avenue and 52nd Street with five display windows and a façade spanning more than 23 meters. The store will employ 450 people.

The new store image is based on four principles: beauty, clarity, functionality and sustainability. The store's design emphasizes simplicity as part of the retailer's ongoing mission to facilitate direct contact with customers.

In each of the three floors, the store is organized around two long corridors or "catwalks" that lead to intimate boutique-like cubes on each side. Each space showcases a specific collection. The wood furniture is finished in neutral elegant colors and textures reminiscent of fabrics such as linen or silk.

The shop also includes all the sustainability features of Inditex's eco-efficient stores, marking further progress in the Group's environmental commitments as outlined in its Sustainable Inditex 2011-2015 Plan.

When the store was inaugurated, in April this year, Ortega was already the world's fifth-richest man. Two months later, Businessweek announced he had joined Bill Gates and Carlos Slim as one of the three richest men on the planet, with a net worth estimated at 37.5 billion euros.

In the first three months of this year, Inditex's profits grew by 30 percent on the same period in 2011, even though sales only rose by one percent. Even the collapse of the Spanish stock exchange has had no negative impact: its share value has continued to rise, to the point that it is now Spain's top bourse performer, outgunning Telefónica, and the country's two leading banks, Santander and BBVA. Inditex has weathered the global financial crisis like few other companies, continuing to grow despite the economic downturn. It has opened 1,000 new stores around the world over the last four years. In 2006, it opened store number 3,000, and two years later opened number 4,000 in Tokyo in 2008; two years later Rome hosted store number 5,000. By the end of the year, it will have opened its 6,000th, probably in China.

Inditex now has 300 stores in China, and has used the country as a manufacturing base. But sensing a downturn in the Chinese economy, coupled with its rising labor costs, the company is rapidly shifting its operations closer to home: Africa, Turkey and Portugal. Rapid response has always been the hallmark of the company.

"Inditex's business model has so far proved indestructible," says José Luis Nueno of the IESE business school, and author of one of the many case studies exploring the Galician company's success. He is currently preparing another, attempting to see where Inditex could be in five years' time, when it is expected to be turning over some 30 billion euros a year.

"Many other companies have tried to copy its business model, and some manage up to a point, but nobody has been able to successfully replicate it: nobody else can do what they do in the way that they do it," Nueno explains.

Central to Inditex's growth strategy is complete control over the chain of production. It takes, on average, just three weeks for Inditex to move a fashion piece from the concept stage to store shelves - and then items remain in stores only a few weeks before being replaced with the "latest" style, giving customers incentive to visit often and check out new arrivals. Relatively low prices also keep merchandise moving and customers coming back.

The group designs all the products sold in its outlets and manufactures all of its items. Stores are the front line. The feedback they send to the company's headquarters in A Coruña, which includes both computerized sales data and anecdotal observations, drives the design process.

Each of Inditex's chains is designed to meet the demands of a different market segment, from teens - who view fashion as fleeting and clothing as disposable - to older men and women, with more conservative styles and values.

Inditex does virtually no advertising, using its outlets, which are generally located in central urban commercial areas, to convey its message.

In terms of technology and industrial production, Inditex is a leading retail innovator. Whereas the production timeline for its competitors can take as long as five months, turnaround time for Zara stores is a mere three weeks. Each Zara store receives deliveries twice a week, based on real-time inventory data collected at each store, then sent through the internet to computers at the company's headquarters. Inventories are kept low while fresh designs pour into stores almost continuously.

Like many successful businesses, Inditex's model is based on a very simple idea: to make nice clothes at a nice price for the middle classes. But other companies have copied Inditex's strategy of allowing its designers to produce their own versions of the trends on the streets and catwalks around the world. Inditex's rivals have gone as far as headhunting its top designers, and have had some success, but as Nueno points out, they are unable to replicate other aspects of the company's business model. The story goes that if the weather forecast is for rain, there will be umbrellas in Zara's windows. In short, the company has been created on the premise that decisions need to be made quickly, and those decisions transferred to whichever stage of the production or distribution process is necessary. If a t-shirt isn't selling, the store knows immediately. It is taken off the shelf and recycled. "They are the masters at this," says Nueno. "The item will be sent back to the factory, dyed a different color, the logo on it changed, and it will be back in the shops. The idea is simple: sell everything that is produced."

Inditex produces some 840 million articles of clothing a year, from skimpy lingerie to heavy overcoats; some 40,000 different items. The company produces its summer and winter lines at the same time, for men, women, and children; for Americans, Chinese, and Africans, taking into account the most popular sizes in those regions and countries.

Inditex is a Spanish company, with some 1,900 shops and nine logistics platforms. So how has it managed to maintain profitability in a country where consumption has fallen sharply and the economy worsens by the day, to the point where an EU bailout looks increasingly likely? In part because Inditex is no longer opening stores in Spain; in fact it has begun to close some that no longer serve their purpose, such as a large Zara store in central Bilbao, where it already had two outlets that had prevented the competition from gaining a foothold.

In 2009, when the analysts predicted that the company would begin to feel the effects of the global crisis, the company responded quickly: "We began to make cheaper clothing, and we also began to pay more attention to our customers. Before, sales staff simply folded clothes and manned the tills. Now they are helping customers find what they want. Nobody should leave the store without buying something," says a senior member of the management.

As the global crisis spread, Inditex simply looked further afield to open new stores, particularly in emerging economies.

Amancio Ortega arrived at A Coruna, Spain, at the age of 14, due to the job of his father, a railway worker. Having started as a gofer in various shirt stores, he founded Confecciones Goa (his initials in reverse), which made bathrobes, in 1972. In 1975 he opened the first store in what would grow into the enormously popular chain of fashion stores called Zara. He owns 59.29 percent of the Inditex group (Industrias de Diseño Textil Sociedad Anónima), which includes the brands Zara, Massimo Dutti, Oysho, Zara Home, Kiddy's Class, Tempe, Stradivarius, Pull & Bear/Often and Bershka, and has more than 92,000 employees.

Amancio Ortega keeps a very low profile and has never given an interview; his secrecy has led to the publication of books such as Amancio Ortega: De cero a Zara (or, From zero to Zara). Similarly, there are practically no photographs of him.

In January, saying the company was now entering a new phase requiring "youth and experience," Ortega announced he was handing over the reins of the company to his right-hand man Pablo Isla, until then the company's deputy chairman and chief executive officer. Ortega retains a 59.2-percent stake in Inditex, Ortega said

The 46-year-old Isla has been CEO of Inditex since 2005. He also sits on the board of telecoms giant Telefónica.

Isla is as reticent as Ortega. He doesn't give interviews, and speaks publicly once a year, when he addresses the Inditex general shareholders' meeting. Some observers say he was the brains behind the firm's decision to expand online, as well as to open the Fifth Avenue store.

Inditex has long used purely promotional websites to draw attention to its Zara product lineup as well as other company-owned chains such as Bershka and Massimo Dutti. Its Facebook page has nearly 10 million fans, and Inditex introduced a smartphone app more than 18 months ago that allows consumers to browse new clothing arrivals. However, selling goods online, something that Gap has been doing for more than a decade, is only now becoming a key part of its strategy to expand sales in the United States. Inditex has about 50 Zara stores in the States compared with the 200-odd US outlets Swedish rival Hennes & Mauritz (better known as H&M) has opened so far.

Inditex will continue to grow: the latest figures will be out in September, and nobody doubts they will be good. Amancio Ortega will continue to be among the richest men in the world, and he will continue to play a key, albeit discreet, role in the company's development. Although retired, he is still a familiar face at the company's headquarters, particularly in the design department, and is a regular in the staff canteen. And he will probably continue to refuse to give interviews explaining how he created a business model that has been pored over by the world's best brains but which, after 37 years, still remains unrepeatable.

Finance&Economics: Inditex - From the first peseta to the 37th billion euro

From the first peseta to the 37th billion euro

EL PAÍS

The robe workshop (1963). Born in 1936 in Busdongo de Arbás, León, Amancio Ortega sets up his first workshop making dressing gowns, along with his first wife, Rosalía Mera.

From retail to wholesale (1972). Confessiones Goa begins producing on a large scale. Ortega and his wife distribute their textile goods in Spain and abroad, with dressing gowns still the stock-in trade.

The first shop (1975). Ortega opens his first shop in A Coruña. He decides on the name Zara after learning that Zorba is already registered.

Regional expansion (1975-1980). Over the next five years, Ortega continues to open new shops in Galicia.

National growth (1983-1986). Zara begans to establish a nationwide presence, opening stores in provincial capitals such as Valladolid, Barcelona, Seville and Madrid.

Inditex is born (1985). Inditex is set up as the holding company for a group of shops and factories run by Ortega.

Internationalization (1988). With more than 60 shops throughout Spain, Ortega expands internationally. He opens the first shop outside Spain in Oporto. By 1989, there are stores in New York, and a year later, in Paris.

Rapid growth (1991) and new brands. Inditex buys 65 percent of men's fashion retailer Massimo Dutti, and creates Pull & Bear, aimed at a youth market. In 1998, Ortega sets up Bershka, aimed at young women. A year later he buys Stradivarius, and in 2000 launches lingerie chain Oysho. In 2003 he sets up Zara Home and in 2008 starts accessories store Uterqüe.

New headquarters (2000). Inditex moves from A Coruña to nearby Arteixo, where Ortega builds a vast plant of 16 textile factories.

Stock market entry (2001). With 997 shops in 30 countries around the world, Inditex enters the stock market with capital of 92 million. Shares go on sale at 14.70 euros. A few days after launch, shares have risen to 18 euros. They have continued to rise since. On August 7 of this year, they reached 90 euros.

The Forbes moment (2001). Ortega enters the Forbes magazine ranking of the world's richest men at 43rd. By the following year, he has risen to 25th place, and in 2003 reaches the top 20 with an estimated net worth of 8.3 billion.

Store number 2,000 (2004). Twenty years after the opening of the first shop in A Coruña, Hong Kong has the honor of hosting the company's 2,000th store. Inditex now has a presence in 56 countries.

Store number 4,000 (2008). In four years, Inditex doubles the size of its empire, opening its 4,000th shop, in Tokyo, and extending its presence to 73 countries. Ortega is now the world's tenth-richest man, worth 18.3 billion euros.

Store number 5,000 (2010). In search of better locations, Inditex opens a store in Rome's upmarket shopping district. At the same time, it develops an internet strategy. Ortega is now the world's eighth-richest man with 25 billion euros.

Ortega steps down as chairman (2011). After 27 years at the helm, Inditex's founder and main shareholder hands over to his deputy Pablo Isla.

Inditex holds its own (2012). Despite the crisis, the group continues to grow, opening new stores that should take it to 6,000 in 85 nations, and turning over 3 billion in the first quarter. Ortega is now the third-wealthiest man on the planet, worth 37.5 billion euros.