SMEs: Challenges and opportunities in the era of a digital, connected, and sustainable railway

THE PARTICIPATION OF SMEs IN THE VALUE CHAIN OF THE SPANISH RAILWAY SECTOR IS VERY REPRESENTATIVE. SUCH COMPANIES PROVIDE GREAT SUPPORT TO LARGE BUSINESSES TO SUCCESSFULLY DEVELOP TRANSPORT PROJECTS AROUND THE WORLD.

SUSTAINABLE AND DIGITAL TRANSFORMATION REPRESENTS A NEW CHALLENGE, BUT ALSO AN OPPORTUNITY FOR GROWTH AND IMPROVEMENT IN AREAS SUCH AS R&D, COMPETITIVENESS AND JOB CREATION.  ITS GREAT ROLE IN THE PRODUCTIVE FABRIC MAKES THIS TYPE OF COMPANIES A STRATEGIC PLAYER TO PROMOTE THE DEVELOPMENT OF THE RAILWAY THROUGHOUT THE WORLD.

Small and medium-sized enterprises are highly represented in the production of goods and services and in the overall data on economic activity. In Europe, nine out of ten companies belong to this classification, according to the European Commission’s “User Guide to the SME Definition”. In turn, they generate two out of every three jobs. Three criteria are taken into account for its definition: number of employees, annual turnover and annual balance sheet. This category includes all those with fewer than 250 employees and an annual turnover of less than 50 million euros.

In Spain it also plays a big role. According to the Spanish Confederation of Small and Medium Enterprises (CEPYME), they represent 99.8% of the productive fabric and represent 65% of the GDP. In addition, as indicated by Eurostat, they account for approximately 72% of overall employment. This contrasts with the average for the entire European Union, which stands at 66%.

“99.8% of the Spanish productive fabric is made up of small and medium-sized enterprises, which represent, in turn, 65% of the Gross Domestic Product (GDP)”.

As for their number, the Central Companies Directory (CCD), as of 1st January 2020, indicated that there were 3,404,428 registered, of which 3,399,602 (99.9%) are SMEs (between 0 and 249 employees). This document also points out that 97.4% of them had a turnover of less than 2 million euros.

The report “Portrait of the SME”, prepared by the Ministry of Industry, Trade and Tourism, indicates that, according to the sectoral distribution, the size varies depending on the economic sectors to which they belong. Thus, 84% of those with an industrial profile are microenterprises. Of these, more than 48% have between 1 and 9 employees.

“84% of SMEs with an industrial profile are microenterprises. Of these, more than 48% have between 1 and 9 employees”.

 

The Spanish railway SME

The SME has a wide presence in the railway sector, where it has a consolidated track record. In recent years it has accompanied, as the main supplier and strategic ally, large companies in the development of national and international projects of all types of systems (high speed, medium distances, commuter, urban mobility, goods, etc.).

This industry has a wide range of small and medium-sized enterprises highly specialised and present throughout the value chain. They start from an advantage position in the market, since the leading groups (large engineering companies, rolling stock manufacturers, etc.)  they have acted as a business promoter and have counted on them for the successful achievement of each contract in many countries around the world.

Growth opportunities

In a global and connected market, such as the current one, the improvement of internal processes, helped by the most cutting-edge technology, allows to advance towards an industry 4.0. This change represents for the SME of the sector an opportunity for growth, the ability to be disruptive and optimise its resources to offer a more innovative model.

The current context, especially after the events of the last year, has led to an acceleration in digital transformation.

The high level of technology that many of the companies in the railway sector already had allows them to face the new challenges in a better position than in other areas of activity: manufacture of smart products, promotion of R & D, implementation of new systems, IoT, artificial intelligence, etc.

“The SME in the railway sector has before it an opportunity for growth, the ability to be disruptive and optimise its resources to offer a more innovative model”.

In addition, aspects such as the recent liberalisation of passenger transport generates more options to enter the railway operation and lend its portfolio of solutions and products to respond to the new demands of this sector. Customer service will be a priority and SMEs can contribute their know-how and aspects such as information, safety on board, comfort, etc.

To facilitate the change, additional resources are available such as the “2021-2025 SME Digitalisation Plan” of the Ministry of Industry, Trade and Tourism.

This programme brings together aid worth 4.5 million euros, in order to promote a transformation that they consider “urgent”, especially after the pandemic.

OVERVIEW OF THE SME IN MAFEX

  • Flexibility, adaptation to the new demands of the market.
  • Personalised response to the functional needs of each client.
  • Close international collaboration with large companies.
  • Technological cooperation: Strategic alliances in R&D.
  • High participation in innovation projects.
  • High degree of specialisation in railway services and products.
  • Consolidated presence throughout the value chain.
  • International recognition with projects in more than 90 countries.
  • Commitment to sustainability.
  • Compliance with the highest safety standards.
  • At the forefront of disruptive companies: Startup.

*Source: Own elaboration. Mafex Magazine.

Main challenges

The Spanish railway sector has a group of well-established SMEs, with years of experience and a good collaboration with large companies and transport administrations around the world. However, in order to continue advancing and maintain its competitiveness in the market, it is necessary to continue with investments in R&D, training in new skills and digitalisation.

On these areas, due to their size and turnover, they may start at a disadvantage compared to large corporations. From an economic point of view, certain effects may be more damaging, as they have a lower capacity to react to external factors such as inflation or deflation. They must also strengthen aspects such as the ability to negotiate with suppliers and distributors. Limited access to credit or sources of financing can also slow down their growth.

Investment in the railway sector will be key in the coming years. In order to be part of the many projects, in which the technological factor and sustainability will be essential, the SME must have the capacity to maintain over time the investment in development, innovation, training and updating of the workforce. Ultimately, resilient in resources and strategies and with a continuous improvement of processes.

Source: Chamber of Commerce of Spain. Initiative Spain Digital.

Railway SME: Main challenges and opportunities

Challenges                                                                  Opportunities

Staying competitive                                                Technology to optimise your resources

Digital transformation                                           Great market knowledge

Raising productivity levels                                    New needs of the sector

Strengthening negotiating capacity                    Large investments in railway

Continuous improvement of skills                      Globalisation benefits

Investment in R&D.                                                Highly specialised professionals

Source: Own elaboration. Mafex Magazine.

THE WORK OF ASSOCIATIONS

The work of institutions and associations is key in promoting the consolidation of SMEs. Mafex, aware of their relevance in the value chain, works to facilitate their activity as much as possible by defending their interests, boosting cooperation with other companies, opening new markets, etc. The association is also leading an innovative European R&D project: Rail Activation. The objective is to support them in their transformation process through the creation and adoption of strategies from an open innovation approach that will allow the development of new mechanisms and tools.

Rail Activation will result in significant improvement changes to the business structure, human resource management, customer relations and the work environment.

Among the partner companies participating in this project are: Aquafrisch, Ardanuy, Inse Rail, MGN – Transformaciones del Caucho, Talleres Agui, Talleres Zitron and Telice.

INTEGRAL SOLUTIONS FOR THE RAILWAY INDUSTRY

Services:

  • Comprehensive consultancy of railway projects.
  • Advice for the planning of new transport plans.
  • Technical assistance in building works.
  • Civil engineering.
  • Building work. Special foundations, piloting, construction.
  • Co-engineering projects.
  • Development of studies and reports on mobility.
  • Safety assessment and process certifications.
  • Technological partners for new developments.

Manufacturing

  • Welded assemblages.
  • Telecommunications cables, signaling and fiber optic.
  • Special machined parts for the sector.
  • Forging of safety parts with very specific characteristics.
  • Foundry. Steel parts and components.
  • Pre-stressed wire.
  • Transformation of copper and aluminum.
  • High precision machining and finishing operations.
  • Pre-assembly of floors, doors, dividers, fairings, etc.
  • Specialised parallel horizontal lathes.
  • Transformers and coils.
  • Railway track materials, rails and railway accessories.
  • Machinery for railway workshops and water treatment.
  • HVAC systems for all types of vehicles.
  • Monitoring equipment against hazards in the operation.
  • Solutions for handling welding machines.
  • Rubber and rubber-metal products.
  • Track and crossing devices.
  • Mobile silos and sand dispensers.
  • Metallic structures.
  • Fixed signaling for tracks.
  • Restoration of rolling stock and special vehicles.

Systems and technology:

  • Identification and access control systems.
  • Level crossing protection.
  • Train detection.
  • LED light signals. Emergency lighting.
  • Railway signalling.
  • Predictive maintenance.
  • Information and communication technologies.
  • Electrification.
  • Comprehensive telecommunications solutions.
  • Power and safety electronic equipment.
  • Driving simulators.
  • Uninterrupted power supply equipment.
  • IT to optimise infrastructure maintenance.
  • Instant alarms in control centres.
  • New technologies for sustainable transport.
  • Hyperloop system.

*Source: Own elaboration. Mafex Magazine.