# Tag Archives: Spain

## How rain determines olive tree economics in Tunisia

“The North of Tunisia is the most fertile region. There it rains about 1,000mm per year. In the middle about 200mm. The South is almost deprived from rain with only between 0-50mm of rain”. More or less these were the words we heard from Mohammed, our guide in Tunisia for 3 days, no less than 3 times. You can “see” that with Google Earth already.

Tunisia.

He also went on to explain that the olive leaves are a symbol of wealth and that Tunisia was one of the main producers (5th in the World, after Spain, Italy, Greece and Turkey). So, after hearing all these explanations and seeing so many olive trees in the fields along the road trips, I started to notice the difference between the olive trees in the North and the South, and mainly the difference in the distance in which they are planted from one another.

Seeing the landscape I thought that (even if they did it unconsciously) these people were using some scientific approach there. I must say that I have no clue about agriculture and olive trees, but let me elaborate.

• “1 mm rain a year” means that in one square meter during one year 1 liter of water is collected.
• The surface from which each of the trees is collecting water must be proportional to the distance (d) between them: (π/4)*d² [m²].
• I assume the water (volume) one olive tree needs along the year must be proportional to its size (volume)… then, the water they can collect is limited by the rain (mm) and the distance among trees: k*(π/4)*d²*r. Where “r” is the quantity of rain measured in mm of water, “d” the distance and “k” a constant.
• Their size may be limited by the rain (if in the South is too dry?), by the distance if they are too close to each other, by genetics of these kind of tree (?)…

So, imagine that we are in two regions in which the annual rain is over the minimum so the olive tree can realize to its “own potential” (olive trees having the same size), then:

• The farmer in the region with less rain must be aware that he shall plant the trees with a distance (d2) between them of: d2 = d1*√(r1/r2), where “d1” is the distance in the rainy region [m], and “r1” and “r2” are the quantity of rain in each regions [mm].
• So, if I see olive trees the same side in the North (1,000mm, region 1) and Middle (200mm, region 2) of Tunisia, the larger distance in the Middle region should be around √5 = 2.23 times the distance in the North.

As we go to drier regions (Middle, region 2, or South, region 3), it may be that the final size of the tree is smaller and the distance will have to be larger.

• If the less than 0-50mm in the South was still enough to have large olive trees, then the distance should be over 20 times the distance that we see in the North. However, I cannot tell you, since we didn’t go the most Southern part of Tunisia.
• If the 200mm of the Middle is not enough water to have that large olive trees then, you could either calculate the size of the tree by planting at different distances in relation to the sizes and distance in the North, or knowing the maximum size you may get you could get the distance at which you have to plant the tree…
• tree2 = tree1*(r2/r1)*(d2/d1)²… if I guess the distance is about double (by seeing in the pictures), then (for a rain of r2=200mm) the tree2 near the Sahara would have a volume of about a tenth of the tree in the North. May well be true by seeing the pictures below.
• If we knew beforehand that the tree would only get to reach a tenth of the size, we could calculate that the distance would need to be double.

Even though I am sure there are many more aspects impacting the growth and productivity of olive trees, if I were in Middle / South Tunisia starting from scratch and not knowing anything: I could start sizing the number of trees I could plant in my garden or how big they would grow, how much olives I would get from my land, etc…

Apologies to the experts in the field for the charade that I may have just written, but it was fun playing with the numbers.

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Filed under Economy

## A400M and B787 static tests

Airbus Military completed on July 22nd in Getafe (Spain) one of the most extreme cases of its A400M structural tests: the maximum wing up bending until reaching the ultimate load, defined as 150% the most extreme load the plane is expected to experience while in service.

Some months ago, another development aircraft the Boeing 787 achieved the same.

Even though, the loads that A400M will experience in service will be higher than those that the 787 will face and thus the ones tested in each case were consequently different, see the difference in the flexion of each wing.

As engineers working in military developments will never be tired of explaining: a military aircraft is a completely different animal, not just a civil one painted in military camouflage.

Filed under Aerospace & Defence

## Ask octopus Paul to invest for you

By now, everybody probably has heard about the octopus Paul picking winners of World Cup football matches. So far, it got right all the results of Germany. Today it picked Spain as winner of the final next Sunday. See the video of its memorable performance in CNN.

First thought: what a monumental charade this is! Second thought I had today at work: what if Paul was picking stocks for an investment fund?

The thought is not that out of the box: Burton G. Malkiel in his 1973 book, “A Random Walk Down Wall Street” (which I strongly recommend), suggested that a blindfolded monkey throwing darts to select stocks wouldn’t do worse than professional fund managers.

The Wall Street Journal went a step further and tried to prove the point. They did so organizing the 6-months Dartboard contest in 1988, a contest that continued along 14 years in more than a hundred 6-months periods. They didn’t use a monkey but the newspaper staff and they weren’t blindfolded. Nevertheless, the stock picks were quite random. See the explanation of that fun story in this article from Goergette Jansen a few months before the contest was to be finished in 2002.

So, how did the “monkey” do against the pros? Dartboard picks won the contest 39% of the times while pros won 61% of them. So, the pros got better results the majority of the time. Nevertheless, think that 39% of the times you would have been better off leaving your investments decisions to the darts, a monkey or octopus Paul (call it the way you want) than professional managers who get paid to maximize your returns… uh.

After those 14 years, pros racked up an average of 10.2% gain while the darts got a 3.5% gain (this is way better than my company-sponsored BBVA pension fund…).

So, next time you jokingly comment on Paul, think that you might as well ask him where to put your money and even get better results than when listening to the advice of the broker of your bank…

Filed under Books, Investing

## Scotch whisky

Yesterday I was reading an article in The Economist about the whisky industry, and I found a thread to follow: Spain being the third largest export market of Scotch whisky!

After having travelled through different European countries and seeing the drinking habits in each place I could almost predict that more whisky was consumed here than in other European countries.

I searched for the source of these data, the Scotch Whisky Association (SWA), which published a release in April 15th on the export data from 2009.

Despite the global crisis, whisky exports continued to rise both in terms of revenues and bottles. But let’s dig into the data.

Looking first at the numbers of bottles exported we see that the leading country is France with almost 180 million 70cl bottles, followed by USA and Spain (with 87 million bottles). The first 10 countries account for 60% of the export market.

Because France and USA are more populated than Spain, I was interested in comparing the ratio number of bottles exported by inhabitant… and now the leading country was by far Singapore, with over 10 bottles per inhabitant per year… either there is something we miss in the picture or there is very heavy scotch drinking going on there (taking into account that not everyone drinks whisky, less people imported scotch). Among those 10 main markets Spain again came in third with an average of 1.9 bottles per inhabitant, though we should keep in mind that this number only reflects the bottles exported from Scotland; not whisky consumption in the country (Irish, US or Spanish whisky is not counted here).

Scotch whisky exports, by number of bottles.

There is another statistic given in the same release: revenues. What I wanted to know with this was the export price per bottle.  Not all top ten countries by number of bottles were among the top ten by revenues, but with those which were I did the calculation. The average price resulted 2.9 sterling pounds, around 3.37 €… so the other ~9€ up to the 12€ price you see in the shop are costs related to transportation, retail shops, etc.

Scotch whisky exports, by revenues and bottle price.

In the SWA site you may find very useful information such as distilleries to be visited in Scotland, etc.

Filed under Miscellanea

## Largest defence companies

The Stockholm International Peace Research Institute (SIPRI) is, in their own words, an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Every year they publish their famous SIPRI Yearbook with data about international conflicts, defence spending, defence companies…

In a previous post I showed cartograms of countries relative to their defence spending, etc. In this post I want to show a bit about the industry.

From the information of last year’s book, we find that of the 10 world biggest defence companies 6 are US companies and 4 European, though the biggest one is the British BAE Systems.

Among the first hundred companies (121 including subsidiaries) there are 4 Spanish: CASA (EADS), Navantia, Indra and Santa Barbara (General Dynamics). This places Spain as the 7th country by number of large defence companies. SIPRI publishes as well a fact sheet titled “Trends in International Arms Transfer”; in that one (data from 2005-2009) Spain is placed as the 8th country by arms exports.

Countries by number of large defence companies.

Countries by defence sales.

Finally, with the information provided by SIPRI I built the following (simplified) table where you may see which are the biggest defence companies by revenues and see how much of their business is relying on defence activities (big conglomerates like GE or UTC do not rely heavily on defence).

Defence companies by defence revenues and reliance on defence.

It is also interesting to look at the previous picture but isolating only the US companies…

US Defence companies by defence revenues and reliance on defence.

… and then taking a look at European ones:

European Defence companies by defence revenues and reliance on defence.

You may see that the top-right corner is almost exclusive domain of US companies, except for BAE, which has a big presence in the US defence market.

In this latest table you would see how the complete picture (with all 121 companies) would look like, with an atomization of smaller companies at the bottom.

Complete picture with 121 companies.

Filed under Aerospace & Defence

## Aerospace, a high-tech sector in Spain

Two years ago, there was a televised debate prior to the general elections in Spain. I remember I was watching it with friends and the incumbent president said “Spain is the leader country in the technology of air refuelling aircraft”. Since those friends watching the debate with me and I work in the aerospace sector we appreciated the comment.

Many things have happened since them, but one has not changed: aerospace sector is one of the most technologically intense in Spain.

For this post I am using mainly two sources: 2008 annual report from ATECMA (Asociación Española de Constructores de Material Aeroespacial, now replaced by TEDAEAsociación Española de Tecnologías de Defensa, Aeronáutica y Espacio; 2009 report is being cooked) and 2009 report from COTEC (a foundation for technological innovation, “Informe Cotec 2009“).

I already mentioned in a previous post the size of aerospace sector in Spain: 5,577M€ revenues in 2008. In the last 10 years aerospace revenues in Spain have trebled. In 2008 Spanish GDP was about 1,088 bn€, so aerospace sector weighed 0.51% of Spanish economy.

Aerospace sector revenues and R&D evolution.

Regarding the employment, there were 36.160 employees of which over 15,000 were graduates, engineers and managers; 41% of the workforce consists of highly qualified employees. The employment of the sector has been doubled in the last 10 years.

Aerospace sector has presence in 16 regions, with the highest contribution from Madrid (63% of revenues and 57% of employment).

Aerospace sector revenues and employment per region.

There were 335 companies: 6 employing over 1,000 workers and 318 SMEs.

The sector had a positive trade balance of 3.6bn€ (while Spain has a large negative trade balance, of about 100bn\$ prior to the crisis, now around 70bn\$, 4.5% of GDP).

Aerospace industry is a dual industry: companies involved in it develop both civil and military products. The weight of each depends on the different years, but on average Spanish aerospace industry is 60% civil and 40% military.

After this brief description of some facts (see ATECMA report for a more detailed view of the sector), I want to remark the technological intensity of the sector.

Aerospace sector invests about 10-15% of its revenues in R&D. This is by itself an impressive, figure: Spanish economy as a whole invested in 2007 1.27% in R&D, thus aerospace invests 10 times as much as the economy average. If we said that the weight of the sector was 0.51% of Spanish economy, the aerospace R&D represents 5% of national R&D investments. Even more, if we only count R&D executed by companies, aerospace R&D contributed with 8.5% of total private R&D.

I included in this post the report from COTEC because it makes a distinction among the different sectors dedicated to technology in Spain: manufacturing vs. services, and high technology vs. medium-high. It uses categories derived from INE (Instituto Nacional de Estadística), and there we see 6 sectors classified as “High Technology Manufacturing Sectors”:

• Pharma
• Office material and computers equipment
• Electronics components
• Radio, TV and communication devices
• Medical, precision, optics devices and watches
• Aerospace

R&D investments of high-technology sectors.

Combining the data from this report with data from ATECMA (using 2007 figures for comparison with COTEC), we reach the following findings:

• Aerospace sector revenues represented 15% of high-tech manufacturing sectors.
• High-tech manufacturing sectors invested 1.3bn€ in R&D in 2007, this is 4.5% of their revenues, or 10% of total R&D in Spain.
• Aerospace sector R&D represented 49% of high-tech manufacturing sectors R&D (!).

Indeed, it seems a high-tech sector.

If you wish to compare Spanish A&D with other European countries, please see the ASD reports (AeroSpace and Defence Industries Association of Europe).

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Filed under Aerospace & Defence