A thriving city: Tangiers-Tétouan’s sprawling industrial network sprang up in a decade

The rapid development of the industrial sector in Tangiers-Tétouan is due to a concerted effort by the central government and local authorities to establish a coherent and interconnected system of industrial and logistics zones, connected to a major Mediterranean port. The Tanger-Med Special Agency (TMSA) now presides over one of the country’s fastest-growing industrial complexes, and its future looks bright. The TMSA oversees a network of six industrial and free zones located in the Tanger-Med greater industrial platform, within an 80-km radius of the Tanger-Med port.

Thus far, 1200 ha of the total 3000 ha set aside by public authorities for industrial parks in this area have been developed, which leaves considerable room for growth in the future.

A GREATER PLATFORM: Tanger-Med includes four free zones, which are subject to specific legal and fiscal regimes: the Tangiers Free Zone (TFZ), Renault’s Melloussa zone, Tangiers Automotive City (TAC) and the Fnideq Commercial Free Zone. Two other industrial – but not free – zones are located in Tétouan: Tétouan Park will be dedicated to light processing activities and local small and medium-sized enterprises, and Tétouanshore is dedicated to offshoring.

Finally, Tangiers also includes several industrial parks on the city’s outskirts, including the Al Majd, Gzenaya and Mghogha zones, which predate the advent of Tanger-Med and the platform. These parks do not offer free zone status, but international corporations have been there for several decades.

Morocco’s affordable wage structure and relatively strong infrastructure, as well as its proximity to Europe but location outside of the EU, have long made Tangiers-Tétouan an attractive location for industrial investment. The push to develop a nationwide network of industrial free zones in the past decade, which offer fiscal incentives and streamlined logistics services, has helped to jumpstart the regional economy. Although cost-competitiveness may be eroded as West African markets look to attract investment in outsourcing, assembly and manufacturing operations, the northern region remains in a favourable position for the medium to long term.

According to TFZ authorities, the network of industrial zones attracted a total of €2bn in foreign investment between 2000 and 2013. By year-end 2013 a total of 500 companies were established across these zones, accounting for more than 50,000 jobs.

The 400-ha TFZ, the largest and most diverse zone of them all, accounts for the majority of the regional platform’s annual turnover of €1.1bn and 45,000 jobs. The automotive industry accounts for the majority of sector activity, closely followed by the aeronautics and electronics industries.

RENAULT MELLOUSSA: Of the €2bn in investment that has been attracted to the Tangiers platform thus far, €1.1bn comes from French auto manufacturer Renault. In an effort to attract large-scale investors, local authorities provided Renault with the land at no cost. Renault launched operations on a 280-ha site referred to as the Melloussa industrial zone, located 30 km outside of Tangiers with railroad and highway connectivity to the port of Tanger-Med. The manufacturer’s move elicited a strong debate in France about the impact of outsourcing; in northern Morocco, at least, the project’s impact has been clear. The zone currently employs 5500 workers, with plans to scale up employment in the project’s second phase.

The factory began operation in 2012, and annual production increased by an estimated 50% year-on-year (y-o-y) to reach 100,940 vehicles in 2013. The plant primarily assembles three models from Renault’s low-cost subsidiary, of which 90% were destined for export. The factory’s primary export market is France, which reportedly received 20,000 vehicles in 2013, followed by Turkey and Germany. However, the firm exports to over 50 countries, and executives indicated in the local press that it intends to open up export markets in Latin and South America starting in 2014.

The company launched the second phase of the project in October 2013, which aims to increase production to 340,000 vehicles, making Melloussa the manufacturer’s largest site in Africa.

ECONOMIC IMPACT: Production at Melloussa plant has propelled the French car maker to a leading position on the domestic auto market. According to the French Chamber of Commerce in Tangiers, Renault sold a total of 47,039 vehicles in Morocco in 2013, of which just over 30,000 came from its low-cost line. This gave it a 39% share of the domestic market, which registered total sales of nearly 121,000 vehicles in 2013.

On the export site, the uptick in automotive production helped to boost activity at the Tanger-Med port in 2013. The traffic of new automobiles passing through the port increased by 81% y-o-y to reach a total of 181,500 vehicles in 2013. Just over half of these, 93,700 vehicles, came from Melloussa.

This uptick helped to push Tanger-Med’s overall activity up 39% compared to 2012. Container traffic increased 40% to reach a port record of 2.5m twenty-foot equivalent units (TEUs).

Rising output from automotive, aeronautics and electrical manufacturers in Tangiers helped to support a nationwide increase in exports in the last two years. According to French Chamber of Commerce data, Morocco’s non-phosphate exports grew by 6.7% in 2013 to reach Dh145.7bn (€12.9bn), which helped to offset a major decline in phosphate revenue related to a downturn in the global phosphate market.

Revenue from phosphate exports dropped by 23.3% y-o-y (down Dh11.3bn, €1bn), but gains in automotive (+23.3%), aeronautics (+14.7%) and electronics (11.9%) exports helped to contain the effects; overall export revenue dropped by just 1.1% y-o-y.

A March IMF report confirms that higher foreign currency receipts from automotive, aeronautics and electronics manufacturing will be one of the key drivers of growth in the non-primary economy in 2014.

TANGIERS AUTOMOTIVE CITY: The TFZ’s specialisation in the automotive industry began well before the introduction of Renault, and today the zone includes a vast network of suppliers that produce everything from exterior and interior trim, stamping, plastic injection, seats, cable wiring, safety systems, to sealing and A/C systems. The arrival of Renault in 2012 brought along it 12 Tier-I suppliers and service providers, which helped to develop this network.

TFZ authorities hope that efforts to attract a second large-scale auto manufacturer will have the same effect. A new industrial free zone, the TAC, was developed to accommodate the overflow from automotive operations in the TFZ and to encourage further specialisation in the industry. The TAC is being developed on a 300-ha site opposite the Melloussa zone along the main highway into Tangiers; as such, the TAC will benefit from the same transport and logistics advantages that already exist in the area.

The first 55-ha tranche of the TAC was completed and commercialised in the last quarter of 2013. So far, at least six companies have signed on to establish operations in the zone, generating Dh600m (€53.3m) in private investment. Three key projects are slated to enter into production between 2014 and 2015. The Spanish firm Europac, specialised in the fabrication of industrial packaging, paper and cardboard products, has acquired a 30,000-sq-metre site, the largest project yet in the zone. The firm is already present in Tangiers, and has announced plans to invest a total of €30m in a production plant for corrugated cardboard products which will target the automotive industry, as well as other regional sectors, such as agro-industry. Two other firms, Spain’s Turbo Cadiz, specialised in the fabrication and maintenance of automotive and maritime turbochargers, and US-based Electrical Components International, specialised in automotive cabling and electrical component assembly, are expected to launch operations in the TAC in the near term.

TRANSPORT LOGISTICS: The industrial development of Tangiers hinged upon the launch of the TangerMed port in 2007, which permits a rapid connection to major export markets in Europe and beyond (see analysis). The port currently has 40 regular connections to 56 countries on five continents. Work on the second phase of port infrastructure, Tanger-Med II, will add two new container terminals, bringing total capacity from 3m TEUs per year to 8.2m TEUs. This stands to make Tangiers a serious competitor for trans-shipment activity for the Spanish port of Algeciras, which processed 4.3m TEUs in 2013.

An extension to the railway connecting Tangiers to the Atlantic coast was completed in 2009, with €25m in financial support from the Agence Française de Développement. The 30-km extension connects the area’s industrial zones to Tanger-Med, helping to reduce transport times. Traffic has increased significantly on the line since Renault’s establishment in 2012, and the ONCF indicated that it aims to increase the frequency to six trains per day by the end of 2014.