IBM Espana SA reports profits for 1988 of $183m, 3.6% down on 1987’s $190m. Despite this, however, the company’s president Fernando Asua refers to the last financial year as excellent with turnover at $1,600m and an increase of 16% in business done in the Spanish market. Exports were the problem, in contrast to the IBM UK picture, and recorded a 13% decline to $470m. Asua claims that the reduction in exports is due mainly to the fact that the costs of manufacturing have fallen by about 20%, and that in turn hits transfer prices to the European subsidiaries, because reductions in cost have to be passed along immediately. Asua also puts the fall in exports down to the fact that demand for the 4381 across Europe fell off in 1988 compared with 1987 and output of 3480 tape drives also fell, and only the low-cost 3174 controllers for the 3270 line saw an increase. The effect is that exports have plunged 37.7% since 1985, when IBM Espana sold $756m of goods to other IBM companies. As part of its policy of as far as possible balancing exports and imports within each country, IBM therefore needs to give Spain something more to manufacture, and has decided to hand some of the 9370 manufacturing currently done at Santa Palomba, Italy to the Valencia plant. From June, Valencia will become the sole European source for two 9370 models. Elsewhere in the Spanish company, investment totalled $125m last year; $35m went on plant and equipment, $20.5m on computers for internal use.
