Spain's Basque region opens business center in Philadelphia

To get an idea of what "foreign direct investment" means, you could visit Gamesa's wind turbine factory in Fairless Hills.

How Spain's Gamesa came to locate here has been well-documented. Five years ago, the Rendell administration heard Gamesa was looking to set up U.S. operations.

Looking to encourage alternative and renewable energy in Pennsylvania, the state's economic development team launched the sales pitch: good workforce, location, transportation network and so on.

Pennsylvania officials offered $22 million in incentives to entice the company here. Gamesa then spent $175 million to build factories capable of fashioning the equipment needed by wind-farm operators.

It transformed part of a former USX steel plant into a modern factory that turns out enormous blades, towers and nacelles. And it built from scratch a turbine-blade factory in Cambria County in Western Pennsylvania. Statewide, Gamesa now employs about 1,200 people.

That's one aspect of foreign direct investment in the United States.

Yesterday brought foreign investment of a different kind. The Basque region, which is home to Gamesa, opened a business center on the 24th floor of 1835 Market St.

That's right. This isn't an initiative by Spain, but a region of Spain. It's kind of like Pennsylvania hiring a trade representative in Moscow - as it has done - to spread the word about doing business in the commonwealth.

But what the Basque government is doing goes beyond a trade office.

For companies in Spain's Basque autonomous community, Philadelphia could become the toehold to the lucrative North American market. And it could mean more companies wind up locating operations in our region.

What's this 1,300-square-foot office costing the Pennsylvania taxpayer?

Nothing.

The Basque government's development arm, SPRI, is paying the lease, staffing the office, and subsidizing up to a half-dozen business tenants at a time for up to six months as they do their market research.

Think of it as a business incubator, or shared office center, with a distinctive dialect.

In Pennsylvania, Basque officials see an economy much like their own, said Ana Aguirre, its minister of industry, trade and tourism. Besides Gamesa, Southeastern Pennsylvania is home to several other Basque companies including Iberdrola Renewables in Radnor, and BTI of North America in Blue Bell.

This is the third such business center opened by Basque officials. The others are in Shanghai, China, and Wroclaw, Poland.

Basque government officials would not say what they're spending on the initiative. With a euro that's strong compared with the U.S. dollar, they probably got a good deal.

And it may not be the last time we see a business center like this. According to state Department of Community and Economic Development officials, a region of France is looking for office space in Philadelphia right now.

But they wouldn't say which. They weren't about to move the spotlight from a region of Spain that has already invested so much in Pennsylvania.

Cooldown

In 2007, special purpose acquisitions companies were all the rage.

They are public companies where money is raised to acquire other firms. Investors don't know what the acquisition will be when they invest. But they do get to vote on any deal that the managers settle on.

In 2005, 28 SPACs raised $2.1 billion, according to data tracked by Renaissance Capital's IPOhome.com. A year later, 34 of them raised $3.2 billion. Last year, investors dumped $11.7 billion in 65 SPACs.

But the credit crunch is hurting SPAC backers. After the first quarter of 2008, when nine of them raised $3.2 billion, there have been only three more this year. And they raised a little more than $330 million, Renaissance said.

Time is not on their side. Generally, a SPAC has 18 to 24 months from the time it raises money to close on a deal. Otherwise, it has to give investors their money back.