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A SITE SELECTION INVESTMENT PROFILE
INVESTMENT PROFILE: PORTUGAL
From Site Selection magazine, May 2023
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Lighting It Up

Why foreign investment is flowing to Portugal.

INVESTMENT PROFILE: PORTUGAL
The Dom Luís I Bridge in Porto, Portugal.
Photo by Michael Warren/Getty Images

by GARY DAUGHTERS
E

merging early last year from the strains imposed by the COVID-19 pandemic, an expanding supplier of call center software based in Silicon Valley began evaluating locations in Europe to stand up an engineering hub. Cities like London, Munich, Frankfurt and Paris are the long-established leaders for large-scale operations of the type the company had in mind. But fast-growing Five9, with revenues approaching $1 billion, ticked past those usual suspects and settled on a coastal enclave in Portugal, one that a less rigorous site selection process might have missed. Porto, Portugal’s second-largest city, turns out to have checked all the necessary boxes for Five9.

“It’s a tremendous base of technology as well as customer support-specific talent, all of it supported by an incredible university system,” says Jim Doran, Five9’s executive vice president of strategy and operations. “Portugal has a great business climate and it’s a great place for employees to live and work, which for us is really important.”

It’s for reasons such as these that Portugal is seeing a surge in foreign investment, especially from talent-hungry companies like Five9. In 2022, Portugal announced 330 FDI projects, a stunning 59% increase from a record-setting 2021. In addition to Five9, recent investors include FinTru, a finance company headquartered in Northern Ireland; Germany’s Seven Principles and Norway’s Visma, both of which opened tech hubs in Porto; and Switzerland’s TX Group and Swiss Post, each having established new IT centers in Braga and Lisbon, respectively. Citing “excellent emerging talent,” Tyson Foods launched an IT hub in Lisbon, as well, with plans to pack it with 200 workers. 

Totaling some $4.8 billion, FDI projects announced in 2022 are projected to create more than 26,000 jobs according to AICEP Portugal Global, the Portuguese investment agency. Notably, officials say 75% of the newly-announced projects supported by AICEP were competency centers — teeming constellations of software language skills, data management and Internet development such as the European Research and Development Hub that Five9 christened in January. 

“These projects,” says Portugal’s Secretary of State for International Trade and Foreign Investment Bernardo Ivo Cruz, “will be a showcase of Portuguese skills, talent and innovation. Investment in knowledge and in the quality of human resources will continue to be at the center of our country’s economic development strategy.”

A Renewables Rush

That forward-leaning posture has served to facilitate Portugal’s steady ascent to a leadership position in renewable energy. In 2016, Portugal committed itself to carbon neutrality by 2050, becoming the first country to do so. That was followed in 2020 by the adoption of a National Hydrogen Strategy, which outlines a vision for positioning Portugal as a leader in the production, consumption and export of green hydrogen as produced by renewable sources such as wind and solar power. 

Major investments have flowed from renewable energy giants including Denmark’s Vestas and Spain’s Iberdrola and Siemens Gamesa. After a recent expansion of its Barão São João wind park in Lagos, Vestas totals over 900 MW of capacity installed or under construction in Portugal. Its Vestas Porto Technology Center employs some 600 engineers, about 80% of whom are Portuguese.

“Portugal’s abundant wind resources and supportive policies,” said Vestas Mediterranean President Javier Rodriguez Diez in a release, “have enabled us to develop and deliver some of our most innovative wind energy solutions.”

Likewise, Siemens Gamesa has tapped Portugal for some of its most ambitious wind energy projects. The company’s Vagos plant near the Atlantic port of Aveiro produces blades approaching soccer-pitch length for the company’s newest generation of wind turbines, says Managing Director José Costa. The Vagos facility, Costa tells Site Selection, currently runs eight production lines and is likely to expand in the near future.

“We have just finished a new building that incorporates the highest technology from the Siemens Gamesa Group. Our production,” he says, “shows the importance of our Vagos plant in the Siemens Gamesa strategy.”

Spanning more than 11,000 acres, the coastal Sines Industrial Complex in southern Portugal stands “at the forefront of Portugal’s energy transition,” says Secretary of State Ivo Cruz, having attracted more than $15 billion worth of clean energy projects. Included among them are wind and solar farms operated by Madrid-based EDP Renováveis and Portugal’s Galp Energia. Galp has announced plans to build a green hydrogen production plant at Sines that, with an output of 200 MW, would make it the largest in Europe.

‘Climbing Up the Ranks’

Portugal’s targets for foreign investment, says Ivo Cruz, extend into the digital, finance, health innovation, automotive and aeronautics sectors.

“Our goal,” he says, “is to continue to attract value-added projects that will showcase Portuguese skills, talent and [our] innovative profile. Portugal will continue to focus on companies where the level of product complexity is higher to make sure that we leverage Portugal’s competitive advantages.”

Five9’s Doran acknowledges that, for a company based in California, the prospect of setting up a major engineering hub eight time zones away “was a little bit daunting.” But he says the involvement of Portuguese partners including local and national economic development agencies proved instrumental in getting the operation up and running. Organizations including AICEP, he says, “were extremely efficient and proactive in helping us learn what we need to know to get ramped up quickly and get the flywheel going.”

The Porto office, Doran says, managed to staff up quickly to more than 125 employees on the way to a projected headcount of more than twice that many. 

“Based on the success that we’ve had so far,” he says, “we don’t think we’re done there. It’s been terrific. We’re going to be looking to add more investment and more employees and to expand beyond engineering to building a professional services and customer support team in Portugal, as well. Porto,” he says, “is quickly climbing up the ranks in terms of sites of importance for us.” 


This Investment Profile was prepared under the auspices of AICEP Portugal Global. 

For more information, please contact Olga Benquerença at olga.benquerenca@portugalglobal.pt.

Gary Daughters
Senior Editor

Gary Daughters

Gary Daughters is a Peabody Award winning journalist who began with Site Selection in 2016. Gary has worked as a writer and producer for CNN covering US politics and international affairs. His work has included lengthy stints in Washington, DC and western Europe. Gary is a 1981 graduate of the University of Georgia, where he majored in Journalism and Mass Communications. He lives in Atlanta with his teenage daughter, and in his spare time plays guitar, teaches golf and mentors young people.

 



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