The crisis, or several crises all at once, are closing in on Guimarães, a beautiful Portuguese city of 50,000 inhabitants and the administrative centre of the Ave Valley region. In the 1980s and 1990s, the enormous textile mills that lined this entire valley were abandoned to the growing competition from China. Since then they have been gathering dust, mementos of a past era.

The same ancient heart of Guimarães, beautifully preserved in the shadow of the old castle, is surrounded by empty factories with silent chimneys of brick. But the city’s inhabitants have decided to bring life back to the factories, a life full of paintings and concerts and plays, in order – incidentally – to try to survive too. The European Capital of Culture, which opened on Saturday in this town some 150 kilometres from Vigo, envisages the recovery of many of these factories as cultural stages, film sets or as artist residencies. Reinvent oneself or die.

The Ramada factory, an old tannery that shut down many years ago, will host a design institute in September – but before that happens, it will be the rehearsal hall for the organisation’s orchestra. The ASA factory just outside Guimarães, in the town of Vizela e Santo Tirso, specialised in its time in blankets and towels, shut its doors for good in 2006. Through a private investor it will now become a sort of inexpensive shopping centre – once its 24,000 square metres have hosted major exhibitions.

And in the ghostly textile factory of the Earl of Vizela, which employed more than 4,000 workers and even had its own currency back in the nineteenth century, Víctor Erice and other filmmakers like Jean-Luc Godard and Aki Kaurismäki (a Finnish filmmaker who lives near Guimarães) will shoot a film together. The city is not ready to watch the film industry come through here using Guimarães 2012 as an excuse and then go elsewhere, and so it has put together a film production team to remake the city into a destination for filmmakers. “We now have deals for productions planned for 2013 that were going to go to eastern Europe. Erice says he would like to come here himself to film,” says the head of the audiovisual sector of Guimarães 2012, Rodrigo Areias.

The country of Portugal was born here

Rodrigo Areias explains this in another old mill in Guimarães, now converted – thanks to the efforts of a group of young architects in the city – into the Centre for Art and Architectural Affairs. Each room has been given a “mission”, from residences for invited foreign artists to an audiovisual laboratory specialising in animated robots and wriggling toys that would delight any one mad about applied informatics – or just plain crazy.

“People come up here from the city at night," Areias explains with a smile. This just may be the secret. The city, the people of this city, which was chosen as a “Cultural Heritage of Humanity” in 2001, see the “Cultural Capital” designation more as an opportunity than as a party. For many it is a lucky break that probably won’t come again. The ones organising it understand that clearly. "We don’t want the Berlin Philharmonic to come, which is very expensive besides. It comes along, plays, does it very well and then goes away and it’s goodbye," says a spokesperson for Guimarães 2012. "We want something that lasts, that helps bring life back to the city, and with the people that are here," he adds. Hence one of the slogans: “I’m part of it." Badges sporting the phrase are pinned to the lapels and jackets of almost all the residents of Guimarães.

The budget is lean (25 million euros), the result of a year in which Portugal is testing its luck as a solvent state, threatened by bankruptcy and watched closely by the troika. Imagination was needed. One example: the innovative band Buraka Som Systema, one of the faces of modern Portugal, will come to give a concert on January 28 at the Pabellón Multiusos (the Multipurpose Hall). A programme called Mi casa es tu casa (“My house is your house”) is also planned for that day, and will see city residents loan their flat or a room or hallway to other groups for recitals. Forty houses have already agreed to swing open their doors.

The proud residents of Guimaraes are, well, answering the call. It’s no surprise, historians say, that the country of Portugal was born here – as was its first king, Alfonso Enríquez, who lived in the famous castle that, over time, has been looking more and more like an abandoned factory. No coincidence either that the official programme will start Sunday off with a documentary on Portuguese music entitled, significantly, Let’s all play together, the better to hear each other.