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Last Sunday’s announcement in our sister paper Malta Today on the supposed talks currently underway between government and a foreign company to eventually sell Malta Shipyards has sent welcome ripples through the business community although it may have been received with trepidation by the union sector.
With the current uncertain situation at the yards, this new development could prove to be an important step towards its eventual salvation. As things stand today, although a number of large contracts have been won, the profit margins due to higher labour costs are still not enough and losses continue to be posted each year.
Ever since the British Services’ rundown in the late 1950’s, the dockyard has suffered from constant bloating of work, botched business plans and general neglect all round. The standard British practice of employing thousands of workers (at one time over 11,000 persons were employed at the dockyard) was carried forward by the Socialist governments of the 1970’s and 80’s when with input from the Chinese government, a huge dry dock was constructed and Malta Shipbuilding was created out of nowhere, although it never turned out a ship.
The yards must however be commended for building the Gozo Channel vessels which are models of excellence throughout and which have served the country well. However, it must be added that these came at a more than usual cost to the exchequer purely for the fact that work was to be kept in Malta
One has to question this government’s decision a few years ago to write off an Lm 320 million accumulated debt run up over the past 30 years at the cost of the Maltese people and create Malta Shipyards Ltd run by a British Chief Executive and a Maltese chairman.
Another bad decision by the government was the creation of another quango in the form of Industrial Projects and Services Ltd which took on a large number of skilled workers who were surplus to the docks and which ended up in local council offices cleaning some roundabout or involved in general maintenance.
But at least, productivity at the shipyards improved although it continued making losses, albeit much reduced when compared to previous years. The government subsidy expires in 2008 and Minister Austin Gatt has made it amply clear that after that, the company is on its own and the future does look pretty bleak for the 1000 plus workers who remain precariously employed at the yards.
The situation will definitely not improve if a company with such questionable financial acumen such as Cala Corporation ‘takes over’ the shipyards. As revealed today, we outline the fact that this American company is barely solvent and if some sort of deal does go through (highly unlikely when one considers the fact that Malta Shipyards have sued Cala in the courts), the outcome could mean that the yards will veritably sink without a trace in some submerged ship of dreams.
However, this newspaper can only give every encouragement to a possible deal to buy out the yards and put them on a sustainable and workable footing. It has recently been made clear that productivity needs to be improved drastically if the yards are to survive although it seems that the company is managing to attract large contracts.
Although there has been much job shedding and also the importation of foreign labour at reduced costs which is threatening Maltese employment at the yards, it is probably inevitable that some jobs will have to go if and when the new masters take over. There is a stark choice to be made here, either leave everything as is and eventually close down the company amidst bitter tears and over 1300 unemployed workers or else, another push to make a leaner and fitter Malta Shipyards in line with today’s market competition requirements. Although the Ministry for Investment, Industry and IT denied that discussions were taking place for an eventual sale of the shipyards, we await further developments with interest.
Wise investments
Today we also talk about the hard time that the government has had to sell its stock issues when a bond of rather unknown security was sold out within hours only a few weeks before. The maxim for investors continues to be to look at higher rates of interest as compared to the safety and protection of one’s capital which is very immature and unsafe, to say the least.
It says something about the rudimentary education of our investment community when such high risk issues are snapped up with such speed and rapidity. Stockbrokers and financiary intermediaries should be on the watch out and seek to educate their clients, not just hope to make a quick buck and exit the scene when the going gets tough. |
