Malta Diary Industrial manufacturing on skid row?
With Malta’s Independence from Britain on 21st September 1964, the Government of the day had announced that the future of the islands of Malta and Gozo would balance on an economic tripod of Agriculture and Fisheries, Industrial Manufacturing and Tourism.
That held good for the first three decades but from the mid-90s onwards the march of time has nibbled drastically into the tripod but substitute props have been introduced. Agriculture and Fisheries has suffered a considerable decline and the future of Malta’s manufacturing industries looks difficult – if not bleak.
Tourism has proven to be the sustained and most durable economic contributor with the island currently enjoying record-breaking numbers of arrivals utilising six top Five Star hotels, a proliferation of Four and Three Star and a vast number of holiday farmhouses, villas and apartments. It also keeps a number of airlines busy and a thriving International Airport. This sector – although seasonal – employs many thousands directly and many other thousands indirectly in souvenir shops, bars, restaurants, car hire and taxi as well as coach transport and all related ancillaries. Additionally Malta has developed into an important Mediterranean cruise hub.
In the early 60s two international manufacturers – Wrangler Jeans and the British Company Dowty O-Rings went into operation and employed thousands. By the 80s Wrangler had pulled out and Dowty declined and is now a much smaller entity called Trelleborg but also making O-rings.
However, the negative impact was not felt because the 70s and early 80s proved to be a veritable goldmine, attracting many industries. The main factor-puller magnets were cheap wages, good weather, good marine and aerial communications, a decent working ethic and above all, the technical capabilities of the Maltese workforce thanks mainly to a Technical Institute, Trades Schools and of course the Malta Drydocks (formerly the Admiralty Royal Naval Dockyard) which in its hey-day employed a workforce of 25,000.
Most Maltese are trilingual, speaking English and Italian as well as Maltese, another advantageous factor.
The Italian-French semiconductor giant SGS-ATES commenced operations in 1981, later to become SGS-THOMSON and now named STMicroelectronics (Malta). By 2005 this company was employing almost 3,000 people directly, manufacturing semiconductor products for Nokia, Apple, Bush and many other international companies. Today it employs 2,000 and many other hundreds indirectly involved in supply, carriage, security and cleaning.
There were others too which are still operational today, including De La Rue printing diverse paper money currencies and postage stamps. Playmobil has a major operation in Malta as well as Baxter (formerly Medical and Hospital Products) manufacturing small hospital equipment such as blood pressure gauges. The American company Methode manufacturing auto devices has also grown in recent years.
Additionally, there are a number of smaller enterprises involved in activities as diverse as aircraft maintenance, medicinal products and wrought iron and stainless steel products.
However, the question is how long is their lifeline in Malta? Cheap labour is no longer a factor although the language advantage and technical knowhow are positive entities. Negatively too, practically all manufacturing supplies have to be imported and freight charges have increased. At the onset, Malta offered tax incentives and grants but these disappeared when Malta became a Member of the EU ten years ago.
A recent European Commission report revealed that over the last two years over four million manufacturing jobs were lost in EU countries as manufacturers relocated to China, Indonesia, The Philippines and Malaysia. This pressure is also on Malta manufacturers.
Aware of this situation, successive Maltese Governments have striven to generate alternative enterprises. E-Gaming has become an important prop as well as diverse financial and insurance services. Ship registrations put Malta amongst the largest international registers and work on oil rigs is a major attraction.
A further negative side to manufacturers is that they no longer offer attractive conditions and wages as they struggle to keep their operating costs minimal. Youngsters are not being attracted to a regimented-style system of work and shift work is proving a massive detractor because of night and week-end work.
Engineers and technicians obviously prefer shorter hours, no shift work and better wages and salaries. There is the further attraction of now being able to work in EU countries such as the UK, Germany, France, Holland etc for the obvious contract conditions they offer.
Paradoxically enough, manufacturers are now attracting “cheap labour” from Sicily, Spain, Russia and other eastern European countries where jobs are scarce and working in Malta provides a job, a wage and a Mediterranean climate.
Some years back a prominent Government Minister caused outrage when he publicly announced he would be willing to place bets that eventually industrial manufacturing would disappear from Malta. Outrage or not, having been involved in manufacturing for the last 30 years, I can see and appreciate the basis of his line of thought.
I am firmly of the opinion that industrial manufacturing in Malta is on skid row. It’s just a matter of time.