688 workers leave the shipyards in two months

Social Policy Minister Lawrence Gonzi, chairman of the task force for the restructuring of the shipyards, told parliament yesterday that 688 workers have so far left Malta Drydocks and Malta Shipbuilding under the early retirement and voluntary resignation schemes.

He said a total of 791 workers had applied under the schemes by the time they closed on Friday but 67 applications were rejected because the workers involved were considered vital for the 'yards. The remaining applications were being processed. He observed that the restructuring plan for the shipyards had envisaged a reduction of 600 workers this year.

Dr Gonzi also said in a ministerial statement which was followed by a debate that the two shipyards made a loss of Lm16.2 million last year, compared to Lm18.6 million the year before. He reiterated the government's plan to restore the 'yards to viability and phase out state subsidies by 2008.

Opposition deputy leader George Vella said the restructuring process was not achieving its aims, not least because according to a MIMCOL report, there were 1,900 excess workers at the shipyards. He said the opposition would support restructuring and the whittling down of subsidies as justified, but it was against capping the granting of subsidies by 2008.

Dr Gonzi in his statement said the government had repeatedly declared its determination and commitment to reform the shipyards on the basis of a restructuring programme laid out after discussions with all the parties involved and building on the initiatives taken by former governments.

This determination stemmed from the government's conviction that the shipyards had the ingredients to stand on their own feet and not continue to depend on state subsidies.

This challenge was one of the most important facing the country and one which could be tackled on three fronts - the attraction of new work by strengthening the commercial reputation of the 'yards in ship repair and metal works; the implementation of the reports commissioned by various governments, particularly the Appledore Report; and by improving efficiency, productivity and work practices and launching new initiatives that would allow diversification into specialised sectors, even through joint ventures.

During the first part of this legislature efforts had been made to strengthen the commercial reputation of the 'yards, which had not only succeeded to achieve new certification in health and safety, but also attracted new work of considerable added value.

The year 2001 showed that these objectives could be achieved, but they could also be lost through actions which were unjustified and irresponsible.

In 2001 Malta Drydocks increased its turnover considerably over the previous year, particularly thanks to the work done on the La Salle. Just as important was the work on the Ikdam, not only because of its importance in financial terms, but also because Malta Drydocks showed it could handle major, complex conversion work.

While the dockyard was achieving these successes, however, incidents took place in September, through a demonstration and violence, which had endangered the whole process.

It was in this scenario that the prime minister on September 26, 2001 set up the shipyards restructuring task force formed of representatives of the government, the management, the workers, MIMCOL and an observer nominated by the Labour Party.

The task force was tasked with drawing up a restructuring plan for the shipyards by November 2001 aimed at achieving financial viability and eliminating subsidies by the year 2008.

In terms of this exercise the management presented a plan which included the broadening of the shipyards' mission; rationalisation of property and plant; investment on modernisation and skills-matching according to the work that could be reasonably expected to be won by the shipyards. This included schemes for voluntary resignations, early retirement, alternative work, recruitment of apprentices, assistance for those who wished to work as self employed, and incentives for new commercial activities, even in joint ventures with private firms, involving shipyard workers in a permanent manner.

The management was also asked to propose a new, effective management structure and a new collective agreement which revised working conditions, work practices and the code of discipline.

Dr Gonzi recalled that as chairman of the task force he had on December 3, 2001 reported to the Cabinet that the task force had concluded its restructuring plan, including the detailed retirement and voluntary resignation schemes, the new management structure, the disciplinary code and a draft collective agreement which had to be discussed with the GWU.

The report was concluded on the basis of the Appledore report of July 1997, the Malta Drydocks Task Force minutes and decisions November 1996-February 1997, the report of the project team, April 1998 and the MDD Restructuring Project - New Proposed Personnel Allocation (February 1998).

The task force also established that in the year 2000 there was a turnover of Lm1.7 million from ship building and Lm13 million from ship repair, for a total of Lm14.7 million. In the same year Malta Shipbuilding had a loss of Lm4.9 million and Malta Drydocks lost Lm13.7 million, a total loss of Lm18.6 million.

In 2001 there was a higher turnover and lower losses.

Turnover in 2001 reached Lm1.9 million from shipbuilding, and Lm19.5 million from ship repair and other works, of which Lm7.3 million came from the ship conversion works on the La Salle and the Ikdam. Losses reached Lm4.5 million at Malta Shipbuilding and Lm11.7 million at Malta Drydocks. That meant a total turnover of Lm21.4 million and losses of Lm16.2 million.

Dr Gonzi said all this confirmed that for the shipyards to be restructured, it was not enough for them to attract work of high added value but there needed to be strong efforts for an increase in productivity, efficiency and the best use of human resources.

The restructuring plan confirmed all this. Viability could be achieved if the shipyards attracted high added value work, particularly in ship repair, conversions, ship hull building and yacht repairs

The plan, however, also provided for capital investment for the modernisation of the shipyards particularly through the upgrading of the docks and equipment, including that at Manoel Island.

Diversification and specialisation also required a new marketing strategy which was already being implemented.

The plan also insisted that restructuring would only succeed if the workforce was reduced through voluntary schemes and if efficiency and productivity improved to at least the levels of competing 'yards.

The plan laid down financial targets between 2002 and 2008 and these had now started being followed, not least through the launching of the schemes for voluntary resignations and early retirement so that the workforce would be brought down to the levels indicated in the Appledore Report, as updated by the task force.

In preparation for the scheme, the government allocated the necessary funding in the last budget and the management of the two shipyards evaluated the workers so that it could decide whether it could accept or reject applications under the schemes.

The schemes were then launched on February 1 and closed last Friday.

A total of 791 workers had applied, of whom 129 were from Malta Shipbuilding and 662 from Malta Drydocks. The management had so far accepted 688 applications, of which 111 involved Malta Shipbuilding workers and 577 were at Malta Drydocks.

The management had also refused the applications of 67 workers, eight at Malta Shipbuilding and 59 at Malta Drydocks, while the remaining applications were being processed.

Dr Gonzi observed that the restructuring plan had, for this year, envisaged a reduction of 600 workers from the two shipyards.

Referring to the applications which had been turned down, Dr Gonzi said the management had followed the projected manning levels established in the restructuring plans and it had to keep in mind that some workers were considered vital for the technical sustainability of the shipyards.

The fact that the dockyard had been able to smoothly handle a full order book in the past two months even as 600 workers left showed that the management had made prudent choices in the interests of the 'yard.

Dr Gonzi said the government had so far paid Lm5.4 million in compensation to the workers who had left. On the other hand, it was estimated that savings from salaries, bonuses, allowances and overtime would reach more than Lm5.2 million per year.

The government was keeping in mind the social and economic aspects of this exercise He said that of the totals he had mentioned, 357 workers had applied under the early retirement schemes and were today receiving a pension. The rest had opted for voluntary resignation. Half of them had found another job and the other half were registering for work. Nearly all those whose application was refused had told him in writing that they already had alternative work.

Dr Gonzi said the restructuring process would now enter a new phase which would involve the restructuring of the management of the shipyards, the implementation of the disciplinary code and talks with the GWU on a new collective agreement.

Another important aspect would involve the ETC in a multi-skilling exercise at the two shipyards along with the training programmes organised by the management.

Dr Gonzi said the government and the management had over the past week received various expressions of interest from foreign investors who wished to team up with the shipyards for specialised projects or initiatives to diversify the shipyards' activities. The government felt it should not give further details at this stage, but the matter would be discussed in the task force.

Dr Gonzi said the actions taken so far encouraged the government to look to the future of the shipyards with greater optimism. It was clear that the targets which had been established could be achieved if there continued to be the sense of cooperation and responsibility shown so far by all the parties involved.

The government wanted to urge the workers to continue to give their best for the benefit of their place of work since this was the only guarantee that the shipyards could attract the work needed for their viability.

Economic Services Minister Josef Bonnici said that last year was a crucial one for Malta Drydocks. The 'yard had needed to make an important change not only in its structures but also in the nature of the work it did.

Through a partnership with other contractors, the dockyard by way of the Ikdam contract, had shown it could handle complex conversion work. The partners which joined the dockyard in this work were involved in design and the provision of engines to process oil.

Clearly Malta Drydocks could not just do work which other shipyards with workers who were paid less, could also do. It had to handle more complex work with added value.

He was pleased to have received a letter from the Ikdam's captain expressing appreciation for the good work done on his vessel.

Prof Bonnici observed that before last year, all the turnover at Malta Drydocks came from ship repair. But last year, Lm7.5 million came from conversion work on the La Salle and Ikdam.

The work done on the La Salle proved the capabilities of Malta Drydocks to one of the most demanding clients and put Malta Drydocks back on the US shipowners' map.

Prof Bonnici said the problems at Malta Drydocks were shown by the fact that while the 'yard was working on a full order book last year, some 2,000 workers were still idle. Clearly, getting more work to the shipyards was not enough.

The problem was more serious at Malta Shipbuilding because the ratio of losses to the number of workers was higher.

The government's policy was to look at both shipyards as one entity and to get them ever closer together, with the human resources being pooled to do work on structures, conversions and maintenance.

He observed that progress had been made in the yacht repair sector, with turnover having risen from Lm900,000 to Lm1 million.

Prof Bonnici said last year's results effectively applied for only the first nine months of the year, up to September 12, when the office of one of the partners of Malta Drydocks was attacked. Those incidents had been very detrimental to the reputation of the 'yard and contracts on work on two cruise liners were lost. Those were irresponsible actions which had cost the shipyards dearly.

Although recovery was starting afresh this year, no new conversion contacts had been won so far, although the dockyard was close in one case.

Through everyone's good will, he was sure the situation would continue to improve and hopefully better results could be reported in the future.

Finance Minister John Dalli observed that restructuring at Malta Drydocks had been going on since the 1960s, years which he remembered well as he worked at the dockyard at the time.

The problems which had been faced by Malta Drydocks had been compounded through the opening of Malta Shipbuilding.

For a substantial period the dockyard was run by a workers' council but the measure had not succeeded to improve the financial situation or productivity.

Unfortunately, the General Workers' Union was not an agent for change at the 'yard. It had not helped to change ingrained practices and one still heard more talk on coffee breaks, walking time and cleaning time than on work time. There were still people in the 'yard who acted like political agents and put politics above the interests of the 'yard.

Mr Dalli observed that in 1987, the shipyards employed 7,000 people. Before the introduction of the latest schemes, their number had declined to 3,400.

The number of workers at the 'yard had to reflect the amount of work which could be taken on by the 'yard and the higher the number of excess workers, the less everyone's productivity would be. Complete structural change was required and it was in the country's interest that this was done and that the country's resources were utilised in the best possible way.

Mr Dalli observed that Lm400 million had been invested in the 'yard since 1987.

He was sure that the excess workers at the 'yard would be used productively for the benefit of the country. Many of them had various skills and he was sure it would be better for them if they worked in a profitable enterprise than a loss-making one.

A strong effort was required by all those who had anything to do with the 'yard for the changes to be carried out and to ensure that every minute's work was productive so that the shipyards could enjoy the best possible reputation in the international market. This reputation could be wiped out in a morning, as the irresponsible actions of a few workers last September 12 showed.

Real change was required not for Romano Prodi's sake but for the sake of Cikku Borg, Mr Dalli said.