Productivity ills blamed for shipyard's lean loss reduction

Malta Shipyards only managed to reduce its projected loss by Lm100,000 despite a Lm3 million increase in turnover, Investments Minister Austin Gatt said yesterday.

Dr Gatt said the company's turnover hit Lm19.8 million from a projected Lm16.8 million but the projected net loss of Lm8.8 million only dropped by Lm100,000 to Lm8.7 million. He blamed the shortfall on productivity problems.

The consequences of not meeting targets, the minister said, would be to either cut take-home pay or redundancies. Subsidies were not an option.

Dr Gatt said that by achieving such turnover figures, the shipyards had dispelled a number of misconceptions. It managed to do this without cutting prices and by competing for high-end work.

The shipyard is fully booked until the end of August and the work will be carried out at very good international market rates.

However, losses for the first two months of this year had already reached Lm1.5 million, which is over Lm400,000 the projected target. The labour cost, the minister said, was 58 per cent instead of the projected 44 per cent.

He said that over the past five years, each family in Malta had forked out Lm3,400 in subsidies for the shipyards and the government would not give an additional Lm1 in subsidies over what had been projected.

He said: "Everyone needs to understand this. The message is simple. We are capable of doing it. If we change our culture and mentality we can do it." But, he added, work practices must change.

Malta Shipyards chairman John Cassar White said that productivity was the most crucial factor in ensuring that the yard remained competitive.

The shipyards operated in a very competitive market and the company was managing to exceed turnover targets due to the reorganisation that had taken place.

Malta Shipyards had managed to repair its poor image with clients. Marketing efforts were bearing fruit and marketing conditions were finally in the yard's favour.

Mr Cassar White said that Malta Shipyard was now working in a broad market and it had managed to diversify very fast from traditional ship repair to the conversion and offshore business.

Malta Shipyards' chief executive officer Chris Bells said that because last year, the company had exceeded its turnover targets, it should have achieved a much better productivity rate.

The government, he said, was playing its part by providing the money for capital expenditure, the executive management was doing its best to attract work but there was a whole multitude of people on whom the yard depended to meet its expectations.

Mr Cassar White said he was optimistic there was a future for the shipyards but this would not come about automatically.