Editorial

Despite all the restructuring that has been carried out at the shipyards, the problem about low productivity still clouds the future of the enterprise. Restructuring and work diversification have helped raise turnover, but contrary to expectations that the shipyards were this time right on course to becoming commercially viable, the situation appears to have stalled over low productivity. This does not spell good tidings for the shipyards.

As usual, the Investments Minister, Austin Gatt, did not beat about the bush when he spoke in Parliament about the financial outturn of the shipyards and the problem about low productivity. His warning was direct. No one, he said, should run away with the idea that the times of old would return. The government was not a safety net. He also remarked that the current problems were affecting cashflow and if they persisted and there were not enough funds to cover salaries early next year, there would only be two choices: Workers would either have a lower wage or some would have to be dismissed. This is a dismal outlook.

It is not the first time the shipyards have been warned about the consequences of a failure on their part to meet the target set for the enterprise to become financially viable. The feeling in the country generally is that the dockyard has been subsidised long enough now and that the time has come for it to start making a profit.

When millions of liri have gone into efforts to bring the dockyard back to profitability, the least that is generally expected of the workforce is an all-round effort to make the enterprise work up to expectations. But, according to the Investments Minister, productivity has gone down, instead of up.

The figures given by Dr Gatt in Parliament illustrate the point in no uncertain manner. In 2004, he said, sales had reached Lm11 million and this year they amounted to Lm24 million. The profit in 2004 was of Lm4.5 million, 40 per cent of turnover. This year, the profit would be of Lm5.5 million, 22 per cent of turnover. The shipyards would have lost Lml million more than was forecast this year, despite selling Lm6 million more in projects.

The government has set 2008 as the target date by which the shipyards have to become financially viable. Will it be met? Not if, going by a ministry statement, workers are not even doing their full working hours. If correct, the matter would need to be taken up with urgency with workers' representatives if they really wish to see the shipyards meet the deadline.

Even though the shipyards have diversified their commercial activities, many are still sceptical about their future financial viability. But Dr Gatt still believes they can make it if the problems are seen to in time. The most important question though is: Does the workforce really want to take the enterprise to profitability?

The minister said ship conversions and work on superyachts now accounted for 70 per cent of the yards' activity and turnover had gone up to Lm24 million this year. No fewer than 900 workers have been absorbed by the government in the restructuring programme, work practices have been changed and marketing is more aggressive. All this has brought about a greater workload, but productivity has not increased.

It looks, then, that one of the major difficulties is one of mentality, an age-old problem at the yard. The sooner this is geared to today's commercial reality the better will the prospects be for the shipyards to meet the government's target.