Editorial

Prime Minister Lawrence Gonzi had a lot to smile about over the weekend when he spoke about Lufthansa Technik's decision to expand its aircraft maintenance business in Malta.

The move is important on a number of counts. First, it is a direct advertisement for Malta, with the inbuilt message being that if the island is good enough for Lufthansa Technik, it must be good for others too. Secondly, the number of jobs it expects to create, 550, is not insignificant, considering that most of the firms on the island are small or of medium size.

There is of course another important consideration: Its line of operations fit in well with the mix of industrial/commercial/services activities Malta is now eager to promote in the new phase of economic development that is gradually emerging following the first economic diversification drive. As it happens, Lufthansa Technik's decision comes only a short time after the government published its three-year industry strategy in which it precisely targeted maritime and aviation maintenance as one of the sectors that should be promoted.

The others are education, health care, back office processing outsourcing, financial management, professional consultancy, creative services, pharmaceuticals, ICT and hi-tech manufacturing. Some of these sectors are more suitable than others in the list but the mix covers lines that could help propel the island's economy forward at a faster rhythm of growth if it manages to get new investment.

Lufthansa Technik is to invest €60 million in new aircraft maintenance facilities to handle the Airbus A330 and A340 aircraft. Its Malta subsidiary, which employs 150 workers, already carries out C-checks on smaller A320 and Boeing 737 planes. A new hangar, expected to be among the first in the world able to take the new Airbus A380, is to be built for the company by Malta Industrial Parks and rented to it for 30 years. The plan is for the company to have the new facility operating by 2008. In a separate development, Lufthansa, which has been operating to Malta for 20 years now, and Air Malta have reached a code-sharing agreement.

What makes the Lufthansa Technik venture even more interesting is its direct link-up with a college of education. Concurrently with the announcement of the planned new investment, it was made known that the Malta College of Arts, Science and Technology had agreed to hold training courses for aviation maintenance technicians. At present the company is already sponsoring 50 apprentices at MCAST. The link-up is a tangible form of the kind of cooperation that is so often discussed, oftentimes only academically, in forums about skills needed by industry.

The latest string of new investments should stimulate a greater national effort to remove any remaining difficulties or excessive bureaucracy in the drive to attract new investment. In the latest world investment report, published only last September, Malta climbed to 84th place from 107 in 2003, but the country is still lagging behind new competitors in the European Union. Cyprus, for example, is in 14th place, the Czech Republic, 28th, Hungary, 46th, Lithuania, 59th, Slovenia and Poland, 75th.

According to the report, new EU members are increasingly attracting new investment in work that requires higher skills, such as precision engineering, design and research and development. Getting such new investment as that planned to be made by Lufthansa Technik helps to enhance further the island's image as a suitable location for foreign investment, but greater success will continue to depend, in large measure, on the island's ability to deliver in terms of manpower skills and, also, on the degree of efficiency in the running of facilities to industry.