STMicro boss announces 15% cut in operations
No change on the local front
STMicroelectronics CEO Carlo Bozotti has announced plans to close or sell a further 10 to 15 per cent of the chipmaker's operations worldwide but the government was still given no feedback on the fate of the operations in Malta.
The Sunday Times reported on May 14 that the company, Malta's largest private employer, with some 2,200 workers, had asked the government for a financial support package running into tens of millions of dollars in order to stay, complaining of the decreasing competitiveness of the Kirkop plant.
The government made a counter offer last week but there has been no response so far.
In the meantime, the Financial Times this week reported Mr Bozotti announcing plans to divest three to five of the company's 30 product divisions and to close six factories, in a bid to save about $150 million from the downsizing.
"We need to do more pruning. We have taken many measures in the past year but the euro-dollar exchange rate is a real challenge," he said, pointing out that, while the company's sales were all in dollars, 40 per cent of its manufacturing costs and two-thirds of the research and development spend are in euros.
"I want to take these decisions quickly. Time is a major issue. I would like to go much faster," he said. The local operations are said to be facing losses that could reach €58 million (Lm24.9 million) a year primarily as a result of labour cost and exchange rate pressures.
The CEO's comments clearly indicate that the group is concerned about the strengthening of the euro against the dollar. In the first quarter, the falling dollar cut $140 million from operating profits, helping to push the company into a $84 million net loss, FT reported.
Finance Minister Tonio Fenech said he had received no response or feedback from the local company to the offer made by the government. "We're aware of the comments reported in the Financial Times but so far we have not been notified of any downsizing or got a reply on our offer so we're still at the stage we were," he said, echoing the response of the General Workers' Union's general secretary Tony Zarb.
The Franco-Italian company, Europe's largest chipmaker, has undertaken considerable restructuring, closing down its plant in Morocco and the American operations.
The Kirkop plant, which began operations in 1981, is an assembly and test facility for ST products that use the most advanced chip packages.