Facing up to the challenge

The government announced that it shall be privatising the Malta Shipyards. The Italians would say, "Tardare sì, scappare no". A number of people (and it is best not to state whether they are in a majority or in a minority) exclaimed that it was about time. Another number are indifferent to the whole thing.

Yet another number have claimed that with the money that was being given to the shipyards, the government could invest more in health and education. And a number believe that the shipyards should not be privatised. One's opinion will depend on one's perspective. However, it is worth reminding that the shipyards (or as affectionately known by most as the dockyard) have been at the centre of conflicting views for the last 50 years.

When it was still a dockyard servicing the Royal Navy, it was a very significant employer. Moreover, for many it represented a true career path, in that a job at the Dockyard gave them the opportunity to enhance their skills. Many that were eventually to take on leadership positions in industry, tourism, trade unionism and even banking, started their career at the Malta Drydocks. It was then given to private owners (Bailey's), but it soon faced financial difficulties and it had to be nationalised. In the late 1960s, inflexible work practices brought the 'yard to its knees but the then Nationalist government still continued to pump money into the operation. In the beginning of the 1970s, Mr Mintoff came out with the idea of self-management. Still, financial difficulties were never far off.

In the meantime, the international ship repair market went through a major transformation as old players went bankrupt and new players came onto the scene. The Sant government of 1996-1998 got rid of the Yard Council, that was responsible for the management of the enterprise and whose members were elected by the workers. He appointed a board that had a majority of government appointees.

The dockyard continued to make losses which were paid for by the Maltese through taxes, and during the EU membership negotiations, the government managed to obtain a derogation whereby it could continue giving it subsidies until the end of this year. The day of reckoning is fast approaching and the financial turnaround is nowhere in sight.

Today we need to appreciate two basic facts. First, the shipyards are no longer a key player in the economy as they used to be in the past. Moreover, it is no longer a significant provider of skills to the country as they were was up to about 25 years ago. Thus, the cost of the subsidies that this enterprise has received, and continues to receive, far outweighs any potential future benefits.

Second, the shipyards still provide a livelihood to hundreds of Maltese families and, therefore, the social impact of a closure of the enterprise is significant on both an individual basis and on a national basis. However, without sounding too cynical, this is not any different to private firms that have closed down and laid off hundreds of people.

Therefore, there cannot be any justification whatsoever for the government to continue using taxpayers' money to keep alive an enterprise that cannot sustain itself and which has no strategic national value for the economy.

However, the government has not decided to close down the shipyards, but rather to privatise the enterprise.

Privatisation will require an element of restructuring. However, such restructuring would only make some or all of the components that make up the enterprise more viable and therefore is a necessity. A restructured enterprise in private ownership would continue to provide jobs, even though not to the same amount as at present.

It would be very easy for anyone to blame others for the predicament the dockyard is in today. The only people who are definitely blameless are the taxpayers, whose taxes have paid for the subsidies.

Prime Minister Lawrence Gonzi, never a person who shies off from tough decisions, is facing up to the challenge and has taken the more difficult route yet again - closing down the enterprise would have been simpler. The route he chose sacrifices the short term for the long term; something which we expect any Prime Minister to do. We do not need a Prime Minister that does not look for the common good or who would prefer to go for a short-term political advantage instead of the long-term national good.

Privatisation is not a dirty word as some would have us believe. It removes the cushion of state ownership and forces us to face up to the realities of competition. The experience of privatisation of state-controlled enterprises has been a positive one in this country, whenever there has been an appropriate strategy. The Prime Minister's statement in this regard is very encouraging - he is fully aware of both the economic issues and the social issues, and he will not ignore either of them.