Government moves in to help another factory

Workers at Stainless Steel Products Ltd will return to normal working hours on Monday and jobs may have been saved at the plant following the government's intervention.

The company, which manufactures sinks for the British market, has been on a four-day week for seven weeks as a result of the global economic downturn and jobs would have been on the line had orders continued to decline.

In a reversal of fortunes, Stainless Steel would now be investing €300,000 in new equipment and tools and taking over a production line from China, Finance Minister Tonio Fenech said yesterday.

"Our policy continues to be to provide aid on the basis of investment," he said, adding that ensuring job security was one of the conditions.

All the company's 107 workers were put on a four-day week in January.

Stainless Steel Products Ltd chief executive Joseph Delia said the government's "long-sighted" policy amid the international financial crisis was pivotal in striking the deal.

The company started suffering from a critical decline in sales in November and its production had dwindled to between 50 and 60 per cent of normal operation. Mr Delia said that had this agreement not been reached, it might have had no option but to make some employees redundant.

The undisclosed financial package is on similar lines to those reached with O-rings manufacturer Trelleborg Sealing Solutions and Methode Electronics. Malta Enterprise chairman Alan Camilleri said the deals with the three companies all revolved around higher value in production lines, which also showed that manufacturing was still an important industry for Malta.

Discussions are still underway with a number of other companies although Mr Fenech said deals have now been struck with the three biggest ones on a four-day week - Methode and Trelleborg were the other two.

Discussions with ST Microelectronics, Malta's biggest exporter, are still underway, he said. Last month the company confirmed it would be shedding up to 450 jobs throughout this year and Mr Fenech said this number remained unchanged.

The minister pointed out that the shift of production from China to Malta meant that the mother company, Jacuzzi UK, was now more dependent on the local operation. This, he said, should translate into a higher demand once the world economy starts to recover.

The company's decision to transfer its China production to Malta went against the usual trend of manufacturing companies moving to emerging markets due to reduced labour costs.

But Mr Fenech said that, since Stainless Steel products were intended for the British market, higher shipping costs could balance out whatever would have been saved in wages. Moreover, quality was still a challenge in the China region whereas Malta earned higher customer satisfaction.

"Malta is attractive because its workforce and management skills are very good," Mr Camilleri said. This was echoed by Mr Delia who said Malta was more consistent and reliable than China.

The General Workers' Union expressed satisfaction that Stainless Steel was returning to normal working hours and that the government's rescue plan was reaping the desired results. It urged the government to widen this aid to include all companies experiencing difficulties.