Dockyard privatisation will lead to liquidation
The privatisation of the shipyards will eventually lead to the company’s liquidation, a prospect that only came to light yesterday in a report published by the European Commission.
In its spring economic forecast the Commission said one of the reasons why it expected the public deficit to drop in 2009 was because the shipyards will be liquidated.
The Finance Ministry yesterday confirmed the matter insisting that Malta Shipyards was not for sale but its business and assets were.
It pointed out that privatisation “contemplated” the sale of four distinct operations: the shipyard facilities, the shipbuilding Marsa facilities, the super yachts facility and the Manoel Island yacht facility.
A ministry spokesman said the Commission forecast reflected the fact that the government “will not have to suffer any more losses due to shipyard operations”.
“Malta Shipyards Ltd, which is the company currently in operation, is not for sale but its business and assets, by way of a concession, are. This implies that at some point MSL will be wound up, as the new operator will not be required to assume its liabilities,” the spokesman said.
It is unclear whether the company would still be liquidated if the privatisation process fell through.
The issue of liquidation had been a bone of contention between the government and the Commission in September last year.
Brussels had made it clear that the government’s intention to fork out a further €100 million to cover the yard’s losses incurred by the end of 2008 would amount to state aid.
The Commission had said it would prefer Malta Shipyards to be declared bankrupt and liquidated. The issue remained pending with the Commission insisting it would only make a final decision once the final plan for the yard was submitted.
The prospect of liquidation was sidelined by the government at the time since the large workforce on the shipyards’ payroll made it almost impossible to go down that route. Declaring bankruptcy and liquidating the company would have left employees without compensation, creating social and political turmoil.
However, the mere suggestion by EU Commissioner Neelie Kross that the company would have to be declared bankrupt had sent workers scurrying for the early retirement schemes.
Today the shipyards employ just over 50 workers.
The privatisation process was put in doubt in February when MaltaToday had reported that the 14 bids fell far short of the government’s expectations.
Only last week the Prime Minister seemed to confirm the media reports when he indicated on the television programme Bondiplus that he was not satisfied with the offers for the shipyards.
Nonetheless, the ministry yesterday insisted the privatisation process was “still underway”.
Meanwhile, the GWU said its position on the privatisation process had been vindicated by the Prime Minister’s admission that the bids were not attractive enough.
The union said it had insisted that privatisation was not the only route to bring the shipyards back to profitability. “In any case, we had argued for early retirement schemes to be offered after the privatisation process was complete. The government was pig-headed and this led to job losses and the expenditure of more public funds than was necessary,” the GWU said.
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Anthony Farrugia
May 7th 2009, 12:23
@L Galea : Just to remind you that you have forgotten the LM100 million (not euros) loss made when Dom Mintoff started tinkering with CBM reserves and took a position on the US dollar which did not work out.
joanna farrugia
May 7th 2009, 11:10
before the election it was a different tune but deep down all the dock workers knew that the gov aim was to close it down totally.he never cared and will never care.about the liquidation its simple to save his face from the defecit and then he comes out and says he spent the money on the education investments etc etc and are all pure lies.well done to austin gatt cos his dream came true that he had the guts to remove another red spot now the whose next??
simon james schembri
May 5th 2009, 21:26
i believe that the ship yard should be closed down only if it is replaced by suitable architectural projects that complement the fortifications.
I dont want to see the monstrous cranes replaced by modern architectural monstrosities, apartment blocks, aluminum and glass, and technicolor paint.
Our Capital City ,and even Birgu, is a jewel of ancient architecture. We should stick to that style in the area.
Franco Farrugia
May 5th 2009, 19:38
@ M Spiteri: Why? Was it-Tarzna ever a viable industry? That is what one gets from work practices that included bringing it-tarznari out to create mayhem in the country, demonstrations and meeting during working-hours, and tarznari doing anything accept work. It is these same tarznari that brought about the closure of the Tarzna. Nothing more, nothing less.
Pisani Saviour
May 5th 2009, 18:14
Ship repair and ship building has never been the priority of the Maltese people. It has been a priority to others especially to the Knights of St John of Jerusalem and to the British. Both were naval forces in their time and Malta served them both very well.When it was no more viable for them they left the Island and relieved themselves of the workload and dumped the workers on the Maltese people.Apart from all this shipbuilding and ship repair is a dirty job which we can do without. I am definitely in faviour of the complete elimination of such activities from our shores.
Joe Morana
May 5th 2009, 17:02
The liquidation of It-Tarzna would be sad story indeed. Regrettably, I believe that the cause for this failure is to be shared by successive governments and weak managements who were unable or reluctant to take the necessary effective measures, and by successive trade union administrations and the different generations of workers themselves who lacked the foresight and allowed themselves to be led to unsustainable short term gains instead of gearing for long term prospects, believing that money for the Drydocks would never stop coming.
Galea. L
May 5th 2009, 16:58
Anthony Farrugia
The mind boggles at the squandering of about Lm500 MILLION left in Malta's coffer by the PL government in 1987 and putting the country in around €5000 MILLION debt by the PN governments.
N. Grech
May 5th 2009, 16:45
Actually it was the political pigheadedness of the majority of the workers and their union which has plagued the Malta Dockyard and the rest of the Maltese population for decades that has brought ruin. With their continual opposition and dissent to take on contracts proposed by someone they happened not to like or for a country that was from a certain part of the globe, It was a continual drain and liability on Malta's economy as would become of any industry that was a stronghold for any political party.
This is a pity because with its prime location in the middle of one of the busiest seas and its harbouring potential, such an industry could have grown to be the backbone of the maltese economy.
Yes, it was an eyesore but the money that was wasted could have been used to upgrade buildings and equipment etc over the years. In the end, in such an economic situation, no matter what party was in government or whether we were EU members or not, the end of the Malta Drydocks is inevitable as it was become economically unsustainable - the big surprise is that it lasted so long!
Mark Galea
May 5th 2009, 15:25
@M.SPITERI
in the last years, it was a costly tradition to keep ... using state aid.
By the way, did not hear any Dockyard workers going out in the streets, breaking everything in the last years, either.
So, hold your horses, Mr. M. Spiteri. Not everyone has your interests.
Laurence Brincat
May 5th 2009, 15:24
Right !
Whoever is in favour of retaining a loss making industry (and what a loss!) should put his mouth (in this case finger) where his pocket is. If my boss goes bankrupt no Govt, Political party or Union will subsidize the losses the more so if they run into hundreds of millions. The present economic downtrun however is a different cup of tea
M.SPITERI
May 5th 2009, 14:44
I hope that Gonzi is satisfied now that he ruined a 2000 year old Maltese tradition of ship building and ship repairs. The PN in government has been working towards this conclusion since the 12th of May 1987. A real shame!
brian calleja
May 5th 2009, 14:20
tonio fenech should resign !
Alexander Morana
May 5th 2009, 14:17
Mr. Anthony Farrugia:. It was worked out to be over ‘345 million Sterling’ over 45 years sunk into that bottomless hole. With that money Malta could have build better roads, a new hospital and some money left over to create some cottage industries for exports.
I was always right to think that no one would want to invest into something which is a liability in today's business climate, especially ship building and repair. It had to be EU membership to kill the albatross around our necks.
Anthony Farrugia
May 5th 2009, 13:46
Am resending message as name as name came out as "A" oops!
Has some economist/accountant ever worked out - at 2009 values - the amount of hand-outs, subsidies, write offs, early retirement schemes etc from 1959 to date, when it started being managed by Bailey's (followed by Swan Hunter, worker-directors, etc) after being dumped by the British Admiralty as it did not need it any more; the cost to the Maltese Exchequer and ultimately us taxpayers would make fascinating reading given that this enterprise was never viable and a commercial non - starter from the very begining in 1959.
The mind boggles at what would have been achieved with this amount had it been used in attracting investment to Malta, social housing, health, education, tourism instead of being thrown down this bottomless black hole and has only given us grief over the past 50 years.
Carmel Taliana
May 5th 2009, 13:37
There is nothing more to say the shipyard (Malta Dockyard) as we use to know it is totally and utterly bankrupt from the time of the reduncies in the 60s and 70s on Joe Soap the taxpayer is keeping on its feet.
Nick Borg
May 5th 2009, 13:35
Anyone who thought that the shipyards were ever going to be viable without state aid needed their heads examined. What upsets me most is that it has taken so long to come to this. Everyone has known for years that the losses were unsustainable and it should have been done long ago. Good riddance.
malcolm tortell
May 5th 2009, 12:58
@ Saviour Pisani: there's already a venice in the med...
pisani saviour
May 5th 2009, 11:52
Malta shipyards had always been a burden on the maltese people. When it is gone all the maltese people will say good riddance and GRAND HARBOUR ,less those ugly steel monsters like cranes etc will once again be GRAND. Our harbour could then really be turned into a VENICE OF THE MED.
J.Borg
May 5th 2009, 10:42
this just shows that eventually in the future one can say that once Malta had a shipyard and then it was turned into a holiday centre with berthing bays, flats, villas etc.....
Joe Cassar
May 5th 2009, 10:12
This simply confirms what many have known for a long time - that the PN Gov never had any real intention of making the shipyards viable and always meant shut them down.
The pity is that it is not doing so for economical or policy reasons, but simply out of spite and for partisan political motives - to destroy what it has always percieved as a Labour stronghold.