Very recently Joinwell discharged 37 of its employees as the company reported a sharp drop in hotel refurbishment projects and super-yachts refits. While the reason for a drop in hotel refurbishments could be attributed to the recession, particularly the downturn in the tourism sector, the latter reason for these redundancies is unfortunately linked to the government's privatisation process of the shipyards.

The GWU had warned at the time that the downsizing of the 'yards before the preferred bidder was known did not make sense. The 'yards would have fetched a far better price had they been sold as a going concern, fully operational and with a healthy order book. Furthermore taxpayers' money would have been saved as the voluntary retirement schemes would have been taken up only by those workers who really wanted them.

Which businessman would drastically scale down operations, lose nearly all customers in the process, and then expect to fetch a good price?! Obviously the drastic scale down in operations at the 'yards, which is practically at a standstill, with approximately 350 employees on its books (300 of these employees have taken the VRS but are still working there), has had a negative multiplier effect on other sectors of the economy, such as Joinwell and all the other suppliers who depended on Malta Shipyards Ltd to earn their livelihood.

There is one other question that needs to be answered. Why are firms that operate solely in the domestic market finding it so difficult to export and instead are shifting to the importation of finished products that they used to manufacture? This is not only happening in the furniture sector but also in the textiles, food and beverages, and in the process valuable skills and jobs are being lost. During the EU election campaign many self-appointed experts stated that local manufacturing firms would find it easier to export to the EU market of some 400 million and also to other countries (outside the EU) which signed a Free Trade Agreement or Economic Partnership Agreement with the EU. The reality is completely different and this is due mainly to the fact that these companies were left to fend for themselves. No strategic plan was implemented to assist these firms to become more competitive, find new niche markets and grow.

Instead, they suddenly found themselves competing in their home market against well-known brands for which they were totally unprepared.

Maltese entrepreneurs have one big disadvantage among others over their counterparts in the EU, and that is economies of scale. An Italian entrepreneur for example will grow his business from a small market of a few thousands to a nationwide market of some 60 million before he even starts thinking of exporting. During this process his business will have been transformed from a family-run business of a few employees to a company employing hundreds of workers.

These will include highly technical experts for research, design and development of the products, sales and marketing, and other professional people who will run the company on modern management practices.

Obviously the mass production of the company's products will ensure that the finished products are sold at very competitive prices.

By this time the company would have also built a strong brand in the home market and would be well prepared to go international and start exporting to other countries. The Maltese entrepreneur on the other hand has to start exporting when his unit costs are still relatively high and when the company has very limited experience and resources.

Obviously this is a huge disadvantage and while few firms got a few export orders, most probably to North Africa or the Middle East, these orders were in most cases not repeated.

If local manufacturing companies are to survive they need to grow by merging with other companies in their sector. They need to tap more EU funds to make themselves more competitive and find new niche markets abroad. Above all they need a government that has a vision that local manufacturing should be given all the necessary assistance to grow and prosper as this is how we can beat the recession and provide more stable jobs.

Mr Carachi is president of the General Workers' Union.