The future of manufacturing

The Malta Chamber of Commerce, Enterprise and Industry has just held a conference on the Future of Manufacturing. The conference, which I chaired, was organised by the Malta Chamber’s manufacturing economic group (Meg) and was one of a series of activities held to promote the interest of the sector.

Andy Gatesy, chairman and CEO of Toly Products, and Alfred Camilleri, managing director of Inspectra, were invited to speak on behalf of industry while the Minister of Finance, the Economy and Investment, Tonio Fenech and the opposition spokesman for industry, the self-employed and foreign investment, Chris Cardona, were also invited to make their interventions in the presence of about 100 representatives from manufacturing.

An insightful panel discussion closed the event, including interventions from Chris De Giorgio, finance director of Foster Clark Products Ltd, and Sergio Vella, managing director of ArrowPharm Malta.

The message we gave was clear. As manufacturers we are willing and able to diversify and enhance our competitiveness to proceed in our path towards sustainability. However, competitiveness must continue to be given equal importance at a macro level – at all times.

Mr Fenech acknowledged this during the event when he said that manufacturing and the authorities can work together to foster the right environment for sustainable competitiveness and sound growth.

Indeed, various routes to growth are available and manufacturers have the expertise and the knowhow to pursue them, given the right support measures and within a business-friendly environment.

Mr Gatesy highlighted various options such as moving to higher value added products, moving up the value chain and, most importantly, being creative, Maltese creativity and entrepreneurship being what our companies need.

Subcontracting and using clusters will also help to develop the sector further by providing flexibility and enhanced cost-competitiveness. By nurturing partners lower down the value chain, larger companies can focus better on their key strengths and on finding new markets.

Malta Chamber president Tancred Tabone also pointed out the importance of business confidence.

He said that businesses that are confident will maintain their levels of investment, even during periods of international uncertainty.

This was amply shown by manufacturing, in particular, during the last international crisis where a focused strategy to maintain investor confidence by the authorities resulted in continued investments in plant and machinery, general equipment and specialised skills. Investment enhances competitiveness and, especially in the case of FDI, it brings about transfer of knowledge, technology and capital to our shores.

Mr Gatesy acknowledged the support afforded throughout the economic crisis. However, the manufacturing industry feels that industry operators and the government must continue to maintain communication and focus to ensure that a similar dynamic approach can be further built upon. He stressed that the manufacturing industry is Malta’s powerhouse and, through the value added it generates, it ensures continued economic growth for the country.

The challenges facing the manufacturing sector are various. In fact, there has been much talk about the issue of service charges; the new rent policies, the price of electricity when compared to other European countries and port charges. We know that, in the past, many of these costs were competitive and somewhat compensated for the island-related disadvantage of operating from Malta. Our country is physically isolated, meaning that practically all raw materials must be imported and finished products need to be exported. This and other realities must be factored into a holistic policy for manufacturing.

SMEs are also faced with their own set of challenges. Representing small companies, Mr Camilleri explained that SMEs need a stable environment as well as stable predictable costs. Targeted SME policies to accelerate development and internationalisation are available but such help needs to be simplified for small SMEs that cannot afford to tackle too bureaucratic procedures.

Besides, the speaker called for an actionable strategy for start-ups through a restructured Business Incubation Centre and for support to SMEs operating in traditional sectors.

Our event concluded that manufacturing is an important and vital pillar of the country’s economic future and that manufacturing in Malta continues to make business sense. However, industry, the authorities and other stakeholders need to embrace coherent strategies for the country to face renewed challenges and focus more on remaining competitive.

We urge the government to understand the highly-competitive nature of our industry and work together with companies to help win business for Malta. Such investment enhances future prospects for exports, job creation and, thus, economic growth.

The author is chairman of the manufacturers and other industries economic group within the Malta Chamber of Commerce, Enterprise and Industry.