Last Thursday, the media reported that Actavis, the pharmaceutical company, announced that it would be closing down its research and development department in Bulebel. As a result, 64 employees would lose their job. The company explained that this formed part of its global restructuring process.

We need to go beyond firefighting and crisis management

As this can get rather confusing, some background helps.

The origins of Actavis in Malta go back to 1976, 37 years ago. Operating under the name Pharmamed, for about 25 years the company manufactured generic drugs for organisations such as Unicef, Médecins Sans Frontières and the International Dispensary Association. In 1990, the quality and competitiveness of Pharmamed’s products led IDA to acquire 100 per cent ownership of the company.

In 2001, IDA’s shareholding was transferred to the Icelandic company, Delta. In 2002, Delta merged with Pharmaco, also Icelandic. In 2004, the Pharmaco Group changed its name to Actavis and set out to develop into a global international brand in generic pharmaceuticals.

That, in a nutshell, is how Pharmamed in Malta became Actavis.

In October of last year, the Actavis Group was acquired by the New Jersey-based Watson Pharmaceuticals, manufacturer of the generic version of Lipitor cholesterol pills.

Watson paid €4.25 billion upfront and gave Actavis’ shareholders about $420 million (at April 2012 value) of its common stock. In January of this year, Watson changed its name to Actavis.

Watson (today Actavis) already owns Arrow Pharm (Malta) Ltd of Ħal Far. Watson acquired the Arrow Group in 2009.

Arrow International, one of Europe’s fastest growing 500 companies, registered in our country in 1999. It started operations in 2003 with a handful of employees and was exporting by the end of the same year.

And now to my point.

The media also quoted a statement, on the same day, by the Ministry of Finance, the Economy and Investment. The release begins by reassuring the public (remember the context: this was two days before the general election) that Actavis, which employs a 1,000-strong workforce in Malta, had assured the Maltese Government that the restructuring process would not affect the rest of its employees.

The author of the ministry’s media release could not resist highlighting the minister’s concern and the immediate action he took. As quoted in the media, the release goes on as follows: “As soon as Finance Minister Tonio Fenech was informed, he immediately requested Malta Enterprise to intervene in the same way it had intervened when thousands of factory workers were on the verge of losing their job back in 2009 during the peak of the global financial crisis.”

Now this is worth reflecting on. Fine, the reference to government intervention “when thousands of factory workers were on the verge of losing their job back in 2009 during the peak of the global financial crisis” is not surprising.

It was the last day of the electoral campaign and electioneering was to be expected.

What is of concern is the idea that the Government, via Malta Enterprise, should be encouraged to intervene immediately only when a crisis erupts, as crisis manager of the last resort. Of course, Malta Enterprise did well to intervene to save jobs in 2009! Of course, also this time, it has done well to intervene to explore, together with Actavis, ways and means of saving the 64 jobs concerned!

It is good to hear that, as reported by the press, the first meeting between the two sides was “positive” and that Actavis has agreed to continue with discussions. It is very good to hear that the local management of Actavis would forward proposals emerging from the discussions it held with Malta Enterprise to the Group’s international management with the aim of finding ways and means to safeguard jobs that, unless a solution is found, will be wiped out. It is good to hear that Actavis is not unreceptive to Malta Enterprise’s efforts.

But we need to go beyond firefighting and crisis management. We need to take industry more – much more – seriously than we have done over the past 15 years. Intervening when a company announces imminent redundancies is necessary but it is hardly sufficient. We need to have a good hard look at the total environment within which industry – foreign-and locally-owned – operates and intervene to improve it.

At the end of the day, when an international group decides that a plant somewhere has to be closed down, it will generally not decide to shut down those sites that are the most competitive. What we must do, therefore, is to constantly watch out for any erosion of our international competitiveness as an export-oriented industrial location.

And this is not only, nor mainly, an issue of labour costs in relation to labour productivity. It is also a matter of overall efficiency, of a good match between education and training and the competences that industry requires. It is also a matter of government-induced costs and of, all too often, excessive bureaucracy.

So, yes, let’s by all means act immediately when a crisis appears but let us also act proactively to prevent crises.

Mario Vella blogs at http://watersbroken.wordpress.com .

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