Palumbo took over the shipyard and superyacht yard almost a decade ago. It is not an easy time for boss Antonio Palumbo, who is appealing a six-year jail term, but he told Vanessa Macdonald that he long ago learnt to look at the future with hope.

Antonio Palumbo admits that he is somewhat bewildered by the media reaction to the news that he and his son were among seven businessmen found guilty in a Messina court last January of illegal waste dumping in Sicily.

“I was unfairly crucified by the media here,” he said bitterly, saying that some of the reports were incorrect.

“I should not be judged by what is going on in Messina but by what is going on here,” he said, sweeping his arm around the yard, visible from his office at Għajn Dwieli.

“I have done – and am still doing – a lot for the environment and for the workers’ jobs and for the economy. I deserve credit for all of this.”

His words may come across as defensive and slightly belligerent but his tone was far from it. He appears genuinely perplexed that he has had to face so much criticism in the nine years since he took over the shipyard, from complaints about noise and dirt to salacious gossip about the court case.

He was anxious to tackle this ‘elephant in the room’ first, stressing that he remained convinced that he would be vindicated by the outcome of the two appeals, which should be heard within the coming months.

What happened in Messina is very simple: it was a vendetta against me for exposing wrongful practices

“Look around at what I do here. Look at the values and philosophy of the company with regards to the environment and occupational health and safety of the workers.

“What happened in Messina is very simple: it was a vendetta against me for exposing wrongful practices. And I and my family have paid dearly for my stand,” he insisted.

‘Best yard in the Med’

The court proceedings have not dimmed the momentum at the yards, where various investments were made with “the next phase” in mind. He spent much of the early years bringing the yard up to date, literally clearing out years of neglect. Once that was done, he invested in a solar farm, aiming to expand it to get as much as 40 per cent of his energy from it within two or three years.

However, the key to the yard’s success will be how well it positions itself to offer something to differentiate itself from the rest. Mr Palumbo already describes it as the best yard in the Mediterranean – and in the world within two or three years – but he acknowledges that the most important factor is to offer something extra.

Perhaps the best way to explain this innovative approach is the superyacht ‘village’. The former stores have been turned into a complete refuge for superyacht crews – who are often there for months at a time during the boat refits. There are now dozens of rooms available for rent, a spa and gym, meeting rooms for project teams, and a small restaurant, all built around original architectural features like beams and fireplace alcoves.

“If I want to attract more superyachts, then it is not enough to offer only technical facilities. All this expense will not make me more profits, but it will attract more business,” he said.

At the time of the interview, the new €2.5 million 420-tonne travel lift was bringing a superyacht out of the water, with two more in the covered facility, two others alongside the quay, and a 90m superyacht under a temporary tent built to control the environment for a re-paint.

The shipyard has also identified various niches where there is not such fierce competition, such as the installation of scrubbers for ships’ exhaust, refits of cruise ships and conversion of fuel systems from diesel to natural gas.

One disappointment is the oil and gas sector, which is still going through a difficult time thanks to geo-political upheavals.

“We did not move away from the oil and gas sector; it moved away from us,” he shrugged wistfully. “We do believe that it will eventually rebound – but it will look very different. We are planning to be ready when that happens.”

€1 million profit

So much for the infrastructure. What everyone wants to know is whether this black pit which soaked up so many millions of taxpayers’ money for so many years is now economically viable.

The yard had a turnover of €41 million in 2017, up from €30 million a year earlier – but the cost of sales remains high at €38 million (2016: €26m), resulting in a profit before tax of just over €1 million, which he described as “very healthy”.

“But we are not satisfied. We will increase that,” he added.

The superyacht side was also profitable, making €38,928 before tax on a turnover of €5.2 million (with a tax contribution which brought it up to €1.5 million).

Mr Palumbo argued that the return was fairly normal for the industry, given the cyclical nature of the work, and explaining that he also had to factor in the millions in annual concession fees paid to the government – and the high levels of investment that were still being made, €4 million last year alone.

I would happily take on dozens of locals if they had the specialised skills that we need

It is company policy that no dividends are paid out, however the directors’ remuneration in 2017 was €396,401 from the yard.

Was that high, given the level of profits?

“It is the ‘prize’ for nine years of hard work,” he explained, saying that this amount varied across the years.

Apart from the investment in the operational side of the yards, his labour model is radically different – and sometimes very misunderstood by those who remember the yard when it employed thousands. The shipyard employed 61 people in 2017 – only 36 of whom were involved in operations. He relies on subcontractors for the rest and leaves them to get on with their own recruitment.

“This is the market’s standard model. You have to be very flexible in this globalised world and to abide by its rules. Criticism comes from those who do not understand – or want to face up to – the reality.

“If we were to take on the employees ourselves, we would reach the point in this cyclical industry where there would not be enough work for them to do.”

Human resources problem

However, one aspect that is perhaps overlooked is that he would be happy to take on more full-time staff.

“I have placed adverts at least 20 times for staff and I have never received a single CV,” he complained, adding that he had also hosted several visits from Mcast students without success.

“I would happily take on dozens of locals if they had the specialised skills that we need,” he said wistfully. “And if they were willing to get their hands dirty. It costs me considerably more to recruit a foreigner who needs accommodation and so on. Malta has a real problem with human resources.”

A yardstick to judge by

▪ The superyacht facility handled 52 yachts last year, bringing the total since he took over in 2011 to some 300.

▪ The shipyard hosted 201 projects, including six cruise liners.

▪ Apart from the boat lift, Palumbo also invested €250,000 in a trailer capable of transporting yachts up to 210 tonnes.

▪ The shipyard ended up with €8.3 million in retained earnings in 2017, with the profits also transferred to reserves.