Carlo Gavazzi to close Malta factory 'with loss of 140 jobs'

Updated 2.30pm with UHM statement

Manufacturing company Carlo Gavazzi is set to leave Malta, ending its almost four-decade stint in the country, the company announced Friday.

The company employs 140 workers, according to the General Workers Union (GWU), which said it had been informed that the "entire workforce" would be cut.

The economy ministry said it was "deeply concerned" by the decision.

In a brief statement on Friday morning, the Swiss-based multinational company announced a restructuring “which shall lead to a progressive reduction and eventual closure of production in Malta”.

“Production of the products previously manufactured in Malta will be continued at other Group locations, in particular at the plants in Mexico and China,” the statement said.

The company later said it was closing due to “external constraints and the need to consolidate operations across its global footprint,” amid rising costs and difficulties recruiting skilled workers.

The General Workers Union said it would meet employees on Friday. Photo: Matthew Mirabelli

Carlo Gavazzi did not say when it plans to exit the country, but the GWU said it had been told there would be a phased closure "over the coming months" but that there would be no redundancies "for at least seven months".

Based in Bulebel, the company designs and manufactures electronic and electro-mechanical control components, focusing on automation.

The Swiss company first entered Malta in 1988, eventually expanding its Maltese operations in 1996.

It had faced troubles in the wake of the 2008 financial crisis, putting its employees on a four-day working week, as orders fell drastically.

A 'serious blow' to the workforce

The GWU said it is meeting with workers on Friday to communicate the situation and begin a 30-day consultation process with the company. 

"This is a serious blow to a loyal and long-serving workforce who have given decades of their lives to this company,” said GWU Secretary-General Josef Bugeja.

“Our absolute and immediate priority is the welfare of these 140 workers and their families. The GWU will use its full strength and resources throughout the consultation period to ensure every single employee’s rights are rigorously upheld and to secure the best possible outcome in this difficult situation.”

It said it would also enter discussions with the Economy Ministry and other private companies to try to give the affected employees alternative employment. 

Established in 1988 as a small assembly operation, the GWU said the Maltese workforce was "instrumental in transforming the plant into a fully-fledged R&D, product management, and manufacturing centre".

It said that in 2006, the Group itself designated the Malta plant as one of its principal production locations, "a testament to the skill and dedication of its local employees".

Meanwhile, UHM said it had met with company representatives and would be working with authorities to ensure that affected workers would find alternative employment.

UHM said it represents 70 workers at the company.

Closure caused by 'external constraints and consolidation': company

In separate statement issued later on Friday morning, Carlo Gavazzi attributed its decision to close shop in Malta to “external constraints and the need to consolidate operations across its global footprint,” pointing to rising costs and difficulties in recruiting skilled workers, among other things.

It said that although the company will be leaving the country, “it does so with deep appreciation for the decades of collaboration with the Maltese Government and the dedication of its local workforce”.

The company said it is in discussions with the government and employee representatives to “mitigate the impact on affected employees”.

Government 'deeply concerned' by closure

Reacting to the news, the economy ministry said it was “deeply concerned” about the impact of the company’s relocation on its employees.

In a statement, the ministry said it is in discussions with the company “to ensure that every affected worker receives full support”.

“This includes assistance in securing alternative employment and access to training opportunities where required,” the ministry said.

PN: Manufacturing sector is wobbling

In a statement, the Nationalist Party said the layoffs are "a clear sign of the instability that is hitting the manufacturing sector in our country." 

It accused the government of doing nothing to improve Malta's competitiveness and failing to invest in advanced technologies, which would increase the manufacturing sector's productivity.

"This is a Government that promises a lot and delivers little. It has failed to retain existing companies, let alone attract new ones, and has not created a single new sector in our economy capable of generating quality jobs," the PN said. 

The PN said, if it were in government, it would channel funds "seriously" into technological advancement, innovation and automation and make "unprecedented investment" into worker skills training. 

The statement was signed by PN MPs Joe Giglio, Ivan Castillo and Jerome Caruana Cilia.