Dockyard reform is not achieving its targets - Vella

Opposition deputy leader George Vella said yesterday that the government was failing to achieve its targets in the restructuring of Malta Drydocks, with almost 700 workers having left the 'yards last year when some 2,000 were considered as being surplus by MIMCOL.

He said the opposition would continue to support the restructuring of the shipyards. State subsidies should be provided only as justified and the sooner they were whittled down, the better, but the opposition disagreed with capping subsidies up to 2008, as the government was doing.

Dr Vella was speaking during a previously unannounced debate on the shipyards in parliament yesterday morning.

Early in his speech he denied there were "political agents" at Malta Drydocks, as Finance Minister John Dalli had said.

The Labour Party, he said, had always acknowledged the importance of the shipyards and their multiplier effect on the economy and it had every confidence in the capabilities of the workers.

The resources at the 'yards, he said, should be used for practical skill training as the country was seriously lacking in many such skills.

Clearly, modernisation and change were required at the shipyards, but the human and social element could not be forgotten.

The MLP agreed with justified subsidies for the shipyards. The earlier there was no longer a need for such subsidies, the better, but the opposition disagreed with capping the subsidies up to 2008, as the government was doing.

Dr Vella recalled how the Labour government had commissioned the Appledore report to propose change to the shipyards and set up a commission headed by former Prime Minister Karmenu Mifsud Bonnici to start implementing the recommendations of that report.

There was a certain resistance from workers and a need was felt for a partnership between the government and unions.

Dr Vella observed that government speakers in the debate had mentioned the need for better utilisation of the dockyard workers, but why was this not being done already?

He agreed with Dr Gonzi that the workers should be encouraged to continue giving, their best as only this could guarantee the 'yard's viability. No one was saying there was an easy solution or that what the government was doing should be resisted, Dr Vella said. But the MLP feared that the way the government was implementing its programme would lead to the shipyards' closure rather than restructuring.

In 2001, Economic Services Minister Josef Bonnici had proposed a three-year plan which was eventually scrapped because it set targets which were not feasible, as the opposition had said at the time.

Dr Vella referred to a MIMCOL (the government holding company) report on "human resources perspective" saying that the opposition could not accept the forceful dismissal of workers.

In this report, the company had calculated that there was a surplus of 1,900 workers at the shipyards, of whom 1,509 were industrial. The government had estimated that the proposed retirement and resignation schemes should lead to the retirement of 1,510 workers.

The report, which was drawn up in October, Dr Vella said, had laid down that 1,600 workers should be retained, of whom 170 would be senior staff and 1,430 would be productive employees. The report planned the dismissal of 600 workers in the first year, 560 in the second and 365 in the third.

But a December 3 report said that the government had accepted to finance the whole project in one year rather than in three. This report also said that the process would be completely carried out in the first year and that these changes would affect the 'yard's profit and loss accounts.

Yet, Dr Vella said, only 661 dockyard and 129 shipbuilding employees had now applied to take up the schemes and 667 were accepted. A total of 67 were refused and a number were still being considered.

This number was, therefore, far below projections. Furthermore, it did not represent any of the surplus of senior staff.

The minister, Dr Vella said, had said that with such measures, the 'yard would become viable within seven years. The projections were of a net profit of Lm250,000 and it was targeted that the turnover would go up to Lm25.5 million.

The current cost of an hour's work at the 'yard was Lm7.50. This was projected to go up to Lm11.70 within seven years.

Dr Vella said the European Union had a series of reports on the ship repair industry and one thing which had always worried the EU was the lack of competitiveness of European 'yards when compared to the prices offered by 'yards in Korea, China and Japan. It had called for the dismantling of subsidies but it was now rethinking the subsidies as its 'yards were still not competitive.

The government's report, Dr Vella said, also said that productivity should increase from 35 to 65 per cent. But no workers' retraining schemes were in place and no new investment in machinery had been announced. So how were competitiveness and modernisation to come about? Workers, Dr Vella said, could not become more efficient just like that.

He feared that the people who had taken up the early retirement or voluntary dismissal schemes were the best the dockyard had, and only the applications of a few were refused. Those who had left did so because they could easily find jobs as there was demand for their skills.

Dr Vella said that while commercial marketing was required, one could also convey the political message to certain countries. One should not be ashamed of asking other countries to send their ships for repair to Malta.

The Nationalist government, Dr Vella said, had chipped at the Constitution when it brought the US Navy vessel La Salle to the dockyard.

In the La Salle issue, the MLP had been very prudent because it saw the interests of workers and the country. But had the MLP been in government, he was sure the Nationalist Party would not have acted in the same manner.

Dr Vella said that he was informed that a certain imbalance was already being felt in the current workforce of the dockyard, and outside workers were being used for ship staging.

On a point of order, Dr Gonzi said this was not the case and manpower projections were being followed. He explained that there were staging teams at Malta Shipbuilding and Malta Drydocks, and it was felt one team for the two was adequate.

Ideally, the workers would be multi-skilled and work at both 'yards as necessary.

Continuing, Dr Vella said the opposition agreed with flexibility and hoped that the situation was as Dr Gonzi had said.

What were the government's plans and objectives now that the schemes had closed? How was productivity to be increased? Had the voluntary retirement schemes been worthwhile? The government had already forked out at least Lm5.5 million on the schemes.

In its report the task force had said that if its aims were not reached, one had to consider a reduced working week and possibly forced dismissals at the shipyards. What did the future hold for the workers still at the 'yards?

The government had told Brussels that it was spending Lm80 to Lm90 million on the restructuring of the 'yards in seven years. The government should say how it intended spending this money, on what, and from where it was coming from. It should say in which sectors this money would be employed and how much of it was to be used for training.

If targets were not reached, was the government bound to close the 'yards? The opposition, Dr Vella said, did not agree that because of foreign exigencies, the 'yards should face closure.

The government should explain how in a document sent to the EU it had already said it would close the shipbuilding section.

Dr Gonzi said the next steps of the restructuring process could only be considered now that the schemes had been wound down. The task force had now proposed training and multi-skilling schemes.

The task force study had analysed the current and expected future international market situation regarding the building and repair of ships. Its conclusion was that most 'yards now specialised in one area and Malta could, for example, concentrate its expertise on the building of hulls and subcontract other jobs to other 'yards. The shipbuilding sector would not be closed, but merged with ship repair.

Dr Vella said the workers were concerned because they did not know what was to become of them.

He agreed with flexibility but there was a lot of heavy industrial work in the country which could be easily done by the shipyards. The first thing the government should do was show respect to the dockyard workers and their capabilities.

Concluding, Dr Vella said the government should not bind itself to close the'yard down after a certain deadline because that would be a disaster for the country.

Prime Minister Eddie Fenech Adami said that the results achieved so far in the restructuring of the shipyards were satisfactory for the people and the government.

The message that was clear in the statement by Social Policy Minister Lawrence Gonzi was that the shipyards could become viable even though there had been many who did not think this was possible. The exercise for the shipyards sector to become viable within seven years was clearly realistic.

Dr Fenech Adami said that in the past, the 'yard used to employ casual workers when these were required but they would then be taken on permanently if they stayed on for more than six months.

At the end of 1987 there had been 6,693 workers at the 'yards and that was gradually brought down to 3,550 before the schemes were launched. This was clear proof that there had massive overmanning at the 'yards.

A fundamental mistake before the 1987 election was that the number of shipbuilding workers had been increased by 1,800.

It was the duty of every government to make 'yards viable. The shipyards were important for Malta as an island in the middle of the Mediterranean.

It was not fair of Dr Vella to doubt the government's aims and to think that it wanted to close down the 'yards.

Indeed the government was committed to their survival and viability.

The government had given so much importance to the task force's work that this was an item on the agenda for every Cabinet meeting.

That 700 workers had left the shipyards was very satisfactory for the task force. What the task force had said was that the workforce should be reduced in the shortest possible time but the target for first year was of 600.

For the 'yard to become viable, a workforce of 1,600 to 1,700 workforce was required. There were now less than 3,000 workers, which was still far more than the eventual target. However, everyone should realise that it would not have been practical to get to the target figure immediately.

The government did not want to dismiss anyone and indeed the situation was now reversed, with workers having protested because they were not allowed to leave the 'yards.

This exercise so far, the prime minister said, had filled everyone with courage. It was showing that the 'yards could be made viable and the seven-year target was there because the government believed that within that time the 'yards would become viable.

He observed that Dr Vella had asked if the retirement schemes had been worthwhile as the government had already handed out some Lm5.4 million as compensation. Dr Fenech Adami said that these workers' wages, including overtime and other allowances, would have cost Lm5.1 million a year. Thus the government's outlay would be recovered through savings in practically one year.

The restructuring process, the prime minister said, was only being undertaken with one aim in mind - the national interest and the interest of 'yard workers. Nothing more. The EU factor had nothing to do with the exercise and this could be seen from the debate. This did not mean that in the future one would not look into the advantages and disadvantages for the 'yard in the EU. But negotiations on this chapter had not yet been concluded and there was much more space for further discussions. The government was committed to get all it could for the 'yards in its negotiations.

Dr Fenech Adami also referred to the La Salle contract and said this had not been a US project aimed at helping the Maltese 'yard. The Maltese 'yard had competed for it along with others and won that contract.

The results achieved by Malta Drydocks last year stemmed from the fact that it was becoming credible. There were other things which had to be done, including the restructuring of management.

He said that workers had shown that with good management they were able to deliver well and on time.

The minister in his statement had said that joint ventures had been suggested with foreign companies on several areas of activity. The government also had to see how to get more work for the 'yard. It was true that 'yards could go in for steel work and the government was not saying that the 'yard could not be given local work.

But it had to be competitive because the time for political contracts was past.

The key to success was that everybody should pull at the same rope. This, the prime minister said, was a government exercise in the national interest.