In last week’s contribution, I focused on the gross value added by economic sector and by employee to help assess which are our country’s economic drivers. One of the sectors on which Malta has always relied on is manufacturing. We had set up an institution specifically to attract manufacturing investment to Malta and to assist local manufacturers, namely the Malta Development Corporation.

The question which arises often is whether manufacturing has a future in Malta. In my opinion, the answer to this question is an unqualified yes. However, we can no longer think of companies which employ a thousand persons, as those would rely on a low-cost operation, and there are several other countries where the cost of labour is much lower than ours. Manufacturing has to continue to evolve in Malta, as it has always evolved in the last 60 years.

In terms of gross value added, manufacturing accounts for seven per cent of the total value added in volume terms for the whole economy. In absolute terms, it stood at €932,095 million for 2022. It registered an increase of 16 per cent since 2018, again in volume terms. The importance of manufacturing needs to be seen also through the linkages it creates with other sectors of the economy, such as transportation activities.

In a recent interview with this newspaper, Finance Minister Clyde Caruana said: “We could be generating high-quality jobs and growing the economy through a modernised manufacturing industry”. Times of Malta followed that up by asking three economists for their views.

Lino Briguglio said that Malta needs to “to identify and focus on niche sectors or products that can be manufactured and sold more broadly”. Gordon Cordina argued that “other industries such as manufacturing and logistics also offer great potential to contribute to the country’s vision”.

The manufacturing sector is part of our economic heritage and we need to continue promoting it and supporting it

Their comments show that consensus can be achieved on maintaining manufacturing as one of our main economic pillars.

We also need to keep in mind the way manufacturing has reinvented itself since independence in 1964. At that time, most persons employed in manufacturing were employed in the clothing sector producing shirts. We then moved to higher value-added clothing such as jeans.

At a point in time, there was the realisation that Malta could no longer rely on manufacturing clothing and started to look for other products.

Even companies that were not producing clothes in the 1960s reinvented themselves and upgraded their product. As such, high-end production of plastic and rubber products, engineering components, pharmaceutical products and healthcare products became significant features of our manufacturing sector.

We can also add food products, which are exported in not-so-small quantities. We have also attracted industrial activities which may not qualify under a strict definition of manufacturing, such as aircraft maintenance.

The diversification of our economy has meant that today we are not as reliant on our manufacturing sector as we used to be.

However, this does not mean that manufacturing is dead; if anything, our economy is less vulnerable.

The sector has proved to be very resilient and it has been able to reinvent itself more than once. It has shown that it can apply advanced technology and make products which are market leaders in their segment. It has also produced a cadre of managers that have helped to upgrade managerial skills in our islands and which other economic sectors draw on.

The manufacturing sector is part of our economic heritage and we need to continue promoting it and supporting it.