The first six months of the year have been characterised by improved confidence and expectations amongst Malta’s manufacturers, order books, although slightly improved, having remained below normal levels and increased price pressures, The Malta Federation of Industry (FOI) has found in its perception survey of the fist half of the year.
And although manufacturers’ confidence had risen in June to the highest levels since June 2005, Malta’s industrial sector still faces a number of hurdles limiting its competitiveness.
Speaking at the announcement of the survey’s results yesterday, FOI president Adrian Bajada commented, “When comparing what is happening in Malta with the state of affairs across the EU’s 25 member states, one sees that the Maltese situation is not unique.
The difference is that, being an island, Malta’s import and export activities are very important, which means we need to prevent stoppages at the ports and ensure lower prices. Industry’s bottom lines are also being impacted and left vulnerable by energy prices.”
The clustering and merging of small and medium size enterprises, which he said would undoubtedly require something of a culture change to gain widespread appeal, should also be considered if Maltese manufacturing concerns are to safeguard their future, Mr Bajada added.
The FOI, he explains, has been advocating the practice for years.
“Clustering and mergers create new opportunities for manufacturers and this should be one of our strengths as a small nation,” he explained, pointing to the economic success witnessed by northern Italy as one example of the benefits of the practice.
On the formulation of a much-needed Industrial Policy for Malta, Mr Bajada confirmed the strategy is currently in a draft version but stressed that the document, once finalised, should not be left on the shelf and that the FOI would expect that the policy’s contents would be put into action.
The draft policy deals with ports, where the FOI has for years been an advocate for change and the revamping of costly, inefficient practices and Mr Bajada expressed regret that since the management of Malta’s ports was put in new hands, prices have, in fact, risen – bad news for manufacturing concerns that depend on imports and exports alike.
Turning to the survey’s results, the FOI found that the performance of the manufacturing sector has improved considerably over the long-term average registered since this particular survey, which questions manufacturing concerns on a monthly basis, began in May 2004.
Manufacturing confidence had strengthened over the year’s first four months, dropped in May, and rebounded to its highest levels since June 2005.
The marked improvement in confidence is the result of a more positive assessment of order book levels, with a strong majority of firms expecting larger production volumes over the short term.
Stocks of finished products, meanwhile, have over the first six months of the year been consistently over and above the survey’s historical levels and although manufacturers have expressed optimism about short term employment prospects, their expectations for the selling price of their goods has remained, at best, flat, due to increasing competitive pressures.
Amongst the sectors reporting an improved outlook are food, beverages and tobacco; publishing, printing and reproduction of recorded material; chemicals; rubber and plastic products; and radio, television and communications equipment.
Sectors seen as struggling – in that they reported negative situations over each of the last six months - included wearing apparel; pulp, paper and paper products; and metal products with the exception of machinery and equipment.
Deteriorating sectors – in that their short-term prospects were not very positive – were listed as textiles; wood and wooden products; and medical, precision and optical instruments.
The surveys results are also passed on the European Union, as the survey falls under the Joint Harmonised Programme of EU Business and Consumer Surveys.