It emerged yesterday that had the Malta Shipyards retained the productivity levels it had reached in 2004, the company would have obtained better results than projected, although it would have still been Lm5.5 million in the red.
Speaking during a press conference to announce a loss of Lm9 million, Investment, Industry and IT Minister Austin Gatt, Shipyards chairman John Cassar White and CEO Chris Bell all agreed that while something needed to be done to change the mentality of all employees at the yard, the economic base to build from was indeed present.
Mr Bell, who gave a presentation yesterday, said that between 2002 and 2005, the company managed to stem the losses and stay within budget, however, results for 2006 were “well off target”.
He explained that had the company managed to retain 2004 productivity levels, the loss would have been Lm3.5 million less than the Lm9 million loss that was actually registered in 2006. The company’s target was to hit a figure of Lm6 million loss while 2007’s target is set at a loss of Lm4.6 million.
Mr Bell said that the key issues at stake were to improve discipline, up productivity levels and also to bring about a change in mindset of the whole workforce at the yards.
He said that the company needed to ensure that the whole workforce bought into the fact that without the abovementioned issues being addressed, there would be no future.
“We need to make sure that all of the workers, managers, foremen, supervisors and ordinary workers realise this is fact,” he said.
Mr Bell said other issues needed addressing, such as the fact that time-keeping was unacceptable, supervision was not effective and that there was over-allocation of employees for the jobs being undertaken.
“Quality of work is another issue. It is key. It causes financial loss when workers complete a job, only to realise that it is not up to clients’ expectations and has to be redone,” said Mr Bell.
He said that the yard still needed to keep its complement of 1,753 workers because being based on a small island, not enough temporary workers could be mustered at short notice to complete a job if the need arose.
Mr Bell said the situation must improve radically if the yards were to reach their targets. He said that when production targets are issued, they need to be monitored and action must be taken according to progress. In addition, he said the yard needed to reduce the amount of consumables it gets through and that more controls needed to be made on sub-contracted work.
Mr Bell wrapped up his presentation by saying that there were three main failures that could arise if current trends were not arrested; a profitability crisis, a cash flow crisis that could lead to wages not being paid and legal proceedings being taken by the EU for Malta’s breach of commitment on the issue.
Chairman John Cassar White said there were also positives to be taken, perhaps the biggest one being that the yards have succeeded in shaking off their shady reputation. He also said that the yard was attracting lucrative contracts and that the market trusted Malta.
He also said that the restructuring process was completed and that the shipyard was now running in commercial fashion, rather than the previous military fashion which was a hangover from colonial times.
Mr Cassar White also mentioned the pluses of the yards’ location and the excellent facilities available. “But we must change the mindset. It is useless to attract massive contracts if we still cannot achieve profitability. We must get rid of this sense of dependency that the shipyards have on the state,” he said.
Minister Gatt said that there would be no redundancies in 2007 and that he was not trying to pin the blame on the shop floor workers. “What we are saying is that everyone must work harder to turn the situation around. There is no more money. The yards have to pick themselves up. And it can be done; we have shown the 2004 figures and if that rhythm was kept up, then we would be meeting and surpassing targets,” he said.
He also had words of praise for the General Workers’ Union for the part it played in implementing reforms. “But the real reform is not tangible. The real reform is that workers need to give 100 per cent for the whole duration of their eight-hour shift. If that does not happen then productivity will not increase. And I stress again – there is no more money and there are no more subsidies beyond 2008,” he said.
Dr Gatt said the government and the management would not give up. “As we have said, the base is there. If 2004 levels were maintained, we could have almost broken even. We will not give up and we will keep on trying,” he said.
Asked about performance incentives, Mr Bell said that in the past, the company spread out all pay incentives across the board so as to incentivise production. “What we now need to do is make sure that only those who do deserve a share of the bonus get it, and not those who do not,” he said.
He maintained that there can be a future at the shipyards because the company made Lm25 million turnover last year with a loss of Lm8 million, whereas in the past, turnover was only Lm8 million while losses stood at Lm25 million.