It is ironic that after embarking on some major ship conversion projects, our shipyards are now facing the prospects of themselves converting their business model to hopefully become financially and economically viable. The Labour Party through our leader Dr Joseph Muscat has spelled out three critical success factors that need to be built into the privatisation process, if this is to be termed a success.

The first prerequisite for success is a clear commitment to the maritime industry in Malta. The shipyards occupy prime sites in the harbour areas and the value of the real estate being used at present by the two shipyards is incalculable. There will no doubt be some who will want to take the easy and short-term option of using the land occupied by the shipyards for real estate development. This will no doubt bring in several million euros just for the sale or long lease of the land for development.

We are glad that the government has categorically excluded this option. We will be equally vigilant that this promise is honoured at every stage during, and after, the privatisation process. If our maritime industry is to take off, we must ensure that our shipyards industry indeed becomes a major contributor to our economic growth. The skills base that exists in the yard is unique and this, combined with good management practices, further capital investment and an excellent strategic location, should guarantee a successful operation.

The present plant and machinery in our shipyards are no longer adequate to cater for the industrial needs of a major heavy engineering business. Years of benign neglect, indifference, and lack of belief in the potential of our shipyards, have left us with an industry that needs major investment if it is to take off in earnest after many decades of poor results. It is up to the government as the main shareholder of the shipyards to ensure that whoever takes on the shipyards enters into a clear and unequivocal commitment to upgrade its infrastructure.

The present replacement value of the facilities being privatised is enormous, but the shipyards industry today is a capital-intensive industry. The new entrepreneur who will eventually be offered these facilities has to show that he is here for the long haul by investing money in the long-term viability of our shipyards industry. The government would need to pass this test too if it is to claim that the privatisation of our shipyards has been successful.

The final critical success factor that needs to be built into the privatisation process relates to the assurance that no asset stripping will be allowed as a result of this process. It would hardly be an economic success if the end result is that the more attractive parts of the shipyards business pass on to private management, while the government is left with what is currently not functioning well.

The Labour Party leader’s comment that it would be far more desirable that all the present functions of the local shipyards are upgraded ideally in one common business structure, makes good commercial sense. It is for this reason that it would have been much more sensible had the early retirement schemes been postponed to the phase following the selection of the new shipyards’ operator.

There is still time for this weakness in the government’s plan to be rectified. It is not enough to claim that one of the criteria of selection will be the employment level to which the new operator will commit himself. Moreover, the present workforce needs to know under what conditions they would be employed

by the new operator before they decide on whether to continue working in the yards or take early retirement. They would also like to know what guarantees the new employer will commit himself to, in order to ensure good employment prospects for workers who opt to be engaged.

The Labour Party will continue to make constructive suggestions to ensure that our shipyards industry is rebuilt on an even keel. We are passionately committed to making Malta a centre of excellence for maritime business, and a healthy shipyard industry is at the core of this project. We hope that our contribution to the privatisation of the shipyards will help the government to achieve the three critical success factors that are indispensable for the healthy future of this important industry.

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