The ongoing events regarding STMicro need some background to be fully appreciated and contextualised.
Back therefore to 1996 (still under a PN administration) when the Federation of Industry commissioned a study by Ramboll & Hanneman (thereafter referred to as the Ramboll Report), which, inter alia, suggested capping what was then known as SGS-Thomson.
This elicited a rather reduced number of comments, the country then being on the eve of an election.
Accordingly, the first official reaction came from new Prime Minister Alfred Sant, who, in a meeting with the FOI council at Castile on 7 January 1997, expressed open disagreement with the Ramboll suggestion of capping SGS, though he agreed SGS was “growing too fast”.
Today, 12 years later, and again in the middle of a recession and another restructuring exercise by ST, which will lead to the shedding of 450 jobs this year, one can perhaps better appreciate the policy decisions taken or not taken in those far-off years.
Dr Sant seems to have been involved in the siting of ST in Malta through Romano Prodi and IRI, years before. Or perhaps his closeness to industry and MDC gave him a certain perspective on things. After all, these 12 years have seen ST contributing mightily to Malta’s industrial export effort, as well ensuring the livelihood of the 1600 plus people they employed, and who’s to argue with that?
Still, it is time now to revisit the Ramboll’s conclusions and take a long look at them once again. As Professor Josef Bonnici had written in an article in The Times of August 1998, when again the country was on the eve of an election, the government’s use of aggregate figures was misleading since, for example, the January to March 1998 figures showed Malta’s overall exports to have increased by 11 per cent or Lm16.4 million. But when analysed, the figures given by ST showed that this company’s exports had shot up by 24.5 per cent or Lm17.1 million, and it resulted that the rest of the country’s export industry had decreased by 0.5 per cent, apart from the four per cent domestic inflation rate.
It was the former Governor of the Central Bank, Francis Vassallo, who suggested that rather than issue aggregate figures, the government would do well to issue two sets of figures, one for the ST and one for the rest of the industry. For ST, by reason of its nature and also by reason of the way GDP figures are worked out, has a huge impact on Malta’s economic figures, in good times and in bad.
As in most other things, then and now, the Ramboll Report issue was immediately politicised, turned into for and against ST, so that the wide perception may well have been that those for capping ST were “against” ST, and those who wanted to give ST as much head as it could were “for” it.
Nothing, however, could be further from the much-maligned Ramboll Report. Essentially, but this point was missed by most commentators, what the report said, or tried to say, was that Malta’s economic future was all a question of balance. Malta cannot just depend on one sector, be that ST or tourism. And that balance must also be reflected even within the industry sectors themselves.
Since then, since the Ramboll Report, much water has passed under the bridges of the country. Politically, the country has joined the EU, economically the country has joined the euro zone, and the country’s GDP per person has grown and expanded, new industries have been attracted to Malta, and the manufacturing base has continued to decrease as higher wages made Malta too costly for many manufacturing concerns, forcing some to relocate elsewhere and others to move to higher value-added production.
ST, meanwhile, has continued to be one of the world’s best semi-conductor companies, although one would have wished the Malta facility to have gone more for R&D and less for assembly-line, to have spawned more, as was promised in some newspaper articles at the time, satellite industries or outsourced functions.
As it is, with SmartCity Malta coming on stream in the coming months, there is still talk of difficulty to find the right skills mix. Perhaps some or most of the 450 being made redundant could be attracted to retraining to make them eligible for employment in the satellite industries being promised by the SmartCity concept.
It is also clear that the Sant administration did not understand the main thrust of the Ramboll Report and its insistence on balance. This is clear with its repeated insistence on renovating the industrial sector where it soon faced problems with that part of industry, which was the dockyard, tackling the country’s financial problems and inflation.
The next administrations, by design or by default, based their policies more on balance than the Sant administration. It is as a result of this that today our eggs are not in one or two baskets any more, that we have gained sectors previously unknown, and that even an outcome as that, largely foreseen, which is happening with regard to ST, due both to the world recession but also due to the particular nature of the ST facility in Malta, there is no cataclysmic effect (except in the front pages of alarmist papers).
Even so, we must not rest on our laurels. Allow us, for once, to conclude with the words that the present writer penned, as far back as August 1996, in the concluding paragraph of The Malta Business Weekly: “The (Ramboll Report) is very right when it insists on more training being given in schools, better insistence on technical training for males and females, a better type of welcome and facilitation of start-ups. EU accession is no substitute for hard work.” That was valid 12 years ago and is even more valid today. Not enough has been done in the past years and, as said recently, the fact that our competitiveness has decreased should make us all worry and work harder. The international recession is the right time to restructure our priorities.