Government in denial, General Workers’ Union still in the dark
David Darmanin
While Finance Minister’s Tonio Fenech denied being informed of any downsizing plans for STMicroelectronics’ plant in Kirkop, the company’s chief financial officer Carlo Ferro this week informed shareholders that in a bid to recover some US$700 million in losses incurred last year, the conglomerate will be resizing its total headcount.
It was later confirmed that the company aims to trim an estimated 1,300 jobs across Morocco and Malta.
But as representatives of ST’s 2,200-strong workforce, the General Workers’ Union (GWU) has not yet been clearly informed of what these plans entail. Speaking to MaltaToday, the union’s section secretary for technology and electronics Andrew Mizzi said there is nothing but “a lot of talk” at the moment.
“Government is now saying we should meet to discuss around the table, but I honestly think it is too late now,” he said.
After a MaltaToday report last week revealed talks between ST bosses and the Prime Minister with regard to possible downsizing or closure of ST’s plant in Kirkop, the GWU sent a letter to the Prime Minister and company officials in a bid to hold an urgent meeting.
“We are meeting the workers’ committee tomorrow,” Mizzi confirmed. “The meeting with ST top officials is set for Wednesday and we’re meeting the Finance Minister on Thursday. In the meantime, I am in contact with representatives of the European Workers’ Council, with whom we will be taking up this issue at a meeting in Paris, scheduled on 10 February. It is then when we will know exact figures.”
Clearly worried about the implications, Mizzi said that either way this story goes “there will be a downward spiral.”
“You can imagine... the company has so far neither confirmed nor denied with us its plans to downsize,” he said.
ST cuts shifts on production line
The last time the General Workers’ Union met STMicroelectronics officials was last Tuesday week, when the Union was informed that the company decided to cut shifts on one of its production lines.
“They told us that because of lack of work, they had decided to cut down shifts on one of its production lines,” Mizzi said. “Whereas this particular line operated from Monday to Saturday on four shifts per employee, this has now been reduced to Monday to Friday on a three-shift week,” he said, while confirming that ST failed to mention its talks with the Prime Minister on downsizing or closure of the plant.
However, ST has been in contact with the General Workers’ Union since November in order to discuss the impact the technological downturn may have on the operation of its Kirkop plant.
“They spoke to us about problems they are facing because lack of work, but officially, we were never informed about it risking closure or mass redundancies,” he said, while qualifying that: “the union was never officially informed, but obviously, things are different verbally. When talking, everyone has different opinions.”
Mizzi said that if ST were to close, “the repercussions would be devastating. ST is responsible for 50 per cent of Malta’s exports. Besides, we are also concerned about all the other local industries relying on ST’s business. We have calculated that its closure in Malta could affect 5,000 jobs locally.”
Government mum
With a workforce of 2,200, STMicroelectronics is Malta’s largest private employer. The conglomerate already receives a series of government incentives in order to keep its operation in Malta competitive.
Without going into specifics, a Finance Ministry official told sister paper Business Today last Wednesday that STMicroelectronics receives “investment aid in the form of Investment Tax Credits, Training Assistance and Soft Loans.”
Whenever applicable, ST could also benefit from “loan guarantees and interest rate subsidies on loans taken to finance capital expenditure; trade promotions and de minimis aid of up to €200,000 over a three year period,” among others.
But when asked about ST’s contribution to the local GDP, its export figures and on how much the company contributed to government coffers over the last years, the ministry official side-stepped our questions, discounting the information as “confidential”.
Both the office of the Prime Minister as well as STMicroelectronics itself ignored all questions sent by both MaltaToday and Business Today about the matter.
Attempts have been made to contact the international press office of the company, but to no avail.
Economists react to threat
Meanwhile, veteran economist Karm Farrugia described the possible closure of ST in Malta as “worse than the Shipyards saga”, and insisted that “all the economy will suffer. ST is too big to be sectionalised.”
Senior economist and Labour EP candidate Edward Scicluna said that “for every job lost at ST, it is estimated we lose the equivalent of a job and a half in other sectors elsewhere in Malta”.
On his part, economist Lawrence Zammit said that ST Microelectronics, being a significant manufacturing player in country, relied on “a range of services that support any exporting manufacturing firm, such as transport services. Such services will be those most affected,” he said.
Prime Minister disappoints Joe Grima
Carrying a series of reports in its special edition on STMicroelectronics and the technological downturn, Business Today last Wednesday interviewed former Industry Minister Joe Grima, who inaugurated the Kirkop plant in 1982 after former Prime Minister Dom Mintoff had clinched a deal with ST, at the time known as SGS-Ates.
In the interview, Grima said he was not happy with the way government is dealing with the threat of ST, along with that of other manufacturing firms, to discontinue their operations in Malta.
“European governments are incentivising industries in some way or other – there were some who removed VAT, while others removed other burdens, such as placing moratoria on bank payment by industry,” Grima said.
“On the other hand, our government placed new burdens on industry at a time when the industry can afford them the least.
“ST might be the first, and there may be others who have already spoken to the Prime Minister and told him they were closing down or going on a four-day week.”
Describing the problem as “government-induced”, Grima said this is not a good time to be facing such issues.
“On the other hand, government seems calm, and does not look so much concerned,” he commented. “We have a Prime Minister who said that he has been negotiating with ST for the past two years. I admire the patience of ST for stretching the negotiations so long. Others would have just shut down and moved elsewhere.
“It looks like the Prime Minister is happy because the Germans are eyeing Malta for investment. At the end, he has to keep a balance between the number of workers that are being fired and those that are being re-employed.
“As an observer, I am not happy with the situation. It is true that Malta’s banking system is sound, but I am not convinced that if the world’s banking system is collapsing, we will not collapse alongside them.”
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