Published on the Business Today, issue Wednesday, 07 April 2010
It was 1967 when I joined the Drydocks as a commercial apprentice. It was a time when openings for employment were limited; either you worked as a clerk or trained as a teacher. But with no ‘A’ levels I needed to help myself and upgrade my educational status so as a commercial apprentice I opted to study for a five year degree level course in accountancy. On qualifying at the age of 22 I was admitted as a member of the Certified Chartered accountants in UK. Thus for me the unique opportunity given by Drydocks was a Godsend. It was exciting since for a year I was exposed to the commercial aspects of a large national entity run by foreign consultants.
These consultants had the foresight to strengthen the apprentice schemes and build up three tiers of training such as journeyman, technician and management levels. Qualified instructors were on the payroll to give the necessary on the job training for young apprentices on a structured five year scheme. Technicians and management level apprentices were seconded to technical institutes and sat for examinations in City and Guilds diploma courses. The standards were high for those pioneering days and the training was fully funded by the entity headed by a management team under the guidance of Mr Adams .During my short term as a commercial apprentice I had my ACCA tuition paid and was sent with five others to study at the Msida Polytechnic .
The yard was then managed by Swan Hunter after Baileys the previous managers had experienced acute financial problems at home. The state-owned Malta Drydocks and Malta Shipbuilding (now Malta Shipyards ) was then one of the largest employer particularly catering for skilled employees hailing from the working classes in the South and inner harbour area. As a background we can safely state that the ‘yard was always the undisputed cradle of industrialisation in Malta, employing at its peak almost 13,000 workers. Originally conceived as a Colonial ship repair yard, the shipyards in Malta turned commercial following a decision taken by the British colonial government in 1959.
The HM Naval Dockyard was a naval yard designed for quality work at a relatively leisurely pace, during peace-time. It is no secret to reveal that the workforce was privileged to feel that money was no problem as the Colonial warlord had deep pockets. Unfortunately the party was soon over when the British Government started withdrawing her forces and Malta faced the prospect of a serious unemployment problem. In 1968 the shipyard was nationalised. It is sad to recall that in 1967 with the closure of Suez Canal following the Six Day War of 1967 fewer tankers was sailing through the Mediterranean. In 1975 the management was transferred under a new experiment termed ‘workers participation’ that is to run a management council elected directly by the workers. Going back in memory lane one recalls how a large concentration of workers in one location led to early fomenting of socialist ideas. In 1943, it was Mr Miller a Dockyard employee who, together with colleagues, founded the General Workers’ Union. Again the Labour party then led by a young firebrand Mr Mintoff enjoyed massive support from workers then feeling threatened by layoffs when the Admiralty started moving out. The Union and the Party had common members as well as a shared fundamental scope, so cohesion between the two was inevitable.
With the election of the Mintoff Labour government in 1971, he fired Swan Hunter. Prime Minister Mintoff told dockworkers “You are not going to fool around. This is not a government in a mood to fool around.” Pull up your socks or else you will be sent home. Excessive overtime and other malpractices were curtailed, a two shift system was introduced to improve vessels’ turnaround and skilled workers retrained to achieve versatility. It was tough on the employees who for years had it so easy going under the colonial rule.
Drydocks registered its first ever positive result in 1974 and continued so up to 1981. The same cannot be said of the Malta yards after 1982, which started to lose money even though the level of work was adequate. The local experiment to empower the workers to participate at management levels failed to achieve viability. Attempts to cut losses failed even though workers consented to work overtime on a time off in lieu basis and management agreed to a 15% pay cut. In 1987, there has been a change in government when the conservatives led by Eddie Fenech Adami were elected who ushered in new consultants Blohm & Voss the German shipyards owners to advise on the future of the shipyard. During this period there was an escalation of political militarism when workers were encouraged to strike and even escalated political violence which occurred during the transition from a Socialist regime to the new Conservative government.
Over the past decades thanks to PN administration massive loans and state aid were pumped into the enterprise to jack up its losses. Studies revealed that it suffered from a combination of poor management and outdated work practices. Management had responsibility without authority whereas the council and the unions had authority without responsibility. Workers were led to believe their jobs were Teflon-coated. In short shipyards were too important to fail and that one way or other the wages will be funded if not from normal operations, then from taxpayers loans or subsidies. The last reform in 2006 saw the workforce dwindle to 1,726 workers. In this scenario, the PN government laid on attractive early retirement schemes and workers who refused the scheme were transferred to work in Government departments. The accounts for 2006 carried a sour note showing losses of euro 20 million (Lm8.7 million).
The truth is that while every effort was made by management to improve the viability of the enterprise, this was still far short of the projected productivity agreed in the seven year plan. One columnist even recommended the writing off of €700 million (Lm300 million) in financial assistance poured in its coffers mainly financed out of loans from local banks. The advent of joining the E.U in 2004 brought with it the end to further subsidies as these are considered as state aid. There was only one way out that is to trim the workforce by offering generous terminal benefits to workers in an effort to further reduce the payroll. The decision to privatise the entire operation was not long in coming.
Was this the only solution to end the cash haemorrhage that accounted to over one billion euro reaching almost twenty five per cent of our national debt? In retrospect is it worth asking who is to blame for this unprecedented national tragedy. Can it be blamed on both political parties who used the yard workers as pawns for their political ploys? Are the militant workers within the Union the cause of this failure and have we learned the lesson not to repeat the same tactics with the new privatised yards? The truth may never be told in our lifetime.
It is expedient to place the fault with the militant workers whose low production instilled the tradition of anything goes. The feeling spearheaded by former Dockyard chairman Sammy Meilaq, the GWU’s metal and construction section president was that nothing can touch us so long as we are cohesive and supported by the Union.
Now that the yards have been privatized the new Italian owner Palumbo wants to start fresh and is spending ninety million euro to acquire the shipyards. So to conclude is this a tragic end to the ultimate stage of redemption of a shipyard which saw it origins in the Knights of Malta. Last week it closed its doors for the ultimate employee to be sent home. Taxpayers under siege from higher fuel surcharge and food costs conclude that no tears need be shed to mark the closure of the Drydocks saga . Others point out that we still continue to feather bed workers in the public sector whose record of productivity is not exemplary. Shall we start the redemption of the public service now ? Upon reflection, try asking the Irish and Greek governments for direction.
George Mangion Partner at PKF – an audit and business advisory firm gmm@pkfmalta.com