The ST Microelectronics bungle

I have consistently and openly praised the present administration’s sensible and well directed assistance to manufacturing companies that are viable in the long run whilst pruning the dead wood like the dockyard.

The latest such case was the recent announcement that ST Microelectronics (STM) was to invest in a new production line while government was going to subsidise its retraining programme for workers to be able to switch from their present job to the new line. In this case no mention of further employment was made – a sign that this time government intervention was needed to save the actual employment level of STM, Malta’s largest private employer and largest exporter of value-added goods in terms of value.

The announcement was made during a visit that the Prime Minister made to the factory on June 29 when STM unveiled new state-of-the-art equipment just installed at its plant in Kirkop and announced further investment on a new line of products that will place it among the global leaders in microchip technology. Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech had earlier concluded months of talks on government assistance for the new investment with ST President and CEO Carlo Bozotti and Chief Operations Officer Alain Dutheil. The move was interpreted as one aimed at consolidating the company's presence in Malta after last year’s fears about the company's future, when some downsizing was made.

Just a week after that announcement – on July 8 – workers at STMicroelectronics rejected the package of austerity measures proposed by the company in a secret postal ballot organised by the General Workers' Union.

From the 925 registered union members at the company – out of a complement of some 1,400 employees – only 542 cast their vote with 505 workers voting against the austerity package. The package was meant to save the company some €600,000 annually and included a two-year wage freeze while new employees would be starting work on the minimum wage. This was not just a case of turkeys voting against Christmas: it seems that the government completely mistimed the Prime Minister’s visit and the announced agreement might have given the impression that STM’s future in Malta was assured, giving the workers an incentive to vote against the austerity package.

It was only after the result of the vote was announced that government ‘explained’ that STM’s diversification plans were conditional to the austerity measures! In other words the government’s timing made a fine mess of all the efforts that it had made to come into an agreement with the company! Now we are told that the GWU intends to repeat the ‘Irish referendum trick’, i.e. to make some changes in the agreed package and subject it to a new referendum while the implications of a negative vote are being made much clearer by both government and the company!

While one sympathises with the GWU that decided to subject the austerity package that it negotiated to a vote among its members, I think the situation called for a more mature way of doing things, with both government and the GWU working together to ensure the present level of employment at the company’s plant. Instead we are having a useless war of words that will not help anyone at all.

In today’s globalised economy, I am sure that it would be a mistake if government and the STM employees were to ignore the possibility of STM moving out of Malta to Asia where cheap labour is easily available and where the work ethic is unacceptable by our standards. In the same period when the STM ‘comedy of errors’ was being played in Malta, the business supplement of ‘The Daily Telegraph’ (July 3) reported that ‘As many as 100,000 students at a vocational school in the central Chinese province of Henan have been ‘ordered’ to work for Foxconn, the giant electronics manufacturer that has been plagued by a wave of suicides.’ The suicides occurred in a scenario where workers were complaining of long hours, strict rules and loneliness. While we in Malta can never condone this sort of work ethic, the harsh truth is that we have to find specialised niches to retain STM in Malta – something that is always becoming more and more difficult. Mistiming announcements on new investment and unnecessary squabbles are surely not what the doctor ordered!