ST downsize not a threat to local economy – Tonio Fenech
Ten days after a shocking MaltaToday report revealing STMicroelectronics’ secret talks with the Prime Minister on its intention to downsize, Finance Minister Tonio Fenech told Business Today that the issue should not be blown out of proportion.
“Government is holding meetings with STMicroelectronics over what has been announced,” Fenech said. “From the local company, we do not have clear indications on how they intend to carry out the downsizing. We do not know whether the 1,300 employees that have been mentioned will be laid off over a period of time or immediately, so we are seeking information from the corporate office abroad. The issue with ST is very unclear yet for government. We were not advised before it was taken. We need to sit down to see if there is anything that can be done, and if we can do it, it will be done.”
Clearly irked by the way blame is being laid on government’s apparent passiveness over the issue, Fenech said: “I cannot change ST’s decision because we did not lead them to the downsize, the global recession did. I cannot possibly create an investment programme to stimulate their demand.”
Challenged on whether he intends offering a financial package in an attempt to make the firm stay in Malta until the global recession ends, Fenech said: “We are in discussion with ST to reduce the impact in any way possible, but in reality there is no stimulus package I can offer – world demand must offer the stimulus.”
In stark contrast to the sentiment shown by factions of the business community, Fenech reassured that there is not much to worry about with regard to the downturn in local manufacturing and export. He seems adamant in his belief that local economy can sustain the impact of the global recession without the offer of a financial aid plan to overcome the prospective crisis.
“There is no crisis,” he insisted. “Not all manufacturing is passing through turmoil, and our country cannot afford a blanket measure. I don’t think I should alarm the economy. The only thing that changed so far was ST. It comprises 2,000 employees in a 160,000 workforce. ST has already reduced its employees by 600 over the last years and the economy absorbed it. Government will not go into panic mode, and I have no intention of putting the country in panic mode either. There is a lot of expectation but we know what the issues are: tourism and manufacturing, and I can only create demand for tourism so we invested. When it comes to manufacturing, we are meeting closely with factories and meeting some of them personally. We need to ensure that we are on the ball and try to support companies with viable options.”
While the initial MaltaToday report itself provoked ST employees, unions, employer organisations, economists and the general public to ask for a political reaction to what may be devastating to the local economy, the Office of the Prime Minister ignored our questions on the matter.
Very shortly after the MaltaToday article appeared, other media houses followed the news, but still, no political reaction was announced.
Last Wednesday, in a special Business Today edition dedicated to the issue, it was revealed that while the General Workers’ Union was left in the dark over the meetings between the firm and the Prime Minister, ST had already cut shifts from one of its production lines. In the same issue, we published the reactions of Malta’s leading economists, along with an admission from former Industry Minister Joe Grima about his unhappiness with the way government is dealing with the global economic downturn.
The same week saw Finance Minister Tonio Fenech’s denial of being informed of any downsizing plans for STMicroelectronics’ plant in Kirkop.
Before the end of the week, the company’s chief financial officer Carlo Ferro 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.
Speaking to MaltaToday last Sunday, the union’s section secretary for technology and electronics Andrew Mizzi said there was nothing but “a lot of talk”.
“Government is now saying we should meet to discuss around the table, but I honestly think it is too late now,” he said.
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.
Meanwhile, employer organisations and unions have also publicly acknowledged the threat presented to the economy if ST had to close. They have also presented government with proposals on a stimulus package to help local economy limit the damage caused by a forthcoming recession.