Constructing a business from the ground up

Nazzareno Vassallo of Vassallo Builders talks to RAY ABDILLA about the state of the construction industry, which is often considered a gauge by which to measure the country’s economy. The former Mosta mayor also speaks about the country’s cashflow problems and his plans for expanding the Casa Arkati old people’s home

How is the construction business performing at the moment?

Unfortunately, the construction business is not passing through what could be considered the best of best times, mainly due to a drastic decline in the industry’s cashflow and heightened competition.

In fact, these days certain projects are failing to register a profit and are sometimes being carried out at a loss.

Many believe that in Malta, if the construction industry is flourishing, then the whole country is doing well. Would you agree with this philosophy?

I totally agree with this statement. The construction industry, which I call the economy’s motor, has always been considered as a gauge for the country’s economy.

As long as I can remember, every time the construction business was performing very well, other businesses followed suit. This is due to the fact that other businesses are directly or indirectly related to construction projects. A lot of other trades are linked to construction - a tourist development for example. So when the contractor completes the project, further employment in the tourism industry is generated and a chain reaction is created.

Some say we are in a recession, while others deny the notion. How do you view the state of the economy at present?

In my opinion, the country is currently experiencing a cashflow problem in all areas of business and over the past seven years, year after year, profit margins have been diminishing. This has also resulted in poor cashflow in the construction industry as well.

I think that this in itself gives rise to recession and is perhaps the main reason why the country is passing through this phase at the moment.

You’re involved in many different lines of business. Which gives you the most satisfaction?

I am involved in a wide spectrum of businesses, starting from our construction arm, from which our company started out and in which we have been operating for the last 55 years.

Over the years we have expanded into different business sectors - especially into the tourism and leisure sector, where we are deeply involved and in which we have invested heavily. Within this sphere we are involved in the Radisson SAS Bay Point, the Coastline Hotel, the Bugibba Holiday Complex and Island Caterers. We are also involved in the care of the elderly.

I believe that my greatest satisfaction is derived from our very starting point - the construction business. Although all businesses have their ups and downs, it is in the construction industry that I feel most comfortable, as it is the area in which I am the most knowledgeable.

Having said that, there is also a great satisfaction in caring for the elderly and today we can say that we take care of more elderly individuals than the government does in community homes, excluding the St Vincent De Paul home.

It is very satisfying to be able to say that a large number of elderly people are entrusting us with the rest of their lives. Some of these are important people who have given a valuable contribution to the country in the past and who are now entrusting us with caring for them. This gives me what I call an inner satisfaction, which is much greater than any financial satisfaction.

Although completely different, tourism is another exciting investment. The clientele is continuously changing and customers must be handled and dealt with on a first hand basis. Although I am not directly involved in this sector on a day-to-day basis, it is also satisfying to see this side of our business expanding.

All things considered, it is the work itself and my dedication to it that gives me the greatest satisfaction at the end of the day.

Is it true that you are in the process of expanding Casa Arkati? If so, to what extent?

I consider Casa Arkati as ‘my baby’ - it was a dream through which the private sector first involved itself in the care of the elderly. Not only was it my dream, I have seen it through the design stage and witnessed it develop from its foundations, stone upon stone, together with the beds being filled one after another since 1993. When our company first embarked on the project many people had doubts about what we were doing, or more to the point, what I was doing.

Today I am extremely happy with the decision we made some 10 years ago. In addition to Casa Arkati we have Villa Messina in Rabat while we also operate two government homes in Cospicua and Zejtun. Casa Arkati is running at full occupancy and we are planning to add a further 22 rooms.

There are important people living at Casa Arkati such as the former president Sir Anthony Mamo. I’ve heard that former premier Dom Mintoff is also staying there. Is this true?

We have many important people residing at Casa Arkati but our company gives all residents the same importance in all our homes. Everyone is treated equally. Yes, we are very proud that the first Maltese President, Sir Anthony Mamo together with Lady Mamo, is residing at Casa Arkati. It gives us great satisfaction that such important people, who have given so much to their country, have chosen to live at Casa Arkati.

As to Dom Mintoff, no he is not residing at there. Of course our doors are open to everyone and it would be an honour for us to welcome him here if he decides to come.

Are the doors of Casa Arkati open only to the rich?

Absolutely not! However, I must say that it is very expensive to take care of the elderly, especially when the nursing element is taken into consideration.

Let’s not forget that we take care of residents on a 24-hour, seven-day-a-week basis and this involves five shifts to cover all the hours.

But we have people from all walks of life and I must say that we have never discriminated nor will we ever discriminate against anyone. I think that today most people are finding different ways and means of financing their stay at our homes.

What is the most important construction project you are working on at present?

We consider every single project that we embark on as being important to us. This is the mentality that I keep trying to instill into all the Group’s employees, as each and every client is of the same importance to us.

Of course, we have projects that give us greater pride or projects that are or were of great importance to us. We have also carried out a number of developments that are of national importance. There was, for instance ,the Danish Village development, which was the largest project in the 70’s. And the Malta International Airport and the Freeport - two projects for which I was consortium chairman.

Our company also specialises in restoration and in this field we carried out works at St John’s Co-cathedral in Valletta, the Mdina Cathedral, the Mosta church, where we have just completed another important phase, the Malta Stock Exchange and the Bell Monument.

Then there was the building of our hotels, Casa Arkati, Villa Messina and various other projects. These have all given me a sense of pride which comes back to me every time I pass by any one of them. At present, we are involved in the Cottonera Project and in Bank of Valletta’s Processing Centre.

How far back does your family construction business date?

The company was started by my dear father who, in 1946, together with two of his nephews - Guzeppi and Mikielang Gatt - formed a partnership and started clearing out the post-war debris. This partnership remained active until 1965 when they agreed to go their separate ways.

Our family then started Vassallo Builders and the others formed Gatt Brothers. Both companies are still very active to date and I am glad that since 1946 we have enjoyed an excellent relationship and still work together on some projects. We were in the same consortia both in the Malta International Airport and the Freeport projects. At present, we are working together on the Processing Centre of Bank of Valletta at St Venera and we are also working together on the Manoel Island project. Thus our relationship has been continuous throughout the last 55 years.

I joined the company at the end of the 1960’s and was appointed the first managing director of the Vassallo Builders Group at its inception and am astill here today.

You were once the mayor of Mosta. What can you tell us about this experience?

Yes, I was in fact the first mayor of Mosta and for four years I dedicated a lot of my time and energy to the locality. I cannot say there was any particular problem, but there was certainly a lot to be done.

The first Mosta council, led by myself, planned and carried out a large number of useful projects in order to make improvements for the Mosta community. We worked on the community hall, the lift, the project carried out at Curate Calleja Street, the five–a-side sports ground, the Victoria Lines projects - for which we were the first council that managed to get its financing from the Europe Union - projects for rain water and projects for different streets. The list is an extensive one.

The requirements for the locality were many, which is not surprising when you remember that Mosta is the third largest town in Malta. When I was mayor, and I know that the situation has not changed much since then, we were faced with 62 per cent of the streets of Mosta never having seen asphalt or tarmac. So you can imagine that with seven zones around the original Mosta, the needs were extensive.

Nevertheless they were four years that I enjoyed. I am the type of person who, once having decided to start something, does it seriously. But it was very time-consuming, which made it impossible for me to continue. Against my wishes, but with satisfaction for what I managed to complete, I decided not to re-contest.

What about the criticism you and your fellow council members received over the amount of debt left at the Mosta council?

I look at it from a different point of view. The council, led by myself, carried out a number of important projects for the Mosta community. If there is anything to say, it would be that maybe too much was done in too short a period of time. The criticism you mentioned was made solely for political purposes.

But, generally speaking, everybody knows and admits that the council planned and carried out a large number of important and useful projects for the locality. These can still be seen today and will remain there to be enjoyed by all in the future.

Certain decisions must be taken. For instance, would you leave Mosta Health Centre without a lift if it needed one and tell people they’ll get it in 10 years’ time?

Let’s not forget that since the inception of the Mosta Health Centre, which is on the first floor, there had been no access for wheelchairs or buggies or injured patients. And so you have to take decisions. My council decided to get this service up and running in the shortest possible time and I believe we succeeded in our goal.

Will you ever contest the local council election again or are you considering standing at the next general election?

As at this stage I have no intention of contesting the local council and much less the general election. Of course I have nothing against politics or politicians and my beliefs are and will remain what they are. But there are other things I can do both in and out of Mosta and I prefer to dedicate the small amount of free time I have to social and philanthropic activities.

Are you still involved in politics?

No, I am absolutely not involved in politics. I still interest myself but I am not politically involved in anything at the moment.

Would you consider Malta being a member of the European Union as an advantage or disadvantage?

In my opinion it would definitely be a great advantage for Malta to join the EU. Today, given the growing trend towards globalisation, no country should want to be left on its own and isolated, let alone a small country like ours.

One could understand the concept of not wanting to join if we held any dominance, but as a small country mostly dependent on foreign elements, we just cannot be left out. There are a lot of advantages in joining, especially for our younger generation and also for the future of the country as a whole. We must begin to understand that instead of being a market of 400,000, we would be forming part of a continent with hundreds of millions of people - a much larger market than we could ever conceive of.

In terms of issues related directly to my line of business, I believe that the roads, the environment and health and safety in the workplace will all see improvements.

For these reasons alone I believe that we should be part of the EU.

Is it true that it is problematic to find Maltese workers to fill vacancies in the construction industry?

Yes, it is a known fact that we are finding fewer workers willing to work in the construction industry and we have been noticing, year after year, that is becoming more difficult to replace those who reach retirement age.

I attribute this to different factors. Primarily, and one must also say positively, the education level in our country is ever increasing and fewer people are accordingly joining the construction trade.

Secondly, today people have a lot of other less physically strenuous opportunities, such as in the services sector. It is understandable that people take up these other opportunities, although it is also true that today’s methods of work in construction are much less demanding than they used to be. I would like to see more youths considering this line of work. Today there are a number of new skills in this field to be acquired. I know that the construction industry offers great opportunities for those who are interested in making a career out of this line of work.

What projects do you have in the pipeline?

We have a list of projects for the future. Our Group’s statement is that we are dynamic, diverse and distinctive and as such we want to expand and invest in all our lines of business.

Yes, we are and will continue to invest in care for the elderly. The same applies to the tourism sector.

With regards to the construction business, we are continuously investing in new machinery while we keep offering the best working opportunities for the large number of employees that we currently have, as well as creating new working opportunities for the future.

What would you say this country needs to get back on track, to revive the mid-1990s when business was booming?

The main concern about this country is the rivalry that exists between the main two political parties. Our leaders must sit down together, discuss all issues between them and come up with solutions that are good for the country.

Of course, international problems leave their mark on us as well. We are no exception and any form of recession, in tourism or other segments of the economy, has an effect on us. But as the local situation stands today, I believe that the only solution is for both leaders of our main political parties to begin finding issues and problems that they can fight for together and not fight about.