NEWS | Wednesday, 16 July 2008

ST-NXP unlikely to affect Malta plant

Charlot Zahra

The joint venture between STMicroelectronics and Dutch company NXP recently cleared by the European Commission will not affect ST’s plans for the Malta plant.
ST is currently in talks with the Maltese Government to discuss the future of the plant at Kirkop, which employs 2,200 people and has reportedly asked for tens of millions of Dollars in subsidy to stay here.
ST Chief Executive Officer (CEO) Carlo Bozotti told the Financial Times last month that ST was looking into saving USS 150 million through downsizing or closing six factories.
Asked whether the joint venture between STMicroelectronics and NXP will affect in any way the employment levels and operations in the Malta plant, Finance Minister Tonio Fenech, who is currently conducting the negotiations with ST, told Business Today:
“The STMicroelectronics and NXP joint venture has been on the cards (announced) quite some months ago now, and although it may have some impact on some lines produced in Malta this in itself is not message of downsizing by ST.
“ST Microelectronics in its very nature is a very dynamic organisation. The interest of ST in Malta is very much tied to the higher technical skills particularly engineers that can be found in Malta and their relative competitive cost.
“Production lines are moved in and out whenever these skills are required, particularly when a new production line has been developed and being improved and the same lines leave when the improved production process can be handled more cheaply in a low labor cost jurisdiction particularly Asia, without the need of highly specialized technical supervision,” he said.
Asked whether the Malta plant was still among those plants on notice in view of what was stated by Bozotti to the Financial Times, the Finance Minister told Business Today: “As has already been announced by ST on the international media by Chief Operating Officer, Alain Dutheil, clarifying the statement that was previously made by Bozotti and reported on FT, picked up by Forbes.com and a few other publications, Dutheil clearly stated that ‘...there is no plan for more factory closures following three plant closures last year in the United States and Morocco.’
“As Government has already stated in public, we have noted with satisfaction that ST has no immediate plans to close Malta, however as was always the case we have to keep on working to ensure that ST in Malta keeps finding the competitive reason why it should not reallocate from Malta.”
When asked when the discussions with government regarding the restructuring of the Kirkop plant are expected to conclude, Fenech curtly replied: “Discussions between the Government of Malta and ST are still ongoing.”
On his part, Andrew Mizzi, Secretary of the GWU’s Technology, Electronics and Communication section, which represents ST workers in Malta, told Business Today that the Union was “not informed locally about the joint venture, but we got the information from the European Works Council which was held Last May in Milan”.
Asked whether the joint venture between STMicroelectronics and NXP will affect in any way the employment levels and operations in the Malta plant, Mizzi said: “This joint venture will surely effect all back-end plants within ST as this will be another internal competitor.”
Asked whether ST’s plans for downsizing of the Kirkop plant will continue as a result of the joint venture or will they be suspended, Mizzi said: “ST’s plans for the Malta plant have not changed in the last months.”

The GWU has not yet been provided with a calculation of how many people are expected to be made redundant as a result of this restructuring.
“Officially all we know is the statement made by the company to government,” Mizzi said.
Discussions between the company and the Union are now “at a standstill” according to Mizzi, and the GWU “is waiting on the company to call the next meeting on this issue”.
Business Today was met with a wall of silence when it asked STMicroelectronics for its reaction about the whole issue.
After a series of questions were sent to ST’s director for CorporateMaria Grazia Prestini, Senior Director, Corporate Media and Public Relations, an email signed by the spokesperson read: “I am sure you’ll appreciate the fact that STMicroelectronics being a public company, listed at NYSE, Paris Euronext and Italian Stock Exchange, our communication to our publics worldwide must take into account very stringent and specific rules which apply to all companies with a similar status, not to mention the responsibility we have towards our shareholders and employees all over the world.”
Business Today asked, among other things, whether the joint venture between STMicroelectronics and NXP will affect in any way the employment levels and operations in the Malta plant, whether ST’s plans for downsizing of the Kirkop plant would continue as a result of the joint venture or would they be suspended, whether ST still had on its cards the closure of the Malta plant, especially in view of Bozotti’s comments to FT, how many jobs would be lost at ST in Malta as a result of the restructuring, and at what stage were the discussions with the Malta Government regarding the restructuring of the Kirkop plant.
On 27 June the European Commission authorised under the EU Merger Regulation the proposed joint venture between the French/Italian group STMicroelectronics and the Dutch company NXP.
“The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it,” the Commission said in a statement.
STMicroelectronics is active in the semiconductor industry and offers a broad range of semiconductor products, from discrete diodes and transistors to complete platform solutions.
NXP creates semiconductors, system solutions and software used in a wide range of electronic devices including mobile phones, personal media players and TV set-top boxes.
The proposed joint venture would operate worldwide in the research and development, design, manufacture, marketing and sale of wireless handsets. Both STM and NXP are dedicating part of their activities to the joint venture.
The Commission’s market investigation revealed that the creation of the joint venture “would not give rise to any competition concerns in the market for wireless handset semiconductors as the new entity would face several significant competitors and customers would continue to have access to a sufficient number of alternative suppliers”.
The Commission also took into consideration the existence of sophisticated customers, such as original equipment manufacturers (OEMs), and the fact that the STM and NXP businesses to be conferred to the joint venture are to a large extent complementary.

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