Astra to buy local steel for own use<\/p>\n
JAKARTA (JP): Car manufacturer PT Toyota Astra Motors has
\nagreed to purchase steel products from PT Krakatau Steel for the
\nmanufacture of its Kijang van.<\/p>\n
According to an agreement signed on Wednesday, Astra will
\ninitially purchase 160 tons of steel worth Rp 480 million (about
\nUS$51,000) a month from Krakatau.<\/p>\n
\"We can save about 20 percent of our costs by using locally
\nproduced steel,\" Astra's technical director Adi Rizal Nizar told
\nreporters after the signing ceremony.<\/p>\n
Before, he said, Astra imported all its steel requirements
\nfrom Japan or Taiwan.<\/p>\n
Adi said that buying locally produced steel allowed the
\ncompany to reduce its steel inventory because of the shorter
\ndelivery time.<\/p>\n
But he said the cost savings would not immediately translate
\ninto lower car prices since a large part of the Kijang's steel
\nrequirements were still imported.<\/p>\n
He said for imported steel to be completely replaced by
\nlocally produced ones for the manufacture of the Kijang vans,
\nKrakatau must be able to supply 3,000 tons of steel a month.<\/p>\n
\"Our goal is to use 100 percent locally produced steel to
\nfulfill our steel requirements,\" Adi said.<\/p>\n
He added that the steel company would have to upgrade its
\nsteel to meet Toyota's standards.<\/p>\n
Costs and delivery assurances were the other factors Astra has
\nto consider before choosing a steel supplier, he said, adding
\nthat Astra spent almost three years to decide whether to use
\nKrakatau's steel.<\/p>\n
\"Supplying the 3,000 tons of steel for Astra is not easy,\"
\nKrakatau director Sutrisno said.<\/p>\n
He said Krakatau's research and development team spent two
\nyears conforming the quality of its steel to that of Astra's
\nrequirements. According to him, it would take at least another
\ntwo years for Krakatau to supply just 80 percent of the 3,000
\ntons of steel.<\/p>\n
\"We are now only supplying some of the exterior steel parts
\nfor the Kijangs,\" he said, adding that the interior of the vans
\nrequired higher quality steel.<\/p>\n
Aside from supplying steel to Astra, the state company was
\nalso supplying some 5,000 tons of steel to other local car
\nmanufacturers.<\/p>\n
These include PT Indomobil Sukses Internasional which
\nmanufacture the Hino trucks locally.<\/p>\n
Krakatau, located in Cilegon, West Java, is the only
\nintegrated steel company in Indonesia.<\/p>\n
The company has an annual production capacity of 2.6 million
\ntons of crude steel, 60 percent of which are in the form of hot
\nrolled coils, sheets and plates; 22 percent cold rolled coils and
\nsheets; and 18 percent wire rod coils.<\/p>\n
Sutrisno said his company begun supplying steel to car
\nmanufacturers because the demand for steel in its main market,
\nthe construction industry, was still low.<\/p>\n
Last year the company sold 1.6 million tons of steel in the
\ndomestic market, he said.<\/p>\n
For the same period, Krakatau's export sales reached 400,000
\ntons, of which 200,000 tons were to the United States.<\/p>\n
However, he said, the United States was threatening Krakatau
\nwith import surcharges of 31 percent because the American steel
\nindustry had charged that Krakatau received subsidized fuel and
\nelectricity.<\/p>\n
\"With a surcharge of 31 percent on top of the import duties,
\nwe can't penetrate the U.S. market anymore,\" he said.<\/p>\n
According to him, Krakatau will face revenue losses of $50
\nmillion a year if the import surcharge were imposed.<\/p>\n
Sutrisno said the U.S. government would send a team here next
\nweek to investigate its subsidy charges against Krakatau.<\/p>\n
Krakatau is among the first batch of state companies the
\ngovernment had earmarked for privatization last year.<\/p>\n
Thus far it remains unclear whether the government will
\nproceed with plans to privatize the steel company. (bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/astra-to-buy-local-steel-for-own-use-1447893297",
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