Carmakers could cut production by 50%: Analysts

JAKARTA (JP): A sluggish market this year will force local automakers to slash production by 50 percent, analyst Suhari Sargo predicts.

He said yesterday the production cut would lead to the layoff of about 80,000 workers.

Suhari said large automakers would be the most affected by the slow market, which would force them to almost halve their production.

The Indonesian car industry is dominated by affiliates of Japanese automakers Isuzu, Suzuki, Toyota, Mitsubishi and Daihatsu.

The five brands made up about 90 percent of cars made in Indonesia and employed 80 percent of all workers in the industry, totaling about 60,000, he said.

The remaining 20 percent of workers worked for smaller companies, he said.

"If the current situation is not over by the end of the first quarter, these companies will likely endure a worse crisis," he said.

Some companies have reportedly begun to cut back workers' hours due to slower production.

Astra

Toyota Astra Motor director Adirizal Nizar told The Jakarta Post yesterday his company would likely produce less vehicles than it did last year.

"We are planning to cut our workers' shifts from two shifts to one this year," Adirizal said.

This would likely affect production by the company, a subsidiary of Indonesia's largest automaker Astra International.

Nizar said Astra Motor produced about 97,000 cars last year with two production shifts and overtime hours.

The company assembles Toyota-made cars, including the highly popular Kijang vans.

He could not estimate how many cars his company would produce this year.

"We can't predict or make any plans for the future yet, because the current situation is so unpredictable. The rupiah continues to plunge and uncertainty prevails in the country's economy," he said.

The rupiah has nose-dived by over 60 percent against the U.S. dollar since last July.

Adirizal said Astra Motor might not have to lay off workers, but might just end contracts of those who worked under contracts.

"We have about 700 contracted workers and they would probably be the first ones to lose their jobs," he said.

Like Astra Motor, PT Bimantara Citra Mobil, maker of Cakra and Nenggala sedans, also anticipates slower production this year.

The company predicted earlier its sales would drop by about 40 percent this year from 5,000 cars sold last year.

Bimantara

Bimantara marketing director Poeng W. Lubis told the Post yesterday the company had yet to forecast production for this year.

"We still have to study the market trend before we can make any predictions, which categories will have better prospects and which will not," he said.

Poeng said the company had not reduced its workers' shifts, but might have to do so this year.

"First we might have to reduce overtime working hours," he said.

If sales dropped 40 percent or less, the company would not have to lay off workers, he said.

"But if sales plunged more than that, we might have to let some of our workers go," he said.

The company employs about 600 people.

Poeng said his company would not be affected by the crisis as much as larger companies this year.

"We are a small company, with about 400 to 500 sales monthly. Our problem is not as big as other larger companies."

The chairman of the Indonesian Association of Automotive Parts and Components Industries, Achmad Safiun, said Saturday that an estimated 36,000 workers, or 60 percent of all workers in the sector, might lose their jobs because of gloomy prospects this year.

Safiun said automotive component companies would likely have to stop production this year because of inflated import prices and lower sales volume.

"The price of components remains the same while import prices go up," he said.

He said 90 percent of car components were imported and the rest were locally made.

"The industry cannot raise prices more than 30 percent, as it would not be affordable," he said. (das/rid)