Carmakers could cut production by 50%: Analysts
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)