Component industry development vital: Gaikindo
Component industry development vital: Gaikindo
By Matthew Allen
GAIKINDO, the Association of Indonesia's Automotive
Industries, has called upon the government to help create a
positive economic climate for the development of Indonesia's
components industry.
It claims that without a viable supplier industry capable of
producing components in volume the car industry's progress will
be stunted.
The chairman of Gaikindo, Mr Herman Latief, said that the
growth of the supporting industries in Indonesia was lagging
behind.
He said a key reason behind the government's national car
program was to enhance the development of the supporting
industries.
However, the national car program requires volume sales for
the supporting industries to survive.
"You need volume to push certain segments in the supporting
industries," Herman said.
"The main priority issue in the automotive industry whether it
be Mitsubishi or Toyota is the supporting industries.
"In Indonesia we have only 91 supporting companies plus their
suppliers and that is only 119.
"Normally one car maker has hundreds of supporting companies.
"Even for the first layer of supporting companies you need
thousands of second layer supporting companies."
Thailand has around 350 supporting companies, Malaysia around
250, the Philippines 191.
"We are behind and we must catch up," Herman said.
Car-makers are responsible for between 30 to 40 per cent of
the in-house content of their vehicles while the remainder must
be sourced from out-house companies.
However, Herman said in order for these companies to want to
invest in large scale volume production they needed to be
guaranteed volume sales.
Herman, who is also the vice president of PT Krama Yudha Tiga
Berlian Motors, the sole distributor of Mitsubishi Motors in
Indonesia, said that his company will continue to concentrate its
investment on its in-house components.
"There is confidence for our investment in the in-house
suppliers, but for the out-house it is just not efficient for us
to invest in everything.
"If the supplier companies can supply us with quality cost
delivery (QCD) there is no problem we will purchase that
product."
The general manager of PT Tjahja Sakti Motor Corporation,
Bintoro Tjitrowirjo, also agreed with Herman that the development
of supplier industries is crucial for volume brands like Isuzu
and Daihatsu.
"If we talk about the Isuzu Panther I think our commitment to
the suppliers is very important," Bintoro said.
"The quality and commitment to delivery is the problem that is
why sometimes we have to do it in-house because one car has
20,000 parts and when one part is not available well ...
"We facilitate capital and technology programs for our large
and small suppliers to prevent problems in delivery and quality."
Likewise the director sales, marketing, service and parts for
PT General Motors Buana Indonesia, Terry Johnsson, said that
through the QF9000 supplier programs they were certifying
companies for global standards.
Meanwhile, it appears the requests for assistance by the car-
makers have not fallen on deaf ears.
Earlier this week at a special Cabinet session, President
Soeharto instructed the Minister for Finance and the governor of
Bank Indonesia to examine ways of funding local component
suppliers.
According to newspaper reports the instruction related to
companies supplying the Timor ''national'' car but any support
for the components industry would be likely to benefit most car-
makers.