Daekyung reaps benefits of transferring technology
Daekyung reaps benefits of transferring technology
Last Friday Korean-Indonesian joint-venture PT Daekyung Indah
Heavy Industry unveiled its first products for export, with
executives paying tribute to the success of the three-year-old
technology transfer enterprise.
Ready for shipment at the company's plant in Cilegon, West
Java, the 22 heat exchangers were inspected by Mr. Yoon Soonyong,
Vice President of LG Engineering of South Korea, which is
purchasing the units.
Established in October 1992, PT Daekyung Indah Heavy Industry
is 60 percent owned by Korea's Daekyung Machinery and Engineering
Company. The other 40 percent is owned by PT Barito Industries, a
subsidiary of the Barito Pacific Group. The group is active in
the forestry, agriculture and petrochemical sectors.
PT Daekyung Indah Heavy Industry, with a paid up capital of
$2.5 million, has invested $13 million in the Cilegon operation.
The company employs 11 South Korean nationals in management
and supervisory capacities. The Cilegon plant employs 163
Indonesian staff in positions which include design engineers,
draftsmen, estimation and fabricator personnel.
Production at PT Daekyung Indah Heavy Industry's plant began
in May 1994.
PT Barito Industries President Director Ir. Suwoso Sindredjo
joined Mr. Yoon Soonyong in cutting the red ribbon on the heat
exchangers, the first ever to be exported from Indonesia.
Managing Director Kim Dooyoung said the company had been
supplying the heavy industry equipment to the domestic market for
some time but this was its first export.
"Overseas technology has always been more advanced than
Indonesia's, but now Indonesia is starting to catch up," he said.
In addition to training in Indonesia, all Indonesian staff
employed at the Cilegon plant regularly receive intensive
training in South Korea for between three and six months. Mr. Kim
Dooyoung said the program was expensive but the benefits to the
company of highly-skilled labor outweighed the cost.
"Through such programs the Indonesian technicians' quality and
training has improved," he said.
"As a result, Indonesia has acquired technology from Korea
and, in a short period of time, we are exporting back to Korea.
The technology transfer has been very rapid, smooth and
successful."
Heat exchangers are used in chemical and petrochemical
engineering to heat and cool chemicals and create chemical
reactions.
The 22 heat exchangers, worth US$400,000, are bound for LC
Engineering's Yeo Chun chemical and petrochemical plant in South
Korea. They will be used in the production of octanol (ethyl
hexanol).
Inspecting the finished equipment Mr. Yoon Soonyong paid close
attention to the welding. He said he was very impressed with the
overall quality of the job.
"I am very happy to see it is a good product," he said.
"Because it is the first time we have dealt with this company in
Indonesia, I was a little worried about production delays or the
quality at the time of ordering. But today I found the quality of
the product to be very good and also delivery will be earlier
than scheduled."
Mr. Yoon Soonyong said that after the completion of the Yeo
Chun project in May next year, his company would consider
ordering more industrial equipment from PT Daekyung Indah Heavy
Industry.
"This is our first purchase from Indonesia but if we are doing
overseas projects we will definitely consider this a source.
"Of course we will make the decision after evaluation of the
equipment but this company will be top of our list."
The firm's most sought-after products are its heat exchangers,
pressure vessels and reactors. However, it also produces towers,
columns, storage tanks, steel structures and air-cooled heat
exchangers.
Recent additions to the firm's output include boilers and
mills for processing crude palm oil on a turn-key basis.
Mr. Kim Dooyoung said: "In the future more automation will be
adopted here, making us more competitive."
The company used local materials in production, he said.
However, some materials, such as stainless steel still had to be
imported.
"We import raw materials from Korea, Japan, America and
Germany but where raw materials are available from Krakatau Steel
we try to use it to support localization."
The Daekyung Machinery and Engineering Company has been
operating in Korea for 17 years and now has four factories there.
The Indonesian joint venture was the brainchild of Company
President Kim Souk Ghee. The plan was realized by Director Cho
Sam Hyun, who oversees the Cilegon plant.
Mr. Kim Dooyoung said the company was looking forward to
achieving further milestones in the coming year.
"Our company will be the first in Indonesia to manufacture
floating-head type heat exchangers which are very high-tech,
complicated and difficult to manufacture," he said.
Pertamina's Balikpapan Oil Refinery in East Kalimantan has
ordered 22 sets of the floating-head type heat exchangers worth
$1.5 million. The order is due to be filled in April next year.
The production of the floating-head type heat exchangers was a
breakthrough in Indonesian manufacturing, he said. Previously,
such equipment had to be imported, because Indonesia did not have
the technological expertise to manufacture that type of heat
exchanger.
Although exports are important, this company's commitment to
serving the local market is strong.
"We are an Indonesian company, so the marketing share will be
60 percent Indonesian, 40 percent export," Mr. Kim Dooyoung said.
"We are currently manufacturing pressurized vessels and heat
exchangers worth around $1.5 million to be exported to Singapore,
Thailand and India in April/May next year."
Furthermore, PT Daekyung Indah Heavy Industry is also
considering the establishment of another plant in East Java.
The joint venture's location in Indonesia is strategic for
gaining access to the Southeast Asian market. It also represents
a good opportunity for developing business in Indonesia.
"The product's volume is large, so transport is expensive.
This makes Indonesia's location important," Mr. Kim Dooyoung
explained.
PT Daekyung Indah Heavy Industry is one of only four
Indonesian heavy industrial manufacturers in similar fabrication
businesses authorized to use the symbol of the American Society
of Mechanical Engineers.
Mr. Kim Dooyoung said that while the export to South Korea of
the heat exchangers marked an important step for the joint
venture, 1995 had been a challenging year for the industry.
"Petrochemical investment here has been delayed slightly due
to loan arrangements. We expect another boost next year," he
said.