Industrial dispute at aerospace firm settled

Industrial dispute at aerospace firm settled

Yuli Tri Suwarni, The Jakarta Post, Bandung

The tension at the state-owned aerospace firm PT Dirgantara
Indonesia (PT DI) came to an end soon after the company's
president director Edwin Soedarmo annulled his decision to lay
off all 9,670 employees on Wednesday.

With the decision's annulment, employees will return to work
on Monday.

The president director closed and locked the plant on July 11,
and decided to lay off all the workers as a result of the chronic
financial difficulties that had been plaguing the company for
years.

Speaking to the press here on Wednesday, Edwin said that
around 3,000 employees would be reassigned to assemble CN-235
passenger planes and to produce spare parts for A-380 aircraft
ordered by British Aerospace.

He said PT DI was currently working on two CN-235 planes
ordered by the Royal Malaysian Air Force, which were scheduled to
be delivered in September, 2004, and March, 2005, respectively.

The company is also working on four CN-235s ordered by
Pakistan, which should be delivered by the end of this year and
in June 2004.

As for the remaining employees, Edwin said the company had yet
to decide on what to do about them. "In the next six months, we
will undertake a streamlining program in the company and
concentrate on our core business. This will likely lead to a cut
in our workforce," he said.

Even if the company does decide to lay off a part of the
workforce, it will also face difficulties as it will have to pay
massive amounts of money in severance pay.

The decision to lock out the workforce raised tension between
the management and the workers, and led to highly public
bickering among top government leaders. State Minister for State
Enterprises Laksamana Sukardi backed the management decision by
saying that the company needed to cut its losses, while Minister
of Manpower and Transmigration Jacob Nuwa Wea slammed the
decision saying that it violated the prevailing labor law.

The company has been dragged down by debts totaling around Rp
2.5 trillion (US$304 million) owed to the government and the
Indonesian Banking Restructuring Agency (BPPPN), and has to spend
Rp 35 billion monthly to cover its operating costs, including
employee salaries.

Edwin also denied an allegation that he had ordered the
cutting off of water and electricity supplies, as well as medical
services for the employees.

"It was probably sabotage as I personally never gave any such
order. Anyway, there is still manufacturing work going on in the
plant," he said.

Meanwhile, employees of PT DI, who have been staging rallies
at the factory complex in Bandung for the last four days, halted
their action following the decision's annulment.

PT DI Labor Union (FKK) spokesman Arif Minardi said that the
rallies had been halted after they received the official
announcement on the decision's annulment.

"The rallies were costing the union Rp 4 million a day," he
added.

PT Dirgantara Indonesia, formerly known as PT Industri Pesawat
Terbang Nurtanio (IPTN), was one of 10 strategic industries under
the supervision of former technology and research minister B. J.
Habibie in the 1980s. Since the initial investment of Rp 1.6
trillion ($195 million) to establish the company in 1986, it has
faced persistent and chronic financial problems, with the
government having to step in to cover its operating costs in the
early 1990s.

The company's outstanding debts now reach Rp 2.9 trillion. The
debts soared after the company recruited a large number of
personnel for the development of the N-250 passenger aircraft.

But after the signing of the Letter of Intent (LoI) between
the International Monetary Fund and the Indonesian government, PT
DI found itself cast adrift and left to stand on its own two
feet.