JP/18/KNIT
Knitting industry unraveling
Knitting businesses caught in a spiral of decline
Yuli Tri Suwarni The Jakarta Post/Bandung
For over four decades, people living on Jl. Binong Jati, Binong village, Batununggal, some 10 kilometers to the east of downtown Bandung, have been familiar with the noise of knitting and sewing machines.
However, the machines have not been heard much over the past two months. Yayah, 18, and the other five seamstresses working at Studio 60, a knitting workshop owned by Andi Farida, 30, have had very little to do lately.
They simply sit and chat, occasionally laughing while awaiting the next job. They may consider themselves lucky because some 4,000 contractual workers in over 120 household knitting businesses in this area lost their jobs completely when the businesses collapsed.
These days are really tough times for the knitting businesses in Binong Jati -- household industrial undertakings that came into being in 1965. The hike in the price of fuel and the depreciating the rupiah have dealt a lethal blow to some 400 small-scale businesses in this area, a situation similar to what happened in 1997.
If you visit the area, you can see, on either side of the two- meter road, notices offering used knitting machines.
"Purchasing power has weakened, while our stocks continue to pile up. The price of acrylic yarn, our raw material, has risen from Rp 33,500 per kilogram to Rp 35,500 per kilogram in just three days. It's really a crisis," said Andi, who, following in the footstep of his father, started his own knitting business, relying on eight knitting and sewing machines.
Owing to buyers' strapped finances, he said, vendors in Tanah Abang market, who used to pay at least Rp 170,000 for a dozen pieces of trendy knitwear for teenagers, can pay him only Rp 160,000 to Rp 165,000 now. In fact, he added, production costs had increased.
Sales have dropped by up to 50 percent. In the past, Andi said, his weekly production stood at 60 dozen but in the past two months it has fallen to 20 dozen to 30 dozen.
Neng Eni, 26, is in the same boat. In the last two weeks, she has not received a single order from Surabaya or Surakarta, resulting in a 40 percent sales drop. She, too, has been forced to slash her prices from Rp 170,000 to Rp 200,000 per dozen to a maximum of Rp 165,000 per dozen. "I really don't know how to manage my money. Besides, my employees have asked for a pay rise. I don't have the heart to lay them off. Well, I'd better wait until the exchange rate of the U.S. dollar falls against the rupiah," she said.
Meanwhile, Suhaya Wondo, 32, a large-scale entrepreneur and also chairman of the knitting cooperative in the area, said that before the crisis there were about 400 household knitting businesses employing some 10,000 people, whose education level ranged from elementary school to senior high school.
The businesses used 3,750 machines, each of which could produce a dozen knitted products a day, and needed some 450 tons of domestically made acrylic yarn a month. Total turnover was recorded at Rp 20.25 billion per month.
The purchasing power of the public, he said, dropped following the hike in the price of fuel last July, when the new school year started in Indonesia. Obviously, as the fuel price hike caused the price of daily necessities to rise, many parents preferred to postpone buying clothing and would rather spend their money on their children's schooling.
"The situation got worse following the government's announcement that it would again raise the price of fuel. Suppliers and manufacturers responded by raising their prices.
"We have really been squeezed while, at the same time, the central government has announced it plans to jack up fuel prices, therefore prompting speculators to raise their prices," said Wondo. Due to an absence of orders, he has not, for the past three weeks, sold his products to the vendors in Tanah Abang.
The present situation is quite different to when Indonesia was hit by the economic crisis in 1997. In contrast, despite the onset of an economic crisis, Wondo and his fellow knitting- business owners enjoyed a boom in sales then.
Although the rupiah has plummeted, he said, fuel prices had not increased and the demand for cheap clothing in the local markets was high.
Thousands of people who formerly relied on small-scale knitting businesses in Binong Jati for their livelihood are now under stress as these businesses have become very sluggish.
Besides, hundreds of food vendors, collectors of yarn waste and cleaners will also lose their jobs. The government has yet to make an effort to address these problems, which grow more acute by the day.