Sawmill firms to lay-off over 13,000 employees

Yuliansyah, The Jakarta Post, Banjarmasin

Dozens of sawmills employing more than 13,000 workers in Banjarmasin, South Kalimantan, may have no other choice but to lay off workers as high production costs are making them unable to compete on the international market.

Dehen Binti, secretary of the local chapter of the Indonesian Plywood Society (MPI), said on Monday that most sawmills in the city were having difficulty paying workers because of increasing production costs coupled with a low demand for plywood on the domestic and international markets.

"Increasing production costs have a lot to do with the rising price of raw materials, rampant illegal fees and increasing labor costs," he said.

Dehen said the plywood industry had been hard hit by the cheaper price of plywood from China and Taiwan, "and we are losing out to the competition".

"It is no longer a secret that layoffs are the probable solution to this difficult situation," he said.

He added that many sawmills were also experiencing worse problems because they were in disputes over communal land that they occupied as a concession.

He said that the difficult situation was also caused by nonlabor factors, especially a drastically decreasing demand for Indonesian plywood on the international market.

"How can we compete if China and Taiwan can supply their plywood to Europe, Japan and the United States 30 percent cheaper than the price of our plywood," he said, citing that the price of Indonesian plywood on the international market was US$400 per cubic meter.

Muchlis, the chief of the local trade and industry office, ruled out MPI's complaints as groundless. He said timber factories had no plausible reason to close their operations as the demand for plywood was still high.

He said that many sawmills were facing financial problems but these conditions would not force them into bankruptcy.

"Our share in numerous markets remains stable and there is nothing to worry about," he said.

Soegiannor, the chief of the local manpower and transmigration office, said he had heard rumors of mass layoffs but that they would not implicate the plywood industry in the province.

"We don't believe that the existing 13 sawmills in the city will lay off their 13,000 workers."

S. Sassau, the chairman of the local chapter of the All- Indonesia Workers Union Federation (FSPSI), agreed, saying that they would oppose any moves by the sawmills to lay off a large number of workers.

"We have frequently heard about mass layoffs but so far, the sawmills have not laid one worker off," he said.