Texmaco set to become machine tools producer

Texmaco set to become machine tools producer

JAKARTA (JP): While the monetary authorities worry about
import growth exceeding export expansion, this trend is seen by
Marimutu Sinivasan, Chairman of the Texmaco Group, as business
opportunities.

Sinivasan is especially excited about the opportunities
offered by the US$12-13 billion Indonesia has to spend annually
on capital goods imports.

"We actually are capable of making ourselves quite a number of
those capital goods," he says in explaining the economic
rationale of the big investments his group has been putting in
the engineering industry over the last few years.

Indeed, Texmaco's modern textile machinery and machine tools
have become one of the greatest attractions at the current
Indonesian Expo 1995 here, as can be seen from the large number
of visitors, including distinguished persons, to the Texmaco
stand.

The Texmaco stand does boast a wide array of modern textile
machinery such as air and water jet looms, weaving, warping,
sizing, dyeing, pre-winder, winder machines, jet spindles and
machine tools such as computer-numerically controlled (CNC)
lathes which many assume should have been imported from Japan or
at least from South Korea or Taiwan.

The media attention gained by the Texmaco machinery obviously
is not as great as the big fanfare that accompanied the maiden
flight of the N-250 aircraft in Bandung on Aug.10.

But Texmaco's big expansion in the engineering industry could
become a breakthrough in accelerating the industrial development
because machine tools make machines and machinery.

Sinivasan sees another great benefit in locally manufacturing
machine tools and other processing machinery.

"It is machines which process natural resources into basic and
intermediate materials," he points out.

Hence, according to his rationale, the capability to make a
wide range of machines will reduce the country's dependence on
foreign suppliers not only for capital goods but also basic and
intermediate materials whose imports reach $12 billion a year.

"Moreover, the manufacture of machine tools in the
industrialized countries has become less competitive due to high
labor costs and workers' dislike of dirty manual work."

Therefore, the international market also offers big
opportunities for a wide array of machinery and machine tools,
Sinivasan says, citing a number of orders his company received
from the United States and several other countries after its
participation in the Hannover Fair in Germany last April.

"We still lag far behind in the engineering industry and this
could become a drag on our industrialization process," he points
out.

Sinivasan sees it as a big disappointment that Indonesia, for
example, is not capable of fully manufacturing even hand-tractors
which are much needed by the agricultural sector.

"The impact is much more damaging than our continued
dependence on imports of completely-knocked down kits of
tractors. That also is one of the causes of the urbanization," he
says.

According to him, most of the job-seekers in the countryside
now are graduates of either secondary or high schools who
obviously are not attracted to work with hoes on the farms.

"The situation, I think, would be very much different if we
had been able to manufacture hand tractors at relatively low
costs. Those job seekers might have been comfortable working in
the farms," he argues.

Texmaco's decision to masssively expand its engineering
capability also has been prompted by Sinivasan's overriding
commitment to add value to whatever products his company
manufactures.

In fact, the embryo of PT Texmaco Perkasa Engineering, the
engineering subsidiary of the Texmaco group, emerged in the late
1970s from PT Texmaco Jaya, the textile subsidiary which started
up the production of fabric in Central Java almost 30 years ago.

Sinivasan's drive to generate higher value added later
resulted in his expansion into the manufacture of polyester
chips, fibers and a full range of filament yarns which are now
managed under PT Polysindo Eka Perkasa.

The need to repair and replace textile machinery and the
requirements of spare parts and components for the textile and
fiber making companies led to the establishment of a textile
machinery workshop, which has become Texmaco Perkasa Engineering.

"The expansion or diversification from textile manufacture to
machinery and machine tools are by no means an unusual process,"
he says in defending his diversification.

In Japan, for example, Toyota, Suzuki and Nissan which are now
major car producers, all started from the textile industry,
according to Sinivasan.

Now Texmaco Perkasa Engineering is geared up to become a big
player in the manufacture not only of textile machinery and
machine tools but also automotive parts and equipment for the
chemical, cement and fiber industries.

The three Texmaco subsidiaries with industrial plants in
Central Java and Krawang, West Java, are already listed on the
Jakarta stock exchange.

Texmaco's foundry capacity has been expanded in iron, steel
and aluminum castings for a wide range of machine parts and
automotive components.

Its machining capability is fully equipped with CNC equipment
ranging from laser cutting machines, turning centers, machining
centers.

The company also is further going upstream to increase the
value added of its textile products by building a US$600 million
purified terepthalic acid (PTA) plant in Krawang which is slated
to come on stream next year.

The PTA plant will further improve Texmaco's polymer
technology to supply the world market with a wider variety of
high fashion fabrics and garments.

Texmaco, already Indonesia's largest and most integrated
textile group, is poised to become also a major supplier of
machinery and machine tools.

Texmaco estimates its group sales will triple to around US$2
billion within the next five years and expects the structure of
its earnings to become much stronger.

Sinivasan expects that by the year 2000 the Texmaco Group's
earnings will be derived in equal proportion from three product
categories: Textile raw materials, high-fashion fabrics and
garments and engineering goods. (vin)