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)