U.S. cities considered for IPTN's plants

U.S. cities considered for IPTN's plants

JAKARTA (JP): President Soeharto is considering Mobile in
Alabama or Macon in Georgia as the site for the new PT Industri
Pesawat Terbang Nusantara (IPTN) assembly plant in the United
States, State Minister of Research and Technology B.J. Habibie
said here yesterday.

"After consulting with experts from the United States, the
President has narrowed down the choices of potential sites for
IPTN's investment to either Mobile in Alabama or Macon in
Georgia," Habibie, also IPTN's president, told reporters after a
four-hour meeting with Soeharto at the Bina Graha presidential
office.

"The final decision will be reached in April," he said, adding
that he is now studying various procedures on labor, the
environment and infrastructure in the two cities.

IPTN is planning to invest at least US$12 million to construct
its N-250 propeller aircraft in the United States, a move
intended to capture the North and Central American markets for
commuter aircraft.

Habibie recently said that five states were interested in
becoming the site for IPTN's ambitious project, including
Arkansas, Oregon, Alabama and Utah.

"In order to build N-250s in the United States, IPTN has
planned to set up a joint-venture company called the American
Regional Aircraft Industries, in which IPTN will hold 40 percent
of its total common shares," Habibie said, adding that several
foreign aircraft manufacturers and banks have shown interest in
becoming partners with IPTN.

He said that the N-250, which can accommodate 70 passengers,
will be priced at $13.5 million each.

The minister said that he is confident with this project
because the "N-250 will be built with 1990s technology."

"The only competitor that IPTN has in constructing this type
of aircraft is Aeorospatiale of France, whose technology is not
as recent as ours," he said.

Difficulties

The minister also conceded yesterday that IPTN's main hurdle
to export its products is the fact that it cannot give its
potential consumers export-credit facilities.

"This is one of our most serious handicaps because no one pays
cash when buying aircraft," he said.

By investing directly in the United States, IPTN will overcome
the handicap, he said.

Habibie explained that he has projected, based on the most
conservative assumptions, that 225 commuter aircraft like the N-
250 model will be demanded annually for the next two decades.

"If we assume that we can meet only one third of that demand
every year, it means that seventy five N-250s will be sold every
year," he said.

Habibie said that IPTN only needs to cover 10 percent of the
world demand for commuter aircraft like the N-250 to break even.
(hdj)