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Special series : INDONESIA - Top interview
Prospects of domestic market as well as for Exports are bright in Indonesia
Chief Executive Officer
JUKI SINGAPORE PTE LTD
M.MANIWANEN,Chief Executive Officer
"Technology is available in Indonesia, therefore we are looking forward to future prospects too" said Mr.M.MANIWANEN
List of Production Facilities
|•PT. Ungaran Sari Garment|
|•PT. Citra Abadi Sejati - Cileungsi|
|•PT. Citra Abadi Sejati - Bogor|
|•PT. Buana Indah Garments|
INDONESIA is a country with population of 228 million people, and has an area of about 1.9 million km2. The country consists of several thousand, over 10,000 islands, and is situated between the Pacific Ocean and the Indian Ocean. As it consists of several islands, country's region wise climatic and natural environment is quite strong including religion, customs and public entertainment etc. The country has been blessed with natural resources too. 88% of the ountry's population follows Islam as religion and 8.9% of the population has faith in Christianity. It is divided into 27 races such as Java and Sunda and majority follows Murray System. The language is Bahasa Indonesia.
Agriculture is the main industry followed by Mining and Manufacturing. It is a country with trade balance where export volume exceeds the import value. In the agriculture, forestry and fisheries industry, country is rich in cacaos, maniocs, coconuts, rice, coffee beans, natural rubber etc and is the number one producer of the coconuts in the world. The country is rich in Mining Resources too and mining quantity of metal, Tin, coal, natural gas, copper and nickel is more. Its' a petroleum-producing nation joining OPEC since its establishment. The import content has increased after the year 2004 and presently import volume exceeds the production volume causing secession and import is being withdrawn since Jan 2009.
The economic growth rate is consistent at an average of 5 to 6%, and the same level has been maintained during the past few years. In the fiscal year 2008 also economic growth level was being maintained at 6% level until the third quarter of the year. Due to economic crisis of Europe and U.S.A. stagnation of export and with the influence of the international financial crunch etc., the economic growth rate decelerated to 5.2% in the fourth quarter (6.1% in the full fiscal year 2008).
As for Textile and Apparel Industry, the synthetic material products are also made partially from oil/petroleum, particularly polyester print fabric is known to be made from petroleum. One can say that the growth of the textile industry has been delayed because so far, government had nationalized major industries like iron and steel manufacturing and aircraft manufacturing under the protection policy of the government due to which these industries flourished and the textile industry was left behind. There have been lot of foreign entrants as far as Apparel Manufacturing is concerned and most of them are OEMs exporting to Europe and U.S.A. Although technically superior work is being done but labor cost has also increased along with that. As a measure towards this, the work is flowing/being transferred to India and Bangladesh, which is a major concern. Economic and low cost domestic products are overrunning everywhere in the domestic market and superior quality products are being expected in the future.
factories based in Chennai, India
- I have been informed that you have just come back from India today. You have been quite active despite of your busy schedule, which part of India you had been to?
- We have established a new factory very recently in Chennai, India on Feb 2009, I had visited that factory.
- You have finally advanced to India, haven't you? You have quite many facilities domestically. This factory in Chennai, India is at which number?
- There are total 14 factories in four regions in Indonesia and in addition two new factories have been established in Chennai (refer the List). 14 lines are operational now and we have a plan to increase the lines to 16 in total in future.
- How many operators you have in Chennai?
- Yes, right now we have employees' strength of 700 people. As it is just the beginning, we are not manufacturing critical items involving minute/ fine hand work but gradually, in a span of two years, we would like to have real core production system with lot of technology embedded into it.
- In Chennai, India, you have recruited 700 operators; didn't you come across difficulty in hiring people in Chennai?
- Yes, there was no specific problem in hiring people. If one is able to recruit experienced staff with high skill level, there won't be any problem but practically it's impossible. Therefore operators were trained for about three months after the recruitment before started working on the production line.
Started in 1975 with 200 machines.
Built factories with 400 machines every two years
- You have an empire of 16 factories including Chennai plants. With this how much is the employees' strength of all the units put together.
- We have a total of 14,000 employees employed in the group.
- I think I am not wrong in saying that you have an eminent garment enterprise in the country, although, as I have heard, originally you started with TEXTILE but-----
- It's not me but my predecessors ventured into TEXILE Business. My brother had been into Spinning, Dyeing, and Weaving business including a TEXTILE Company. The Textile Company was established in the year 1963 for making polyester fabric. That factory is being managed by the eldest son of the family, my elder brother.
I started the apparel factory at Ungaran of Semarang in the year 1975 with a scale of just 200 sewing machines initially producing products for the domestic market mainly and I converted my factory into Export Oriented Unit after I got acquainted with a buyer handling exports in the year 1985.
- For making a shift from domestic to export, one need to solve two issues such as improving upon technology and quality along with securing the order for export, isn't it? Although it's very easy to say verbally but I believe it's a tough job indeed!
- Yes, you are right! While converting to Export, there were 400 employees in the factory. We formulated an education system for the operators considering quality level enhancement as the most important aspect for attaining technical caliber.
Taking this experience into account, I believe that to run an apparel factory, a basic unit of 400 machines is the ideal one and hence after I made it a principle to start a company with an employees' strength of 400 machines and have been expanding at an interval of every two years.
On the other hand, for securing export orders, I could find and secure buyers for export after spending two years. With the improvement in the quality level, queries also started pouring in thus increasing the work load too. Rather, with the exchange dropping since 1997, lot of apparel work has gone out of Indonesia; this on the contrary, has resulted in an increase in the work load.
The expectations are large from the highly skilled operators of Indonesia
- What's the situation or say scenario of Garment Industry in Indonesia at present?
- Indonesia has an advantage of cheap labor too; therefore many export manufactures from Taiwan, Hong Kong have also launched factories into Indonesia and are exporting products to Europe and U.S.A. On the other hand, domestic market is flooded with low cost
Chinese products and we are not in a position to manufacture for domestic market.
Right now, if we look at Garment Industry in Asia, labor cost has increased in China too and as a result work load is being transferred to the countries called as China plus One. Low cost mass production items may be made in the countries like India and Bangladesh but from technical point, these countries are still far behind and have a long way to go; making it difficult to
produce products like formal shirts, or product with more stitches.
Such job load has been transferred to Vietnam but Vietnam also is nearing its saturation, therefore work from China requiring high technical skill is being transferred to Indonesia. In future also prospects are good and we believe that work load will increase further in the future.
Tendency towards making in small lots in many varieties
- As mentioned by you, new factory with an employees' strength of 400 machines is established at an interval of every two years, how about the recruitment of engineers and managers?
- On inviting applications operators gather. There is no problem in getting the operators but that does not include experienced operators only rather beginners also are there. Therefore three months in-house education and training is given on recruitments. We have a system in which 400 people are trained for three months after recruitment before inducting those onto the production line. This system was adopted right in the beginning itself.
We promote and cultivate group leaders and leaders in-house, whenever a new factory is established; such person is appointed as the Leader of the line.
Operators skill and technology level is adequate with the local Indonesian people, however to manage the factory is not possible at all with Indonesian People; there fore management level people recruited are Indians. They do management well.
- By the way, are you not interested at all in the domestic market?
- Export market is the OEM Production of the Partner Brand. Brand is a must for producing for the domestic market. It's quite difficult to develop the brand of the company on its own, however one option could be to take a license of a brand and produce the same for the domestic market.
- As mentioned, right now you are procuring the fabric as specified by the buyers, making proposals for designing and pattern, Therefore, I think, Brand also should be possible if you feel like having one.
- If a brand is developed, sales become an issue. It's just that we don't have this function now, however this not mean that we are not interested in the domestic market.
- As your company mainly exports to U.S.A., have you also faced the heat of the ongoing economic recession in U.S.A.?
- Since the beginning, our company aims at different verities of multi products, therefore we have a vast product line-Up, and however there has been a trend of reduction in the lot size.
- You are interested in the domestic market too; we all should look forward to that isn't it? You set up a new factory after every two years. I am waiting for you with the se wing machines (laughs!!).
Thank you very much!
Realization of High Quality and High Productivity with Multi Item
"Lot size has become small, and low cost is in demand, therefore Operators' Skill Level Enhancement is an important Topic"" Therefore please use know-how of JUKI" says The Company Staff as well as the JUKI Service Staff. From left Mr. ISHIDA (JUKI Singapore of Jakarta office), Mr. RAJEEV RAKHRA(Unit Head PT Citra Abadi Sejati-Bogor), Mr. RAJ KUMAR(Strategic Head), ANTON SUDEWO(OBOR Machinery, Machine Agency), LEWIS TAN(JUKI Singapore)
View of the factory. Lighting arrangement is bright and being maintained beautifully. High productivity achievement is feasible
Direct-drive, High-speed,1-needle, Lockstitch Machine with Automatic Thread Trimmer (DDL-9000SS)
Computer-controlled, High-speed, Bartacking Machine (LK-1900AHS)
Out of the 16 factories of your company, PT. Citra Abadi Sejati - Bogor factory is also the leading factory producing middle and high end products.
Outdoor Items being produced are
- Jacket (45%)
- Bottom (55%)
and the lot size consists of 300 to 10,000 pcs.
Lot size used to be little larger in the past. Although there is not any difference as far as total volume is concerned now, but lot size has reduced and has become more time consuming, which is a point of concern" said Mr. RAJ KUMAR (Strategic Head) and Mr. RAJEEV RAKHRA (Unit Head PT Citra Abadi Sejati-Bogor).
This factory employs 1,100 employees, has a composition of 50 man power per line.
There are total 14 lines with a monthly production volume to the extent of 250,000 pcs. To achieve this much volume in small lot production requires production efficiency improvement, high level of efficiency while changing over one model to another model etc in particular. One might say that it requires double the capability. The manufacturing efficiency has been raised thoroughly along with the combination of the group leaders of the factory.
The evidence of the same can be seen in the Seiri-Seitoni.e. Arrangement and Cleanliness, Factory is bright and housekeeping is good. Lighting also is adequate and sufficient attention has been paid to the factory environment to make it Operator-Friendly.
"Naturally JUKI sewing machines are also important equipment in attaining high quality and high level of productivity" might appear as a Lip Service but can say this as a fact when we see JUKI Machines close to 100% all over the factory.
Aiming at Operators' Skill Improvement
"While talking to the buyers, Low Cost Topic is always discussed" (as told by Mr. Raj Kumar), Cost-Down is a major concern and shortening of lead-time also is strongly demanded.
Right from the sampling stage, it takes approx 100 days from selection of the fabric, design concept etc to get into the production, however Buyer gives time limit to the extent of 3 weeks for the delivery after the go ahead.
The company deals with and produces for famous brands like NIKE, KENNETHCOLE, MEXX, ESPRIT, CALVINKLEIN, TOMMYHILFIGER, ANNT AYLOR, PVH, PERRYELLIS, TALBOTS, LIZ CLAIBORNE. Factory wise items are fixed for production. Main factory is PT. Ungaran Sari Garments in Semarang producing about 1.5 million pcs/month alone.
The company is dealing into various items under Multi Item system, and is handling those by dividing into different factories. Since company is involved in various items, therefore has a variety of Sewing Machines too, such as ----- APW-196, LK-1900A, LK-1930, DDL-9000SS are being used.
Feed-off-the-arm, 3-needle, Double Chainstitch Machine (MS-1261)
Lockstitch, Automatic Welting Machine (APW-196)
Computer-controlled, High-speed,Shapetacking Machine (LK-1930)