Japanese suppliers in Indonesia: New entries and capacity enhancements
Activities of Aisin Seiki, IJT Technology, Keihin, Seiren, G-Tekt, TPR, Press Kogyo, and others
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This report summarizes activities of Japanese automotive parts suppliers in Indonesia in the seven months to late May 2014. The automobile sales volume in Indonesia continued to expand by 9.3% year-over-year (y/y) to 435,000 units during the period of January to April 2014, following a large increase of 10.2% y/y to 1.23 million units in 2013. In this country, major automakers like Toyota, Nissan, Honda, and Daihatsu continue to enhance their production capacities, to launch strategic vehicles designed for emerging countries, and to build engine plants (for details, please refer to this report).
Japanese parts suppliers have followed the OEMs and have been starting new operations and expanding their production capacities. These suppliers' moves are to satisfy automakers' demand for local production, promoting weight reduction and energy saving, and reduce production costs of vehicles.
In order to further strengthen operations in Indonesia, some suppliers are also restructuring their manufacturing and sales bases, establishing sales subsidiaries, and positioning Indonesia as export hubs. Activities in Vietnam, Malaysia, Laos, and Myanmar will be posted shortly in a separate report.
Activities of Japanese suppliers in Indonesia
|New entries||Supporting automakers' demand for local production and plans to increase production:
Ibara Seiki (cold forged products), Okajima Pipe (precision electric-resistance-welded tubes with small diameter and thin wall), Katsuyama Finetech (seat belt parts), Suminoe Textile (floor mats), Seiren (seat fabric), Chiyoda Kogyo (seat parts), Nishikawa Rubber (rubber and plastic products), Piolax (resin molded and metal parts), Fuji Oozx (engine valves), Press Kogyo (frame parts for trucks), Marugo Rubber (special hoses for trucks)
|Enhancement of production capacities, production of new items, etc.||Construction of new plants and buildings:
Aisan Industry (engine parts), Aisin Seiki Group (body, engine, and brake parts), Central Motor Wheel (aluminum wheels for next-generation IMVs), Hitachi Chemical (powdered metal products), Yutaka Giken (exhaust parts)
Supporting weight reduction and energy saving:
Keihin (ECUs), G-Tekt (CVT parts), DaikyoNishikawa (plastic engine parts)
Introduction of low-cost production lines:
Taiho Kogyo (highly-efficient engine bearing machining line; for models designed for emerging countries), Fine Sinter (new small-scale, highly-efficient shock absorber production line; to support Toyota's TNGA)
|Enhancement and restructuring of operations||JVC Kenwood (restructuring of manufacturing and sales bases to strengthen car electronics business), Imasen Electric Industrial (establishment of sales subsidiary for mechanical and electrical products)|
Sources: Press releases by each company
Related Japanese Supplier Reports:
* the US (Apr. 2014)
* China (part 2): Northern, Northeastern & Southern regions (Mar. 2014),
China (part 1): Eastern and Central China (Mar. 2014)
* Latin America (Part 2): Trends in Brazil and Mexico (Mar. 2014), Latin America (part 1): New plants in Mexico (Mar. 2014)
* Thailand (Part 1) (Jan. 2014), Thailand (Part 2) (Jan. 2014), ASEAN (Nov. 2013)
* Russia and Eastern Europe(Oct. 2013), India (Sep. 2013)
Establishment of new plants by Seiren, Piolax, Fuji Oozx, and others
Establishes joint venture (JV) with Taiwanese manufacturer; to start producing cold forged parts in April 2015In March 2014, Ibara Seiki established a subsidiary, PT. Ibara Lioho Indonesia, in the suburb of Bandung, West Java jointly with Lioho Machine in Taiwan. The company is building a plant equipped with an integrated system from production and machining to heat treatment of cold forged components. The plant is expected to go into production in April 2015. JPY 800 million will be invested in the first fiscal year. The plant will produce 1 million units of cold forged products annually. Steering-related shaft components will be manufactured through in-house machining. Ibara Seiki also plans to sell cold forged components to other companies, mainly to Japanese companies in the automobile industry which currently rely on imported components. The company intends to invest additional JPY 700 million by 2017 to introduce NC lathes and machining centers, depending on the sales trends.
Establishes JV to start producing small-diameter, thin-walled steel pipes in November 2014In November 2013, Okajima Pipe established a JV, PT. Top Tube Indonesia, in Karawang, West Java with Toyota Tsusho. The JV was capitalized at JPY 1.2 billion and Okajima Pipe owns 53% of shares. The new plant manufactures general, surface-treated, and special steel pipes for automotive parts suppliers.
Starts operations at new plant for seat belt buckles in January 2014In January 2014, Katsuyama Finetech started production at its new plant of PT. Katsuyama Finetech Indonesia in Bekasi, West Java. The plant manufactures automotive seat belt components and is engaged in consigned processing of cationic electrodeposition coating. Products are supplied mainly to major local seat belt suppliers. JPY 1 billion was invested in this project. The plant is equipped with a press machine equivalent to those at its Japanese main plant and Thai plant, as well as coating facilities. Initially, production began using only part of the capacity due to a limited number of employees. In the future, the company aims to achieve annual sales of JPY 500 million.
To establish automotive and motorcycle spring manufacturing subsidiary; to start operations in September 2014Goko Spring is establishing an automotive and motorcycle spring manufacturing subsidiary, PT. Goko Spring Indonesia, in the suburb of Jakarta. JPY 200 million is being invested in the construction of a new plant. The plant is expected to start operations in September 2014. The plant will produce products that are currently supplied from its Thai plant for the Indonesian market. The company plans to produce 100 million to 300 million units in the first year and increase the volume to 1.5 billion units in the future. Indonesia is the third country that the company has built its overseas plants following Thailand and Vietnam. Goko Spring plans to increase its overseas sales by 60% to JPY 2.3 billion in the next five years compared to the fiscal year ended in February 2014.
Establishes floor mat manufacturing JV; starts production at beginning of 2014In 2013, Suminoe Textile established a JV, PT. Suminoe Surya Techno (SST), in Bandung, West Java with a local major textile company. The JV was capitalized at JPY 50 million and Suminoe Textile owns 51% of shares. Since the beginning of 2014, the plant has manufactured floor mats for 40,000 vehicles per month. The products are supplied to local plants of major Japanese automakers.
New seat fabric plant begins production at end of 2013At the end of 2013, Seiren started producing seat fabric at PT. Seiren Indonesia in Bekasi, West Java. JPY 3.1 billion was invested in this plant. The plant can produce 200,000 meters of fabric per month. Concurrently, a new plant with the equivalent capacity also started operations at Seiren India Private Limited in India. The combined monthly production volume of the two plants is expected to be 150,000 meters in 2014. In Asia, the company also has plants in China and Thailand. With these four plants, Seiren intends to support Japanese automakers' plans to increase production.
Establishes seat component manufacturing JV; to start production in 2015In 2013, Chiyoda Kogyo established a JV, Pelangi Prima Teknikraya, in Bekasi, West Java with a local company. The JV was capitalized at JPY 120 million and Chiyoda Kogyo owns 67% of shares. The company received orders for functional parts for seats which will be used in the second and third row of a new model that will be produced by a Japanese automaker in 2015. The parts will be supplied to a seat plant of the automaker's local supplier. By transferring underutilized facilities from Japan to Indonesia, Chiyoda Kogyo plans to operate a highly-automated production line at a low cost. The sales target is JPY 500 million in 2016.
New motorcycle and automobile hose plant starts operations in December 2013In December 2013, Tokai Rubber Industries completed a new plant at its subsidiary for producing and selling hoses for motorcycle and automobiles, PT. Tokai Rubber Auto Hose Indonesia, in Bekasi, West Java. The company introduced a new production line, and transferred production facilities from a leased plant that the company had utilized since February 2012. The plant started producing plastic and rubber hoses for automobiles, in addition to plastic hoses for motorcycles. JPY 2.8 billion was invested in this plant. Tokai Rubber intends to achieve sales of JPY 2.3 billion in 2015.
Rubber and plastic product JV's plant begins operations in January 2014In January 2014, Nishikawa Rubber Industries began producing rubber and plastic products in the cutting and stamping processes at its JV's new plant. The JV, PT. Nishikawa Karya Indonesia, was established jointly with a local company and is located in Sumedang, West Java. In April 2014, an extruding process was added to start full-scale production. Nishikawa Rubber owns 80% of the JV's shares. The plant is introducing loss-free approaches accumulated in Japan for production control and human resource assignment. The annual sales target is JPY 1 billion in 2018.
Interior and exterior synthetic resin component plant starts operations in August 2013In August 2013, Nissen Chemitec started forming, processing, and assembling at its new plant of PT. Nissen Chemitec Indonesia in Karawang, West Java. The plant produces interior and exterior components for automobiles as well as synthetic resin components for motorcycles. JPY 2.4 billion was invested in this plant. The company also has its overseas plants in the U.S. and Thailand. Through coordination with its Thai plant, Nissen Chemitec intends to strengthen its supply network to Japanese manufacturers operating in ASEAN countries.
Resin molded and metal component plant starts production in August 2013In August 2013, Piolax started operations at its new plant of PT. Piolax Indonesia in Karawang, West Java. The plant produces resin molded fuel system components and metal powertrain components for automobiles and motorcycles. The company aims to achieve sales of JPY 1 billion in 2015 and JPY 1.2 billion in 2016. In Asia, the company also has plants in Thailand and India and same kinds of components are currently produced in each country. Piolax intends to consolidate production by item to enhance cost competitiveness.
To start engine valve production in fall 2014In autumn 2014, Fuji Oozx will start engine valve production at its new plant of PT. Fuji Oozx Indonesia in Karawang, West Java. The subsidiary was established jointly with a local company, PT. Prospect Motor. At the prospect of new orders from local Japanese automakers, the company will produce 6 million units annually in the fiscal year ending in March 2015 (FY 2014*). From FY 2015 to FY 2017, the company will carry out its first-phase capacity enhancement to increase the annual production volume to 15 million units in FY 2017. In FY 2018 and later, Fuji Oozx plans to enhance the capacity further. The company aims to expand its supply to India and Southeast Asian countries. *Note: In this report, "FY" is used only when the fiscal year will end or ended in March.
Truck frame component plant starts operations in January 2014Press Kogyo invested JPY 2 billion in its plant of PT. P K Manufacturing Indonesia in Karawang, West Java. The investment was made to build up its automotive business with introduction of press, drilling, laser beam, and other facilities. Since January 2014, the plant has produced frame components for Isuzu trucks (for 17,000 trucks per year). The company produces all frame components for medium- and heavy-duty trucks for the Southeast Asian market in Indonesia.
Establishes two lead-acid storage battery JVs (manufacturing and sales) with Indian Mobile Group in December 2013In December 2013, Furukawa Battery established two JVs for producing and selling motorcycle and automotive lead-acid storage battery. The JV partner is an automotive parts wholesaler in the Indian Mobile Group (Salim Group), PT. Central Sole Agency. The manufacturing JV, PT. Furukawa Indomobil Battery Manufacturing (FIBM), in Bekasi, West Java was capitalized at JPY 1.9 billion. The sales JV, PT. Furukawa Indomobil Battery Sales (FIBS), is located in the same premises with FIBM, with a capital of JPY 100 million. Furukawa Battery owns 51% of FIBM's shares and 49% of FIBS's shares. FIBM's new plant in Purwakarta, West Java is expected to start production in January 2015. The company intends first to capture the aftermarket where a rapid growth is expected and then to gradually start supplying products for new vehicles. In the future, Furukawa Battery plans to use these subsidiaries as its export hub to Southeast Asia and Middle East.
Allies with local parts supplier and machine trading company to start full-scale overseas parts manufacturing and salesIn September 2013, Heian Manufacturing formed a business alliance with a local supplier in Jakarta, PT. Pamindo, mainly for technology transfer. The company has licensed its technology to manufacture drive plates (powertrain components) to the local partner. Heian Manufacturing supplies products half-finished using its advanced forming technologies to Pamindo, which produces finished products. The company plans to supply the product to Japanese automakers in Indonesia. Heian Manufacturing also intends to expand its supply to other ASEAN countries by utilizing preferential duties under the ASEAN free trade agreement. To this aim, the company has formed a partnership with a machine trading company, Maruka Machinery, in Osaka, Japan to obtain support for establishing a distribution channel and export-related operations. In two years, Heian Manufacturing aims to double the annual production volume of the above products to 1 million units and to achieve overseas sales of JPY 200 million.
Starts producing anti-vibration rubber and special hoses for trucksIn January 2013, Marugo Rubber started producing anti-vibration rubber at PT. Marugo Rubber Indonesia in Karawang, West Java. The plant produced 1.5 million units in 2013. Through facility expansion, the company plans to increase the volume to 4 million units in 2014 and to 6.5 million units in 2015. In February 2014, the company also started producing special hoses for trucks. Previously, these hoses had been exported from Japan. Marugo Rubber plans to produce 70,000 units in 2014 and 165,000 units in 2015. JPY 350 million will be invested in total to enhance its production capacity. The company aims to increase its sales from JPY 100 million in 2013 to JPY 800 million in 2015, and further to JPY 2 billion in the future.
Ties up with local company to produce stamping parts for HondaMarujun is establishing a supply capacity to meet Honda's demand for local procurement in Indonesia without having its own local plant. Marujun signed an agreement with a local company to provide its manufacturing technologies within 2013. The company intends to develop a local production capacity based on its technologies to start local supply of stamping parts. (Source: Press release in November 2013)
Enhancement of production capacities by Aisin Seiki, Keihin, and others
To establish new plant building by summer 2015 to increase production of throttle bodies and fuel pump modulesIn FY 2013, Aisan Industry invested JPY 1 billion at its plant of PT. Aisan Nasmoco Industri in Bekasi, West Java to add a production line. This increased its production capacity by 10%. By summer 2015, the company will complete a new plant building, which will increase the total floor area by nearly 20%. JPY 1 billion to JPY 2 billion will be invested in this expansion. The new plant will be used to produce engine components such as throttle bodies, fuel pump modules, and canisters as well as components for motorcycles. The expansion is to accommodate an expected increase in demand from Toyota and Daihatsu, which will build new engine plants in 2016.
To increase production of body, engine, and brake parts together with group company, AdvicsIn March 2014, Aisin Seiki established its second production subsidiary in Indonesia, PT. Aisin Indonesia Automotive, in Karawang, West Java. The company intends to expand its production lineup of body components such as power sliding doors and door handles. Aisin Seiki also plans to introduce new equipment to start producing die-casting such as engine front modules as well as oil pumps and other engine components in January 2015. Meanwhile, Advics established Aisin Group's first brake component manufacturing subsidiary in Indonesia, PT. Advics Manufacturing Indonesia, on the same premises as the new subsidiary in April 2014. The new plant is scheduled to start producing brake boosters and drum brakes in December 2014. Management resources will be shared between the two subsidiaries to improve operation efficiency.
Raises local subsidiary's capital; to establish integrated production system for casted partsIJT Technology Holdings was established in October 2013 by integrating management of three Isuzu parts suppliers: I Metal Technology, Jidosha Buhin Kogyo, and TDF. The holding company plans to increase the casted parts production capacity at the former I Metal Technology's local subsidiary, PT. Asian Isuzu Casting Center (AICC), in Karawang, West Java. In March 2013, before the management integration, the former TDF and the former Jidosha Buhin Kogyo had established a JV, named PT. TJForge Indonesia (TJFI), in Karawang, West Java. This JV's plant is also located on AICC's premises and expected to go into production in May 2014. JPY 3.6 billion was additionally invested in TJFI to finance capital expenditure, which increased TJFI's capital to JPY 6 billion. An integrated production system will be established to accommodate Metal Technology's casted parts, TDF's production of forged suspension parts, and Jidosha Buhin Kogyo's machining and assembly. The production capacity in forged product volume basis is 10,000 tons per year.
|Imasen Electric Industrial||
To establish sales subsidiary in July 2014 to expand market and accelerate customer supportIn April 2014, Imasen Electric Industrial announced that it will establish a local sales subsidiary for automotive components such as mechanical and electrical products in July 2014. The subsidiary will be named PT. Imasen Parts Indonesia (tentative) and located in Bekasi, West Java. The subsidiary was established to satisfy customer needs promptly in the expanding Indonesian automotive market. The subsidiary is expected to start operations in January 2015, with a capital of JPY 30 million.
Starts plating in 2014 to meet direct orders from Japanese manufacturersAt the beginning of 2014, Kida Seiko started plating for motorcycle and automotive fastener products at its JV, PT. Indo Kida Plating, in Bekasi, West Java. The company began receiving direct orders for plating from Japanese companies. This business expansion was made after plating for its JV partner, PT. Garuda Metalindo (screw supplier), in Jakarta had become stable so that the company can ensure the quality of the plating equivalent to that in Japan. Kida Seiko aims to raise the plant's utilization ratio from the previous 60% so that its sales will increase by 60% from the previous year's outlook to over JPY 800 million in the fiscal year ending in April 2015. The company will also consider expanding its production capacity if orders increase further.
Starts producing automotive ECUs in April 2014In January 2014, Keihin started producing electronic control units (ECUs) for automobiles for the first time in Indonesia at the first plant of PT. Keihin Indonesia in Bekasi, West Java. The plant is equipped with an ECU production line for motorcycles with an annual production capacity of 4 million units. The company reduced the amount of investment by commonly using part of this production line for automotive ECUs Keihin also added a new small-scale and simple dedicated production line. The plant has an annual production capacity of 200,000 units.
To strengthen car electronics business through restructuring of its bases in AsiaIn January 2014, JVC Kenwood announced that it will restructure overseas manufacturing and sales bases to reduce its fixed cost in FY 2014 and later. In Asia, two JVC and Kenwood sales subsidiaries will be consolidated in Thailand while a sales subsidiary is newly established in Indonesia. With regard to manufacturing, production of car electronics products at JVC Manufacturing Malaysia Sdn. Bhd. in Johor, Malaysia will be transferred to PT. JVC Electronics Indonesia in Karawang, West Java, Indonesia in early FY 2014.
Consolidates two manufacturing subsidiaries in March 2014; starts producing CVT partsIn March 2014, G-Tekt consolidated its two local subsidiaries, PT. G-TEKT Indonesia Manufacturing (G-TIM) in Karawang, West Java and PT. Auto-Body Manufacturing Indonesia (AMI). With G-TIM as the surviving company, management resources will be concentrated to improve business efficiency. In addition to conventional production of transmission and body components, G-TIM started producing continuously variable transmission (CVT) components in 2014. Previously, CVT components had been produced only in Japan, but local production started to satisfy requests from customers.
Constructing new engine component plant to go into production within FY 2015DaikyoNishikawa is constructing a new plant for plastic oil strainers (engine components) at PT. DaikyoNishikawa Tenma Indonesia in Bekasi, West Java. The plant is scheduled to go into production within FY 2015. Products will be supplied to Daihatsu's new plant. JPY 800 million will be invested in the construction. While conventional oil strainers are made of metal, DaikyoNishikawa succeeded in producing plastic strainers and thereafter has been increasing its market shares both in and outside Japan. The company is the leading Mazda parts supplier and the sales to Mazda account for 70%. However, DaikyoNishikawa intends to expand its customer base to strengthen its business foundation.
To start operating highly-efficient machining lines for engine bearings in 2015Taiho Kogyo plans to add two highly efficient production lines, called RR lines, for machining engine bearings at a plant of PT. Taiho Nusantara in Karawang, West Java. The company plans to start operating them in 2015. Compared to conventional production, the RR line can reduce the number of processes by 30%. The amount of investment can also be reduced by more than 15%, to about JPY 400 million in this case. The engine bearing production capacity will be 600,000 units per line per month. Products will be supplied to Toyota's new engine plant also located in Karawang. The engine bearing will be used on strategic compact vehicles designed for emerging countries. Production of the compact models will start in the first half of 2016.
|Central Motor Wheel||
Second aluminum wheel plant starts operations in January 2014In January 2014, Central Motor Wheel started operations at its second aluminum wheel plant, PT. Central Motor Wheel Indonesia, in Karawang, West Java. The plant was built to increase production for Toyota's next-generation innovative international multi-purpose vehicles (IMVs). JPY 2.6 billion was invested in this plant. Compared to the first plant, reductions have been made for the second plant in terms of capital investment, production space, and head-count. Meanwhile, the local procurement ratio has been raised to nearly 80% to enhance cost competitiveness. The plant has an annual production capacity of 250,000 units. Because the company received orders also from local Daihatsu and Nissan plants, the company will increase the annual capacity to 500,000 units by October 2014 and 1 million units by spring 2015.
To expand production capacity for automotive piston ringsTPR will increase the monthly production volume of piston rings for automobiles at PT. TPR Indonesia in Bekasi, West Java. Specifically, the volume will be increased from 400,000 to 500,000 units at the beginning of 2014 to 900,000 to 1 million units by FY 2016. The enhancement will be made to meet an increase in demand from Japanese automakers in Indonesia, Thailand, and other nearby countries. In FY 2016, the monthly production volume at this plant will increase to 2.5 million units, combining piston rings for both motorcycles and automobiles. The ratio of production for automobiles will be raised from 20% to 30% in FY 2014 to 40% in FY 2016.
Enhancing JV's plant facilities to start production by end of 2015In June 2013, Toshin started operating the plant of its JV, PT. Toshin Prima Fine Blanking. The subsidiary was established jointly with the Indoprima Group and is located in Surabaya, East Java. Fine blanking and other products are not only supplied within Indonesia but also exported to Thailand. In order to satisfy growing demand from Japanese automakers in Indonesia and Thailand, the company are introducing 1,100-ton and 400-ton press machines, one each, in 2014. Toshin plans to start producing suspension and exhaust manifold flanges as well as clutch system components at the beginning of 2015. The sales target is JPY 1 billion in the fiscal year ending in December 2015.
To enhance ceramic substrate production capacity for enginesIn 2014, Noritake Co., Ltd. will invest several hundred millions of Japanese yen in PT. Noritake Indonesia in Purwakarta, West Java to enhance production facilities. In 2015, this enhancement will increase the annual capacity to produce ceramic circuit substrates for engines by 20% from 50 million units in 2014. From its Matsusaka plant in Japan, firing furnace and equipment for printing wiring on substrates are being transferred to this plant. Noritake aims to increase the ratio of its overseas sales from over 30% in FY 2013 to 40% in FY 2015. The facility enhancement at the Indonesian plant is part of this initiative. For further capacity enhancement, the company will first introduce equipment to currently unused space. Noritake is also considering expanding its building in the long run.
Constructing second plant for powdered metal products for automobilesIn November 2013, Hitachi Chemical renamed its Indonesian subsidiary in Karawang, West Java from PT Hitachi Powdered Metals Indonesia to PT Hitachi Chemical Indonesia (HCID). On the premises of an existing plant, the company is newly constructing the second plant for powdered metal products for automobiles (engine and transmission components). The new plant is expected to go into production in spring 2015. The products will mainly be supplied to Japanese automakers like Daihatsu and Honda. The existing first plant is currently producing products for motorcycles. Currently, products for automobiles are imported from its Thai plant. The company, however, decided to localize production to meet customers' requests. In FY 2015, the company plans to increase the sales by 50% from the FY 2012 level.
Introduces new production line to existing plant in 2013 to support Toyota's TNGAFine Sinter introduced a new small-scale, highly-efficient production line for shock absorber components at PT. Fine Sinter Indonesia in Karawang, West Java. The plant started operations in 2013 and this is the company's first production line which is compliant with the Toyota New Global Architecture (TNGA). Compared to conventional production lines, the new one only has one-sixth of production capacity and the amount of investment was less than the half. In order to cover these reductions, the post-forming machining process, which is conventionally carried out at a separate location, was integrated into the same production line to increase production efficiency.
Adds second plant to start full-scale automotive business in January 2014Yutaka Giken added the second plant to its existing plant at PT. Yutaka Manufacturing Indonesia in Bekasi, West Java. The company began to increase production of exhaust products for automobiles (silencers and catalytic converters) in January 2014. The existing plant is the Asia's largest plant for disk brakes and mufflers for motorcycles. Regarding automotive components, the annual production volume of silencers will increase from 61,000 units in 2013 to 160,000 units in 2014 and further to 261,000 units in 2016. On the other hand, that of catalytic converters will increase from 40,000 units in 2013 to 143,000 units in 2014 and further to 249,000 units in 2016.
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