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INDONESIA
Sinarjaya to Hike Production in 2013
Sinarjaya has no plan to set-up any more plants in other parts of Indonesia in the near future. “We are more focused on this plant and also its expansion at the moment,” clarified Tedi. The mother plant caters to the market up to East Java. Sinarjaya has got a fleet of vehicles that collects tyres from the market, besides, clients also drop in tyres at
the plant.
The retreading firm also retreads OTR tyres of up to 49 inch rim size. The company started OTR retreading in 1995 and retreaded around 600 tyres in 2012. “We hope to increase the retread tyre production by 20 per cent this year,” he said. Sinarjaya retreads OTR tyres by the cold process.
It was never easy to organise meetings with Indonesian retreading companies as they prefer to live in their own world and are often not very keen to meet visitors, never mind a journalist from an international retreading magazine. The bigger retreaders prefer to operate under a shroud of secrecy and think that meeting a journalist would make information about their operation public.
But somehow a meeting with
tonnes,” Arief informed.
Starting as a small retreading unit in the early eighties, Sinarjaya emerged as one of the biggest retreaders in Bandung. It shifted to the new bigger location in the middle of Bandung in 1986. Beginning with the traditional hot process, Sinarjaya joined the precure wave in the early nineties. “The hot process is fading out and that is reflected in our output,” said Tedi Gautama, Vice Director of Sinarjaya and son of
Crown to Focus
on Customer Service
Arief Subahari, Director, Pt Sinarjaya Rimbawan Asri
Bandung based retreading company Sinarjaya was organised. Bandung is around 180 km south east of capital Jakarta and was around a three hour drive from the Indonesian capital. The capital of West Java province and third largest city in Indonesia, Bandung is no longer quite the same city as it used to be around half a dozen years ago. It is now a big city with roads choked with traffic, particularly two wheelers, coming from all sides.
Interestingly, the time of the visit was opportune as Pt Sinarjaya Rimbawan Asri is gearing-up for raising production at its plant. Currently, Sinarjaya retreads around 700 tyres per day and it plans to raise production to 900 tyres per day. “We will raise the production levels by the end of this year,” confirmed Arief Subahari, Director, Pt Sinarjaya Rimbawan Asri. Sinarjaya is a big retreading company. Therefore, it is natural for it not to depend on the outside market for sourcing tread liner.
It is very common among large retreaders to manufacture their own tread liner and not supply the open market in Indonesia. “We also manufacture our own tread at this plant. We manufacture around 5 tonnes of tread liner per day. With the production hike planned later this year, tread liner production would also be hiked to around 7
Arief. “The hot cure production is barely 15 per cent of our total monthly output of 700 tyres,” he further confirmed.
“Hot cure is on the way out but it is still here and will take some more time to go completely”, said Arief, commenting on the ongoing trend in the Indonesian market. “Currently, 80 per cent of the Indonesia market is controlled by the precure version and hot cure has been reduced to 20 per cent.” When asked how big the retread market in Indonesia was, Arief said , “No conclusive figures are available but by rough estimates of in between 15,000 to 20,000 tyres are being retreaded every day in Indonesia.
Interestingly, the big retreading companies are also investing in advanced equipment, which is a positive sign for retreading in the country. It also indicates that retreading is finding greater acceptability in the market and retreading companies are becoming more modern and hi-tech to meet the growing aspirations of the Indonesian people. It has been observed that more and more large retreaders are installing expensive shearography machiner y in their plants. “We have installed a shearography machine from German company Steinbichler last year,” informed Tedi.
Jakarta headquartered Crown Retread has no plans for further expansion in the saturated Indonesian retreading market. Indonesia’s biggest retreading company has 42 large and small retreading units spread all across Indonesia. It is the only company that has a nationwide retreading network, with plants in almost every city in the country. Instead of expanding further, it has changed its focus to service. “We have expanded to a level where we can comfortably claim to be a national player. We don’t think there is any more expansion required. Our focus is now shifting to provide good quality service to our clientele as these customers are key to our survival,” admitted Harianto Ong, Vice Chairman, Crown Retread.
The move will help Crown to consolidate its nationwide operation and market share in the saturated Indonesian market. Moreover, it is interesting to know that a major player is focusing on some kind of value-addition in an industry that is highly disorganised, lacks quality norms and is saturated. The move will go a long way to establishing quality standards in the Indonesian retreading sector. In order to hike quality standards and increase focus on customer service, Crown continues modernising its plants. “We installed a third shearography machine last year and so plants in Jakarta, Surabaya and Manado (capital of Northern Sulawesi province) are all equipped to modern standards.
Crown has the capacity to produce 500 tonnes of tread liner per month, feeding its plants as well as supplying the open market. With the market conditions becoming difficult due to the presence of small and mid-level retreaders operating at all price levels, it is always a herculean task to run such a large operation. “Not all of the plants are running every day,” admitted Harianto. It opened the last plant back in 2004 and after that focused on restructuring and organising the whole operation. When asked about the reasons for setting-up so many
plants in Indonesia, Harianto explained, “We intend to have a presence in all parts of Indonesia and this is one of the ways to reach out to the customers and to increase the acceptability of retreading here.” The retreader’s major international foray does not draw a rosy picture and failed to give the desired results. Crown started exports in 1993 and found it difficult to operate in the highly competitive far-eastern market. “We do export tread liner but hardly five per cent of the total production,” informed Harianto. Crown finds it difficult to compete with Chinese and Malaysian competition. “We could not match their prices, therefore, we do export but only in a negligible quantity, supplying to just a few committed customers.”
In its international foray, Crown also established overseas retreading plants. “We set up four retreading plants in a joint-venture with local partners in China but later on decided to withdraw from the Chinese market,” Harianto confided. When pressed further, he added, “We found both the local partners and the market difficult.” Crown opted out of the Chinese foray around six years back and continued to focus on its home turf, where it has a larger operation and stakes. He further opened-up, “There are too many players in the world and it is difficult to run overseas operations from an Indonesian base.”
On his observation on the size of the Indonesian retreading industry, Harianto believes, “Indonesia consumes about 2,000 tonnes of tread liner a month.” But there is more supply than demand. “The installed capacity is much more than the consumption,” he claimed. Around 200,000 tyres are being retreaded in Indonesia each month. Over the years, the Indonesian retreading industry has grown in size and stature; when a number of new players joined the market, this further intensified competition in the already stagnant sector. “Three decades ago, the number of retreading plants was around 100 but now it is much higher. No
34 Retreading Business