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Building three new factories

The prolonged economic crisis, which has resulted in uncertainty in the business climate in Indonesia, has not been able to prevent the Maspion Group from realising the construction of three new factories. These three factories were officially opened in September 1998. The location of the three factories is in the Maspion Industrial Estate, Gresik, East Java. The three factories, construction of which has been completed, are a stainless steel factory with a production capacity of 50,000 tons per annum and involving investment of around US$ 60 million. This factory, located on 11 hectare of land, is operated by P.T. Maspion Stainless Steel (MSS). The factory is located on 11 hectare of land. MSS is a joint venture between the Maspion Group through P.T. Alumindo Light Metal Indonesia, which owns 70% of the shares and three partners from Japan- Kanematsu Corp. (15%), Sumitomo Metal (10%) and Nippon Kogyo (5%).

The second factory produces PVC resin through P.T. Siam Maspion Polymers which is a joint venture between the Maspion Group and its partner, the Thai company, Siam Cement Group, each of whom owns 50% of the shares. This factory, which is located on an area of 2.8 hectare and involves investment of around US$ 60 million, has a capacity of 120,000 tons per annum. Through its third factory, managed by P.T. Maspion Steelbar, Maspion Group has established a billet reinforcing rod plant with a total production capacity of 240,000 tons per annum.

With the operation of these three factories, the foundations of the Maspion Group have obviously been strengthened. As well as this, the structure of this business group has become stronger. The operation of these three factories has also made the Maspion Group an integrated producer of plastic and steel goods.

The economic crisis has influenced business performance

The long drawn-out economic crisis has reduced community purchasing power. As a result, there has been a drop, quite a drastic drop, in demand for everyday requirements which are not considered staple goods. The Maspion Group has felt the impact of the crisis as its core business is not the production of staple commodities. As a result sales of its production dropped. The Maspion Group's core business is in the production of plastic ware and household electrical products, the aluminium sheet industry, the foil and extrusion industry, the aluminium and steel household utensils industry and the building materials industry.

Even the condition of the core business, which produces building materials, has given cause for concern because of the close links with the property and construction sector, which is currently being hard hit by the economic crisis. In view of the drop in the performance of all the Maspion Group's core businesses because of being hit by the crisis, the revenue of this group started to drop quite drastically as of 1997 - a 25 % drop from the 1996 level of Rp. 775 billion to only Rp. 585 billion.

As a result of the economic crisis, the Maspion Group has postponed several projects such as the construction of wharf facilities in Gresik, which it was originally planning to build along with P.T. Siam Maspion, a terminal involving investment of around US$ 10 million. The wharf, whose construction was 70% completed, was originally designed for those living in the Manyar industrial zone, Gresik, which belongs to the Maspion Group and is used basically for the importing of chemical and liquid basic materials. It is planned that this harbour should have a depth of 12 metres and be accessible to ships of 40 tons DWT and a cargo capacity of around 2,000 TEUS (Twenty Equivalent Units).

Even though its performance has dropped, the Maspion Group has not collapsed and still has the resilience to escape from the crisis in view of the fact that several of its products have penetrated the export market, particularly aluminium sheet, foil and extrusion. The name Maspion is well-known among consumers for locally-manufactured household utensils from both plastic and metal. Another evidence of the resilience of this group is the construction of the three new factories described above.

Another factor, which has given the Maspion Group resilience in facing the current economic crisis is the company's financial state. According to a source in Maspion Group, its party has hedged, particularly on the debts of its two subsidiaries which have gone public, P.T. Alumindo Light Metal Industry and P.T. Indal Aluminium Industry. The assets of these two companies total around US$ 90 million, approximately 80% of which has been hedged.

As well as this, according to the Maspion Group's Director of Corporate Finance, Ronawati Wongso, the Maspion Group, as well as hedging debts on the two subsidiaries which have gone public, has converted its debts into rupiah, a fact which has given the Maspion Group quite a good image in the eyes of creditors as a group which is reliable in paying loan instalments and never defaults. Thus it is reasonable that, at a time of economic crisis, the Maspion Group is still able to obtain overseas loans, a percentage of which has been used to realise the construction of these three factories.

Active in partnership with foreign companies

Maspion Group is one of the conglomerates which is attractive to investors, particularly foreign investors, as is evidenced in the significant number of foreign investors who have been involved in cooperation with this group of companies through the formation of joint ventures. Foreign partners which have worked with the Maspion Group include Samsung Electronic (South Korea), Marubeni Corp., Hanwa Cozai, Kanematsu, Sumitomo, Namoto (Japan), Seven Sea Chemical (Hongkong), Pan Air Electronic, Fluorescent Lamp (Taiwan), Srithai (Thailand) and Du Pont (USA). Through these joint ventures with foreign partners, the Maspion Group, which was originally only involved in the production of household utensils, using conventional production processes, has now developed high-technology products.

Through partnerships with foreign companies, this group's products have become more varied, covering a broad range of products - not just plastic household items, but also aluminium, enamel and melamin products. As well as this, the Maspion Group has become involved in the production of household products with a high added value such as electronics goods, AC, refrigerators, washing machines, TL lamps and other household requirements.

Apart from cooperation through joint ventures, the Maspion Group has also become involved in technical cooperation with other world-class companies such as Hoogovens Technical Services Technological and Operational Assistance. B.V. Hoogovens is one of the strongest steel and aluminium producers in Holland.

Through this cooperation, the Maspion Group's P.T. Alumindo Light Metal Industry (ALMI) has obtained technical assistance from its Dutch partners related to the method of operating the cold mill unit which can produce 72,000 tons of aluminium sheet per annum. Through the operation of this new machine, P.T. ALMI has been able to increase its aluminium sheet production capacity from the original volume of 54,000 tons per annum to 72,000 tons per annum. With this capacity, P.T. ALMI is currently the largest aluminium sheet producer for the ASEAN area. As well as this, as part of cooperation with its partner from Holland, P.T. ALMI has also been able to penetrate the Dutch market with Hoogovens itself being the marketing agent.

Table - 1

Profile of the Maspion Group

Holding company : MAS PIONEER (MASPION), PT
Address (Surabaya) : Jl. Kembang Jepun No. 38-40
City : Surabaya 60162, East Java
Phone(s) : (031) 330333, 331445, 341040

Fax : (031) 333218, 333055
Telex : 31127 MASPION IA

Address (Jakarta) : Jl. Pinangsia Timur No. 50
City : Jakarta Barat 11110
Phone(s) : (031) 6903886, 6911641, 6907430
Fax : (031) 6911564
Telex : 4267 MASPION IA
Number of companies : 50 Companies
Line of business : -Industry:
 Aluminum industry, cable, electric
 equipment, electronic equipment,
 steel industry, households
 form plastic and steel, PVC
 resin industry
 Banking, investment holding
 Industrial estate development
 Housing development, Department
 store, and office building
Total Asset : 1997 - Rp 8.5 trillion (estimate)
Sales Turnover : 1997 - Rp 585 billion (estimate)

Chairman : -Mr. Alim Husin alias
 Go Kiem Moey

Other Key Persons : -Mr. Alim Markus alias
 Go Wen Kuang
 -Mr. Alim Satria
 -Mr. Alim Perkasa
 -Mrs. Angkasa Rachmawati
 (Ong Sui Eng)

Source: Data Cosult

Starting out from household utensils

The Maspion Group started off from a small company which could be categorised as a home industry. Thus its original production was only household utensils, such as saucepans, requiring only a simple manufacturing procedure. In the process of its development the Maspion Group's saucepan industry expanded until Alim Husin, the pioneer of this group, decided to try to develop this group by establishing P.T. Logam Jawa in 1962, another of the original companies from which the Maspion Group sprang up. This company's production was more varied, no longer just limited to saucepans, but capable of producing other household utensils using more sophisticated technology and basic materials such as aluminium and steel. This company's products include spoons, tiered food containers and kettles.

Progress was rapid after Alim Husin established P.T. Maspion in 1971. This company at first produced household utensils from plastic such as buckets, baskets and plates. Then P.T. Maspion began to diversify by starting to produce electrical equipment and PVC pipes. From that time Alim Husin's business progressed rapidly and spread to various fields of enterprise until finally the Maspion Group business kingdom was established, supported by four main business pillars - household plastic ware and electrical equipment, the aluminium sheet industry, the foil and extrusion industry, the aluminium and steel household industry and the building materials industry.

As his business kingdom extended and he grew older, Alim Husin, as part of the regeneration process handed over the management of his business to his children - Alim Markus, Alim Husin, Alim Satria and Alim Perkasa. The eldest son, Alim Markus, is the head of the business kingdom.

Table 2

Several companies, some of whose shares are owned by the Maspion Group
Name of company Line of business

-Mas Pioneer (Maspion), PT Households industry from
 plastic and steel,
 electric equipment
 industry, and PVC pipe
-Alumindo Light Metal Industry, PT aluminum sheet and foil
-Indal Aluminium Industry, PT Aluminum sheet and
 extrusion industry
-Logam Djawa, PT Households industry from
 aluminum and steel
-Aneka Kabel Cipta Guns, PT Cable industry
-Dharma Cipta Karya, PT PVC pipe industry
-Dupont Agriculture Product, PT Herbicide industry
-Indal Steel Pipe, PT Steel pipe industry
-Maspion Kencana, PT PVC pipe industry
-Maspion Stainless Steel, PT Stainless steel industry
-Maspion Steelbar, PT Steel concrete and billet
-Samsung Maspion Indonesia, PT Electric and electronic
-Sea Horse Maspion Indonesia, PT Chemicals industry
-Shanghai Maspion Oleo Chemical, PT Oleochemical industry
-Shanghai Maspion Printing Ink, PT Print ink industry
-Siam Maspion Polymers, PT PVC resin industry
-Alaskair Maspion Indonesia, PT Fan industry
-Heisei Stainless Steel, PT pipe stainless steel
-Indal Compact Aluminium, PT Aluminum industry
-Indofiber Mattress Indonesia, PT Mattress industry
-Naomoto Indonesia, PT Electric equipment industry
-Royal Chemical, PT Polyester fiber industry
-Srithai Maspion Indonesia, PT Lamp industry
-TFC Maspion Indonesia, PT Gas tube industry
-Trisula Pack Indah, PT Packaging industry

-Alim Investindo, PT Investment holding
-Bank Maspion INTERNATIONAL, PT Banking
-Guna Investindo, PT Investment holding
-Husin Investama, PT Investment holding

-Altap Prima Industrial Estate, PT Industrial estate
-Alumindo Industrial Estate, PT Industrial estate
-Maspion Industrial Estate, PT Industrial estate

-Maspion Mal, PT Department store/
 supermarket dev'l
-Pondok Maspion, PT Housing development
-Wisma Maspion, PT Office building

-Maspion Trading, PT Trading

-Citra Maspion Contractors, PT Contractors
-Indalex, PT Contractors

Source: Data Consult

Expansion overseas

The Maspion Group has expanded overseas in order to strengthen the marketing network for its products. At the moment there are around five companies overseas owned by the Maspion Group, all of them involved in trading Alim Brothers Industries PT. Ltd. Singapore, Fung Lam Trading Company (Hongkong), KK Maspion (Japan), Maspion Canada Inc., (Canada) and Taiwan Concorde (Taiwan).
COPYRIGHT 1998 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

Article Details
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Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Oct 26, 1998

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