SEI Strengthens Indonesia Production of Car Related Products

Sumitomo Electric Industries (SEI) announced on Friday the firm expands local production capacity of automobile related products in Indonesia. The firm will newly start local production of cutting tools and sintered parts while expand output capacity for automotive wiring harness at the exiting subsidiary. SEI follows the demand growth for these products in Indonesia where major automakers and auto component makers are aggressively increasing local operations.

SEI will establish a cutting tools making joint company with PT Somagede Indonesia, a local trader of cutting tools, in June 2012. The JV company, 80% controlled by SEI Group, will start production of cemented carbide drills, CBN (cubic boron nitride) and diamond insert chips in April 2013. SEI invests approximately 2.5 billion yen. SEI has supplied cutting tools from Thai subsidiary to Indonesia. The JV company will deploy 100 employees in 2014 and target annual revenue at 700 million yen in 2015.

SEI will establish another sintered parts making company with local conglomerate companies, WLK Group and Santini Group, in April 2012. The JV, 66% controlled by SEI Group, will start production of engine parts and mission parts for vehicles and motorcycles in March 2013. SEI invests approximately 1.2 billion yen. SEI has supplied sintered parts from the subsidiaries in Malaysia and Thailand to Indonesia. The JV company will deploy 120 employees in 2013 and project annual revenue at 1.8 billion yen in 2015.

As for automotive wiring harness, SEI will build an additional factory inside the existing subsidiary, PT Sumi Indo Wiring Systems, with 1.4 billion yen capex toward 2013 and triple the output capacity in 2015. The subsidiary is controlled by SEI with 34.5% shares and Sumitomo Wiring Systems with 25% shares.