Jakarta – It is estimated that about 36,000 employees or 60 percent of the entire work force of the automobile and motorcycle parts industry will be put on home standby status, in the wake of lowered sales of the industry's products. In fact, the increased prices of raw material accompanied by the strengthened dollar value, which are not offset by increased sales prices, have caused part of the industry to cease production.

This estimate was conveyed by Ir Achmad Safiun, chairman of the Association of Automobile and Motorcycle Parts Industries (GIAMM) in Jakarta on Saturday (3/1). According to him, the monetary crisis, which apparently will last through 1998, has hit all companies without exception. This includes the automobile and motorcycle parts industry which has been most heavily struck by the monetary turbulence.

Because this industry has very high import content, around 90 percent, as most of its raw materials are imported. Local content comes to only about 10 percent. When the rupiah value against the US dollar drops more than 100 percent, according to Safiun, who is also chairman of the Association of Metal Casting Industries, then prices of these parts practically will increase by 90 percent. But in fact the industry cannot increase prices by 90 percent, but at the most 30 percent. Higher means no buyers.

The industry clearly cannot hold out long under these conditions. Especially the smaller companies will not only lower production volumes, but cease production. Lower turnover is caused by low purchasing power in the market. The most severe impact of the monetary turbulence is on companies which sell parts to the automobile industry. Here the expected sales volume of 400,000 units for 1997 was not achieved.

Safiun estimates that at least 60 percent of the employees of 76 companies which are members of GIAMM, will be put on home standby. Of that number, 50 percent are from industries supplying industries producing new vehicles, and 10 percent from spare parts industries.

The number of employees in the automotive field, including the main industries, supporting industries, suppliers, dealers and workshops, comes to about 300,000 workers. Among those, employees involved in the field of automobile and motorcycle parts number about 60,000 persons.