Aug 26 2004
It has been concluded with deep regret that it will be necessary for Asahi Kasei Fibers Corporation (hereinafter “AKF”) to withdraw from fibres production in Indonesia at the end of this year, thus bringing to a close thirty years of operations by P.T. Indonesia Asahi Kasei (hereinafter “Indaci”), its subsidiary founded in 1972 for the production and sale of acrylic spun yarn and nylon filament in Indonesia. The withdrawal has become unavoidable, despite every effort, as a result of the sharply deteriorating economic and business environment and conditions which have confronted Indaci operations during the past several years, their grave and continuing effects, and the absence of a clear prospect for substantial improvement.
Primary factors leading to withdrawal
In Indonesia, the years since the currency crisis of 1997 have brought extremely fast-rising energy and labor costs. For sweater knitters and other domestic customers for the yarns and filaments of Indaci, these difficulties have been compounded and their operations have been severely weakened during the past several years by sharply intensifying competition from China, following its establishment of an extremely strong and increasingly pervasive competitive position.
From their onset, these developments brought deteriorating profitability. To meet the rising costs and restore profitability, Indaci responded early on with extensive and effective cost-cutting programs, including voluntary early retirement, coal-fired boiler installation to reduce the cost of steam generation, and a series of investments for greater energy efficiency. The cost reductions have been continually outpaced, however, by the rapidly worsening economic and business environment. The end result has been an untenable loss of profitability during the past several years, with no clear prospect or means of achieving a return to profitability. These circumstances have now been found to leave no recourse other than discontinuation and withdrawal of the Indaci operations.
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