W

em>When this country sees a rise in middle class demand for air travel or encounters a boom in the mining industry, the United States-based company Honeywell experiences business growth. The diversified company, which runs aerospace, automation and control solutions, performance materials and technologies as well as transportation system divisions, has benefited from technology products that industry players in the country need to purchase for their business operations . It is now looking for deeper penetration. Honeywell International Inc. president for Indonesia Alex Pollack discussed the issue in a recent interview with The Jakarta Post'€™s Raras Cahyafitri. Below are excerpts from the interview.

Question: How do you plan to increase penetration into the Indonesian market?

Answer: Part of the plan is to have more strategic marketing here and to have more people here to cover the primary cities and secondary cities. Because Indonesia is a very big place, we have to be able to cover Medan [North Sumatra], Surabaya [East Java][ ...] it is a big country.

We have four major business groups. But one '€” the transportation system '€” is not really active here because it makes turbochargers [a device that make engines more efficient and produces more power] for cars.

How about competition?

We are not competing with them. In other places it is more difficult, but in Indonesia, we are not fighting head to head for the same piece of equipment. We even have a lot of partnerships with companies like Rockwell Collins for technology for air traffic management or for internal systems for planes. We need to work with them as they sell components that work with our system. It is more complimentary than it is competing head to head.

It really comes down to what people are buying here. Our aerospace business mostly deals with commercial aircraft, with Boeing and Airbus. We are already becoming part of the equipment in the Airbus A320. When you buy the airbus A320, or Boeing 777 or 737, the equipment is already chosen and is already part of the plane. We are not really fighting to put that part in the plane because the competitors do not have that piece of equipment.

In that plane, there is no second choice. So, if you order a Boeing 737, part of the plane [for example] is an APU [Auxilary Power Unit] from Honeywell. When the plane comes here, it needs to be serviced and it needs new parts.

It'€™s very hard to talk about the market share. In the oil and gas industry, if we make 90 percent of the refineries here and provide the technology for 90 percent of the refineries, then it obviously means we have a very large part of the market share.

In the aerospace industry, the planes being ordered are from Airbus and Boeing, so we have a very large market share there.

What are your plans for expansion?

We'€™re working with the government to find ways to improve gasoline efficiency. If you go to the US or Europe, the government has the blueprint or master plan for energy efficiency.

Here, because the gasoline price has hit Rp 6,500 a liter, people are now beginning to say that '€œgasoline is getting expensive'€. For example, what the government needs to do is make a regulation that by 2018 all cars have to be able to go 10 kilometers on one liter of fuel, and improve the efficiency gradually to one liter for 12 km by 2020 and one liter for 16 km by 2022.

If the government creates regulations that forces companies produce more efficient cars, then turbo chargers will become a much needed product. If such regulations were in place manufacturers would have to make more energy efficient cars. If we added a turbocharger to a car, it would have the same power and could go at the same speed but would need less gasoline.

Sometimes we need government regulations to push technology development in a certain direction.

In Europe 70 percent of cars have turbochargers. In China, maybe 40 percent of trucks have turbochargers. In Indonesia, it is very small, maybe less than 5 percent.

At this moment, we'€™re only providing information [to the government] with research and data from the US.

I cannot be too specific. But basically, we'€™re providing information about the economic effects of regulations for better gas efficiency, as well as how it effects pollution and costs. One of the most common complaints in Indonesia is transportation costs. If transportation costs can be decreased by 2 percent by reducing gasoline consumption, then food costs will go down as well.

Have you talked to manufacturers of low cost green cars or do they already have the turbochargers installed?

Some do and some do not. Honeywell manufactures 70 percent of all turbochargers in the world. Many people think turbochargers are only used by Mercedes and BMW. That'€™s not true. High-end cars and low-cost cars can utilize turbochargers.

I think this is something that will take a couple of years. This is not going to happen this year. First, we need the appropriate regulations in place, which will take time to implement. You have to give the manufacturers in Indonesia more time to do it. It'€™s not something that can happen overnight.

Honeywell is planning to introduce smart grid technology to improve electricity efficiency. What are the details of this plan?

We'€™ve just signed a Memorandum of Understanding [MoU] with PLN [state owned electricity firm]. Next year, we are looking at doing a pilot project. Together with PLN, we will select certain buildings to install the smart grid. We will select government buildings, new buildings and old ones too.

The cost of reducing energy usage is about 25 percent cheaper than building a new plant. For a brand new building, if we install the technology, the energy usage will 10-15 percent more efficient. If the building is more than 10 years old it will 25 to 30 percent more energy
efficient.

Which sector is the biggest contributor to Honeywell Indonesia'€™s business?

The biggest contributor is the oil and gas industry. We'€™ve been in the industry for 40 years.

We have many businesses attached to oil and gas. Many refineries here already use technology owned and patented by Honeywell -- to process the oil to make jet fuel and diesel fuel. Around 40 percent of the technology around the world that is used to make gasoline or fuel is owned by Honeywell.

We don'€™t sell pipes, we don'€™t sell cement foundations, but what we do sell is all the expensive equipment for the refineries such as sensors and all the systems used in control rooms.

Yes, we will benefit from the government'€™s decision to ask miners to build smelters. Anything that is [related to] high-end technology will benefit Honeywell.

Right now, we'€™re rolling out wireless technology and we'€™re doing research with Pertamina [state owned oil and gas firm] on how to expand their refineries and make them more efficient.

Also one of the big businesses we have is in clean gas. There are many place that use coal bed methane and unconventional gas. We make the system to collect the gas, to clean it and then to turn it into compressed gas and LNG.

Earlier this year, you said Honeywell was planning to expand its facility in Bintan. How is that progressing?

The facility in Bintan is basically for Aerospace. As worldwide sales grow, the facility will have to grow with it. Right now we are looking at the products currently being produced here and the ones being produced overseas, and deciding whether we can shift production to Indonesia. It is not really be about expanding the facility, it is more about changing the product line or adding products.