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Jakarta Post

Saint-Gobain to launch $45m production facility

  • Tama Salim

    The Jakarta Post

Jakarta   /   Thu, October 23, 2014   /  10:19 am

PT Saint-Gobain Construction Products Indonesia (SGCPI), a subsidiary of French construction giant Saint-Gobain Group, has invested approximately US$45 million (Rp 526.87 billion) in building a gypsum board production facility within the Cikande industrial estate in Serang, Banten.

The factory, which is located on a 6-hectare plot of land and boasts a maximum output capacity of 33 million square meters per year of highly customizable gypsum boards, will be officially opened on Oct. 28 after 18 months of construction.

According to Edward Loy, SGCPI'€™s managing director for Indonesia, Malaysia and Singapore, production will start in November and the factory is expected to operate at full capacity by the end of 2015.

Loy said that the factory was a first for the firm'€™s industrial mortars division in Indonesia, hinting that there would be more investments to come from its glass and abrasives production in the near future.

'€œWe want to position ourselves as strategic investors in Indonesia, [and] we have more investments coming through in the next few years as well, be it in glass or abrasives. [PT Citra] Mortar Utama is one. We have a few more coming,'€ Loy said on the sidelines of a media workshop in Jakarta on Wednesday.

According to previous reports, Saint-Gobain had acquired a majority 51-percent share in PT Cipta Mortar Utama, one of the country'€™s leading industrial mortars companies, in June 2011.

With the opening of the factory, Loy suggested that the company would become more efficient in terms of pricing. '€œ[The opening of the factory] will allow us to position ourselves as a local player in the market, so even though we started in 2007 with imports, it wasn'€™t competitive. [Now] we'€™ll have no more freight charges or shipping and handling,'€ he told The Jakarta Post, declining to go into further detail.

In spite of his optimism, the regional managing director acknowledged that his firm would need to face the challenge of competing against cheaper, readily available yet unsustainable construction materials like asbestos and sand bricks.

'€œWe can'€™t compete with clay and sand bricks when the labor is still very cheap, but we can make sure the price difference is small, and [...] they are not offering the same kind of quality [that we are],'€ Loy said.

'€œWe'€™ll deliver quality and performance to the homeowner.'€

According to him, three factors will be decisive in driving the adoption of SGCPI'€™s Gyproc brand of gypsum boards in the country: rising labor costs, knowledgeable consumers and the shift toward using green and sustainable construction materials.

Loy said that around 40 to 45 percent of the firm'€™s business would be in the residential sector, while the rest of his clients would come from the commercial and public sectors, catering to spaces such as shopping malls, airports and hospitals.

Meanwhile, SGCPI'€™s marketing director, Won Sieuw Yee, said that the adoption of green technology like Gyproc was inevitably a chicken-or-egg problem.

  • Firm to invest US$45 million for facility
  • Plant to have capacity to produce 33 million square meters per year of gypsum boards
  • Production will kick off in November

'€œIn developed countries, brick walls are no longer green or common. But in this part of the world, when we introduced drywall, our prices were much higher [than more commonly used materials]. But as time goes by, [...] you can get cheaper materials. One day it will be the same in Indonesia,'€ Yee told the Post on Wednesday.

Yee revealed that the Gyproc was not offered as a one-size-fits-all solution to construction, saying that prices range from Rp 130,000 per square meter (sqm) to more than Rp 400,000 sqm. '€œWe found that in the Indonesian market, a lot of people don'€™t use the right system for the right solution,'€ she said.

The company currently imports 50 to 60 percent of its raw materials from Thailand, while the rest is supplied from within the country.

In 2013, Saint-Gobain recorded a global revenue of 42.025 billion euros ($55.472 billion), with a recurring net income of ¤1 billion and capital expenditure amounting to ¤1.4 billion, part of which was used to fund the Cikande plant construction.

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