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From Value One, Summer 2013 No. 41
PT. Iron Wire Works Indonesia
Fortieth Anniversary of a Secondary Wire Rod Processor That Manufactures Locally for Local Consumption
Capturing Demand as the Car Market Grows
PT. Iron Wire Works Indonesia (IWWI) is a secondary wire rod processor that began operations in 1972. We held a party to celebrate our fortieth anniversary in November last year, inviting all 330 employees and a small number of guests.
IWWI manufactures steel wire for cold heading, cold drawn steel bars, piano wire, and high carbon steel wire, which is mainly used in components for the many two- and four-wheeled vehicles manufactured in Indonesia, as well as in coil springs for bed mattresses. Other than a tiny amount exported to neighboring Southeast Asia, nearly everything that we produce is for Indonesia's domestic market.
Indonesia still has a great need for motorcycles as a way for people to get around, and IWWI has expanded its business operations in tandem with the motorcycle market's growth. Demand for four-wheeled vehicles has also soared in recent years, with the annual number of cars sold finally hitting the one million mark last year. Word is that the car market will grow to two million vehicles by 2020. Japanese cars currently account for more than 90 percent of Indonesia's market, and Japanese manufacturers are increasingly promoting local procurement. IWWI is preparing to expand production capacity so that we can capture demand as the car market continues to develop.
IWWI's combined wire drawing machines

A family riding a motorbike in the suburbs

Marching in a protest rally

Eye-Popping Consumer Demand As Minimum Wage Rates Rise
There have been insistent demands for higher minimum wages in Indonesia in recent years, particularly in the area around Jakarta. The downtown minimum wage rose 18 percent last year, and with the adoption of a sectoral wage system this year incomes are going up at a rate of 44 percent—a wage jump rarely seen in the world.
From the corporate point of view, this naturally affects business performance, but one senses that growing incomes have clearly improved individual consumer sentiment. For example, the wealthy once formed the core of car demand, with large six- or seven-passenger vehicles allowing people to move about with their maid and chauffeur accounting for the majority. A recent trend, however, has revealed rapid growth in demand among the young and average families for compact "eco" cars they could drive themselves. Seventy percent of Indonesia's population is under forty years old, so these increases in income for so many young workers have supercharged the country's consumer demand.
Jakarta Bubbles Over with Youthful Vitality
The impression you get when you visit downtown department stores and such is that this country has a lot of young people. I often see them walking around with multiple tablet PCs and smartphones in hand. Scenes of young couples at coffee and hamburger shops are common, and the city bubbles over with the vitality of youth.
It might be that such scenes occur only in the capital, Jakarta, but there is a large population of young people nationwide, and we may well come to see the same scenarios in other cities in the near future. I truly sense that young, vigorous, energetic Indonesia is a country within rapidly growing Southeast Asia with great potential for growth.
A Jakarta traffic jam—compact "eco" cars are increasing in number





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