Three Adidas shoe factories in West Java close down.
PT Dong Joe Indonesia and PT Spotec, two Korean owned firms licensed by the Adidas Group to produce Reebok and Adidas shoes in Indonesia, have closed down due to financial difficulties and problems experienced in acquiring credit for the purchase of raw materials for production, as announced by the chairman of the Asosiasi Persepatuan Indonesia (Aprisindo), Indonesian Shoe Association, Eddy Widjanarko, in Surabaya, East Java. kompas A third firm, PT Tong Yang Indonesia, located in Bekasi will also cease production shortly, according to the Jakarta Post.
Eddy claimed that the two Korean owners sincerely wanted to stay in operation but that the financial situation of both was critical. He went on to say that the factories had not increased their prices, at five dollars per pair, for their Reebok branded shoes in five years, while at the same time production costs kept rising. Both businesses had attempted to find new investors but had failed.
The Adidas Group, said Eddy, was a hard taskmaster and insisted on the five dollar per pair price. If the price could not be provided by Indonesian producers then there were plenty of Chinese and Vietnamese factories that could satisfy them.
Thousands of workers have been put out of work, about 6000 at PT Dong Joe and 4500 at PT Spotec. Between the two firms a total of 1.3 million pairs of shoes were manufactured per month. The owner of both companies has already left the country and a team is currently looking at ways to restructure the companies and breathe new life into them. The government is currently working with the Korean embassy to contact the owner and remind him of his responsibilities to his workers. L6
Meanwhile the workers of both firms are petitioning the mayor to seek a method of keeping the factory, opened in 1990, running. The company's manager, Harold Kussler, has vowed that employees will not be retrenched, and claims that there is simply a conflict among the shareholders. tempo
15th January 2007. PT Tong Yang Indonesia has received an order for 250,000 pairs of shoes from Boss according to Ansari Bukhari, of the Directorate General for the Textiles industry, enabling it to stay in business. tempo
The other two firms, PT Dong Joe Indonesia and PT Spotec, are currently seeking new investors from China, Taiwan, and South Korea, companies that seek to rent the two firms' factory facilities, but this is dependent on approval from creditor banks, Bank BRI dan Bank Mandiri.
Meanwhile Industry minister Fahmi Idris said that the original reason for the three companies failures was that when Reebok was taken over by Adidas the latter viewed products from the three as being not of the highest quality.
16th April 2007. The 6,830 workers of the PT Dong Joe Indonesia (PT DJI) Reebok factory in Tangerang were formally laid off yesterday after having been idle for the last five months. The lay offs were agreed upon by company management, the labour union, and the Tangerang State Court. The company is now said to owe almost 100 billion rupiah, or about one million dollars, in unpaid wages and severance pay.
Harold Kussler, the Factory Manager, said:
There's no way out for PT Dong Joe.
Previously in December 2006 the court had declared the company bankrupt and thereafter Bank Rakyat Indonesia was appointed to auction company assets between March 21st and May 21st this year, which include the company's land, buildings and machinery.