Sumitomo Electric Industries, a unit of Sumitomo Corp. of Japan, has struck a deal with Indonesia’s WLK and Santini Groups to establish a company that will make sintered tools in Southeast Asia’s largest economy.
Sumitomo said in a statement on its Web site on Friday that in addition to manufacturing, the new company would sell products.
The joint venture company, which will be called Sumiden Sintered Components Indonesia, will build a plant in Bekasi at a cost of about $16 million.
The plant will be located at the Lippo Cikarang Industrial park in Bekasi, about 60 kilometers east of Jakarta. Bekasi and Karawang are the sites of several manufacturing plants.
Sumitomo Electric Group will control a 66 percent stake in the joint venture, while the WLK and Santini Groups will own the remainding 34 percent, the statement said.
The WLK and Santini Groups are controlled by Indonesian businessman Sofjan Wanandi, who is also the chairman of the Indonesian Employers Association (Apindo).
Sintered parts, made primarily of iron powder, can be molded into precise and complex shapes. They are widely used in products such as cars, office instruments, and home appliances, the statement said.
Sumitomo Electric Group said that the company currently supplied the Indonesian market from its plants in Malaysia and Thailand.
“The Sumitomo Electric Group has decided to collaborate with WLK and Santini, leaders in the Indonesian automotive market, to jointly establish a company to manufacture and sell sintered products in the country,” the statement said.
“The new company plans to gain a large share in the Indonesian market by supplying four-wheel and two-wheel engine parts, and transmission parts.”
SSCI is expected to start operations in February 2013, the statement said. The company expects to employ about 120 workers once it is up and running.
The Santini Group has more than 20 companies in diversified sectors with more than 15,000 employees.
The WLK Group is a private company that invests in the automotive component business in Indonesia.