Japanese coil maker Sagami Elec to double automotive parts output in Indonesia

02, Jul. 2020

Sagami Elec's second Indonesian factory is under construction in Medan, northern Sumatra Island.  (Photo courtesy of Sagami Elec)
Sagami Elec's second Indonesian factory is under construction in Medan, northern Sumatra Island. (Photo courtesy of Sagami Elec)

JAKARTA, NNA – Japanese coil maker Sagami Elec Co. will double its automotive parts output capacity in Indonesia as it relocates production from China where labor costs are rising.

The company plans to invest $5 million to build a second factory in the Medan Star Industrial Estate on the outskirts of Medan, northern Sumatra Island. PT. Sagami Indonesia, its local unit which became operating in 2013, now produces power inductors for vehicles there with monthly output of 10 million units, factory manager Noboru Kamei told NNA on Wednesday.

Construction began in January with completion expected by the end of the year. The Yokohama-based manufacturer will transfer all production lines from its factory in Shenzhen, southern China to Medan, as rising wages in China make it difficult to hire younger workers, the factory manager said.

The second factory will ship about 80 percent of its power inductors for use in car audio equipment, LED lighting and sensorsand the rest for home electronics and smartphones, according to Kamei.

The first factory ships half of its output to Europe and the remaining half to Japan, the United States and other Southeast Asian nations, he said.

The local unit employs 2,000 workers at the first plant and will hire 1,500 for the new factory, he said.

The Shenzhen factory will focus on products for China’s domestic market, Kamei added.