Chapter 3 History of DENSO Indonesia Group and Myanmar
For decades, DENSO has been a part of a larger mission to drive prosperity in developing countries, including Indonesia. The “DENSO Way” emphasizes the community’s role in bringing resiliency and adaptability into the company. It has been instrumental in driving meaningful and transformative changes for all stakeholders of the brand; and it has become a compass that helps DENSO survive through challenging times. Here’s the story:
The Early Years (1960-1990)
DENSO entered Indonesia just as the country found its footing. The New Order regime brought political order, economic development, and new intellectual aspirations.
Since late 1960s, prompted by the exponential growth of consumption across Southeast Asia, Indonesia was enjoying unprecedented economic growth at somewhere between 7-9%, which resulted in a GDP rate of over five hundred percent. With thriving markets, it was a time when global capitalism began to take hold of the region, as international corporations raced to expand their business in Indonesia.
DENSO was one of the first major global corporations to invest in the country. Mr. Mamoru Tanabe (DENSO Corporation) and Mr. Tjia Kian Tie (PT Astra International) founded PT Nippondenso Indonesia Incorporated in 1975 and built its first plant in Sunter, North Jakarta. Its first product was copper radiator.
As the nation gained wealth, people began to adopt better lifestyles. To remain competitive, DENSO Indonesia began manufacturing more spare parts: Air Conditioning, Radiator, Spark Plug, Air Filter, Fuel Filter, Stick Coil & Oxygen sensor (1978-2004). In just one decade, DENSO Indonesia became an important player in the automotive manufacturing industry.
Growing Pains, Expand & Change (1990-1998)
In the early 90s, rapid economy growth can be seen in its cityscape, especially Jakarta. Urban developments were prevalent, but they often challenged existing infrastructure. By this time, Jakarta was also suffering from overpopulation due to the newfound socio-economic growth with over 10.4 million people living in the city, making the need for better infrastructure and living arrangement even more urgent. In February 1996, after long periods of heavy rains, coupled with rising sea levels and land subsidence, eventually caused flooding. The flood also affected DENSO’s Sunter plant: machineries were damaged, and production had to stop. This was the first major incident when the “DENSO Way” was put to a test.
Under the leadership of DENSO Indonesia President at the time, a collaboration among DENSO corporations in Southeast Asia was organized, with approvals from DENSO Japan. Technicians were sent from Japan, Thailand, and Vietnam to assist in the plant’s recovery and resume production. DENSO Indonesia also worked closely with local vendors to secure more spare part supplies in time.
Eventually, DENSO managed to resume operations within two weeks after the disaster, a marvelous feat considering there was no recovery guidance formally put in place. The company then developed concrete risk mitigation steps, disaster management, and disaster prevention for all DENSO Indonesia’s factories. The flooding remains one of the biggest challenges in DENSO’s history, yet it showed a significant step in its growth.
Throughout the decade, especially in the early 1990s, Indonesia was more lenient toward trade and foreign investments, which drove the industrial sector on regional and international levels. In preparing for the more competitive ASEAN market, DENSO Indonesia established its second plant in Kawasan Industri MM2100, Bekasi, outside Jakarta, in July 1996. The decision to open a factory outside Jakarta and to separate the production site for (Air Conditioner) AC compressors, which at the time was high in demand, from radiators, which was still manufactured in Sunter. The second plant focused on thermal product, such as car air conditioning, bus air conditioning, and air cleaner.
As the brand continued to rise, DENSO established a subsidiary entity called PT Hamaden Indonesia Mfg, with mother company HAMANAKODENSO CO. Ltd. from Japan which specializes in manufacturing car horns, produced at DNIA’s first factory in Sunter, North Jakarta.
Employee upskilling became an urgent matter with the ongoing product diversification. To close this technical gap, DENSO set up a special committee to design and formulate effective skill programs for both veteran and new employees.
In 1997/8, another major disaster hit the company. The Asian Financial Crisis devastated the region’s economy and forced companies to pivot or streamline their processes. The market tanked and supply mounted. DENSO Indonesia had to make tough decisions, including laying off several employees and mitigating unwanted risks. The company survived yet another challenge, proving its resilience.
1997, ASMO Co., Ltd. One of DENSO Corporation subsidiary company expanding their market to Indonesia and established company called PT ASMO Indonesia with specialty automotive motor product such as Wiper, Throttle Control, Power Window and other auto parts.
Still in 1997, responding to a new policy by the Indonesian government that made it compulsory for all brand names to use Indonesian language, PT Nippondenso Indonesia Incorporated changed the name of its entity to PT DENSO Indonesia Corporation. From the government’s part, it was a move to normalize Indonesian language at the corporate level. In the years that follow, this will give a significant direction for DENSO Indonesia to localize even further.
In 1998, DENSO Indonesia received ISO Certification 9002 & ISO 14001 for its success in maintaining high-quality production over the years and including the environmental protection aspect into its manufacturing line.
Forging a New Path (2000-2020)
After the economic plunge during Asian Financial crisis, there were permanent impacts on how loans and debts were regulated. However, the economy slowly stabilized, and the greater public gained confidence in its government.
Population grew and urbanization took place. Between 2000-2010, Indonesia’s urban lands increased by 1.1% each year, indicating more working opportunities and economic improvements. Higher education opportunities were more available, increasing accessibility and quality education for the masses. The 2000s was marked by significant changes in political and economic reformations and market behaviors, demanding companies to remain innovative and competitive. In this period, DENSO put greater focus on its workforce, seeing the fluctuating market and rapid growth ahead.
In early 2002, as a form of kaizen (Continuous Improvement). Toyota is optimizing its production and supply chain network through the Toyota International Multi-purpose Vehicle (IMV Project). Through this project DENSO throughout ASEAN has contributed to fulfilling the components needed in every TOYOTA car, in this project DENSO Indonesia focuses on Thermal category products such as Car AC, Radiators and others which are produced at the DENSO Bekasi Plant MM2100.
To support and maximize this project, DENSO Indonesia also involves the supply chain through the production of local content for each product to always provide the best quality and continuous improvement for PT Toyota Motor Manufacturing Indonesia (TMMIN).
In 2005, DENSO Indonesia set up PT DENSO Sales Indonesia to manage sales, marketing, and distribution efforts, especially for non-automotive products. By then, DENSO Indonesia had manufactured a lot of its components locally, in addition to importing. With bigger volumes of supplies in stock, DENSO needed to expand quickly and forge a better relationship with its main buyers, including Toyota. Service network was also established, covering 142 shops and 86 offices located across Indonesia. This went hand-in-hand with an intensive training program for mechanics to improve knowledge and increase service quality for customers.
Educating its workforce continued to be DENSO’s main mission throughout the decade. Knowing that DENSO Indonesia has to match DENSO Japan in product quality, DENSO Indonesia added new programs to retain high-functioning workers and nurture the next generation of mechanics and technicians. In 2006, DENSO Indonesia initiated a leadership program called KOSEN to recruit high-achieving students from vocational schools and provide them with high-quality training programs in order to give them the opportunity to join World Skill Competition (WSC) and gain professional advantages.
In 2008, the mission expanded to include community welfares. DENSO Indonesia launched CSR Program as Company Contribution for society and also environment. DENSO CSR focusing on 4 pillar activity (Health, Education, Environment & Economic) which goes along with Astra CSR policy.
At the end of the decade, the education programs were collated together under DENSO Training Academy & Green Card Education Program for New Associates to improve industrial capability, competency, and skills.
DENSO Indonesia was already around for more than 30 years and had seen workers turned into professionals. The Training Academy was the company’s way to ensure sustained professional development among the employees.
By early 2010s, DENSO Indonesia’s market had expanded to exports. Compressors were in high demand for both domestic and international markets. To manage sales and distribution, PT TD Automotive Compressor Indonesia was established in 2011, in cooperation with DENSO Indonesia Group.
2012, Fujitsu Ten Ltd. One DENSO Corporation subsidiary expand their product to Indonesia with established named PT Fujitsu Ten Indonesia with specialty product car audio, head unit and navigation.
The new decade was also marked with heightened concerns towards clean energy and sustainable practices. In this era or in 2014 to be precise, DENSO Indonesia opened a new plant, namely the DENSO Fajar Plant in response to growing market needs after the government's policy at that time called as an LCGC (Low-Cost Green Car) which required more than 70% to use parts local content. motivated by the creation of Fajar Industrial Park in Bekasi, which was aimed toward helping Indonesia become a sustainable market for industrial and manufacturing sectors. The green and modern factory was a stepping stone for DENSO to establish itself as a company that cares about generating high-quality workforce and creating sustainable jobs and products. Through this mission, DENSO Indonesia was able to strengthen its collaboration with the Indonesian government.
In 2014, DENSO Indonesia expanded its community service activity by establishing Wheelchairs and Friendships Center of Asia Indonesia (WAFCAI). The non-profit organization aimed toward providing wheelchairs and donations for communities of disabled individuals across the country, as well as supporting innovative solutions to mobility issues.
Since the new millennia, DENSO Indonesia has shown its resilience in facing the fast-changing market. By ensuring stability across all departments, from product manufacturing to staff management, DENSO Indonesia proves that the “DENSO Way” remains a formidable force.
DENSO Myanmar Establishment (2014)
In January 2014, DENSO Myanmar was established in response to the escalating minimum wage rates in Indonesia and anticipated future sales conditions. Moreover, Myanmar's stable political environment has begun attracting investment from other countries. DENSO Myanmar was set to manufacture "Hose Assy" product, with DENSO Manufacturing Indonesia providing support during the initial factory setup and production phases until operations are running smoothly.
Following the military coup in February 2021, Myanmar faced economic hardships and a climate of uncertainty. The resulting political instability caused disruptions across sectors, impacting both foreign and domestic investors. Due to the unpredictable political and economic conditions, DENSO Myanmar was forced to close operations. Hose Assy production process will transition gradually to DENSO Manufacturing Indonesia (DMIA), with mass production running start in 2023.
The Future and Beyond (2020-now)
DENSO started with a small workshop in Sunter. Four decades later, it has become one of the biggest automotive manufacturing companies in the country, with sprawling distribution networks across the archipelago. Innovation and resilience are the biggest contributors to its success, as seen from DENSO Indonesia’s quick rebound after various disasters hitting the company. For each hardship, the “DENSO Way” is again used as a guiding light through difficult time.
When the pandemic hit in 2020, the Indonesian government immediately enforced lockdowns and tracked infections. Companies scrambled to manage their resources against the uncertain future, leading some to inevitable collapse or massive cuts in workforce. This was a challenging period for everyone as prices soared, sales plummeted, and limited mobility.
Responding to the crisis, DENSO decided to keep productivity at a high level and avoid lay-off schemes as much as possible. DENSO formed a task force from three subsidiaries to mitigate every risk that might arise. The task force was responsible for five things: 1) maintaining health protocols according to government regulation; 2) providing health assistance to all employees and members of DENSO Indonesia communities; 3) developing clear and useful guidance to performing daily tasks that adhere to health protocols; 4) implementing daily health monitoring systems and providing vaccines; and 5) reporting to IOMKI every week.
Since operations were running at full capacity throughout the pandemic, DENSO Indonesia was able to bounce back faster and return to normal activities when the pandemic was no longer a concerning threat nationally and globally.
The “DENSO Way” helped bring attention to the workers and communities, acknowledging them as a vital source for the company to thrive. This has become DENSO Indonesia’s mindset for decades. With that kind of nurturing environment, DENSO Indonesia has created a sustainable working model that will last for years to come.