Asia Inc
Sept 1995

BUSINESS: Indonesian textiles in Ireland

Tables Turned

The opening of textile mills in Manchester, England, in the 19th century spelled doom for the traditional garment industry in British India. From that point on, the colonies supplied raw cotton to Lancashire county's humming factories. Now, in a reversal of fortunes, a company from another former European colony is coming to the aid of the Old World by setting up two textile plants in troubled Northern Ireland.

Norfil Ltd., which is associated with Polysindo-Texmaco, Indonesia's largest integrated textile group, plans to open a $ 68 million polyester filament yarn plant in County Antrim next month. An affiliated $ 78 million weaving plant -- partly using yarn made by Norfil -- is to be up and running by early 1997. Together the two operations are expected to employ 900 people.

It is tempting to view this development as part of the peace dividend in Ulster after the separatist Sinn Fein began negotiations with the British government. However, Norfil executives say they had planned to start production as early as 1993 but were put off by Europe's recession.

They say Northern Ireland's relatively high labor costs will be offset by substantial savings in import duties in the European market. Says Norfil Director Christie Cherian: "In the late 1980s our management decided to create a presence in Europe, the world's largest textile market." And being close to the market will give Norfil an edge over competition from East Asia, he says. (EC regulations allow subsidies for yarn weaving but not for spinning; Cherian says grants and incentives for the weaving plant will defray 30 percent of its costs.)

British analysts feel Northern Ireland must capitalize on its position as the second-cheapest site in the European Union (after Portugal) to attract labor-intensive industries that want to enter the European market. By setting up offices in Taipei and Hong Kong and making frequent visits to Singapore and Indonesia, officials of the Northern Ireland Board of Investment hope to kickstart Ulster's economy.

South Korean companies like Daewoo have already begun operations there. Such job-creating investments should help Ulster reduce its chronically high unemployment rate, currently 12 percent, and boost the optimism ushered in by the peace talks.