“In many ways, the true moves of developed countries in building their country is quite simple. They simply apply the concept of added value. Japan for example, known for its poor natural resources now perform as one of the world’s economic giants. That’s because they are smart in doing the added value process. ”
Metals and raw materials imported from developing countries ‘transformed’ into a luxury car of various brands. Of course the selling price is rising in multiply. America and Germany have a similar story. The people from developed countries live in prosperity because of the successful value added process, plus an accompanying multiplier effect.
There is a story about cloth weavers in Garut, West Java, which can be taken as wisdom. In the past they sold the final product in the form of white cloth at a price of Rp 100 thousand per bal. The weavers were then given training by top designers such as Biyan Wanaatmadja, Hireka Vitaya and Sebastian Gunawan.
They are taught how to draw patterns and color them. As a result, several years later the price of Garut woven cloth skyrocketed to hundreds of thousands Rupiah and even up to Rp 3 million, per sheet. Clothes that have been given added value are also sold in department stores in New York.
The cement industry should be the same. When the domestic market is saturated by too many players, then we have to do extra ordinary efforts because it’s irrational by just hoping from the cement profit sales whose margin continues to fall down.
It’s yet unclear whether the new equilibrium is currently being achieved. If not, then there is possibility of EBITA margin will go down again. Cement Indonesia should not surrender and do nothing. We must think hard how to add value to the cement which is the basic product.
Do not let SMI Group accept the fate of developing countries that just enjoy exporting raw materials to developed countries, while the profits are small. As a result of laziness to provide added value, they don’t gain prosperity and living standards enhancement.
The spirit of innovation and new breakthroughs are what should be encouraged in the SMI Group. Cement should be transformed into a downstream product of more value, whether it can be precast, readymix concrete, lightweight bricks, maybe even more.
It can be implemented in The One Million Houses Program from President RI. Imagine if SMI have a knock down home products that can be installed easily from floor to roof just like Lego game. Thus the company will no longer sell cement, but a package of house. Obviously it will be more profitable because we can set premium pricing.
In order for the added value process to be working, at least two conditions are required. First, the mastery of science and technology. Second, humans themselves must first through the process of added value. Whether it involves skills, insight, culture, work ethics and morals.
I am sure most of these requirements are already owned by SMI Human Resources. The culture of CHAMPS and the spirit of SMI (Synergy, Militant, Integrity) when applied consistently will give birth to qualified human beings who are adaptive, have good integrity, synergic, ready to compete and continue to learn to create new innovations. Let’s think hard to add value to the cement and don’t get preceded by competitors.
HENDI PRIO SANTOSO
PT Semen Indonesia (Persero) Tbk.