Bekasi. Japanese electronics company Sanken Electric has announced plans to shut down its factory in Cikarang, Bekasi, leading to the inevitable layoff of over 450 workers.

The factory is set to cease operations in June 2025 as part of Sanken’s strategy to refocus on its core business operations in Japan.

Dedi Supriyanto, chairman of the labor union at Sanken Indonesia, said that management had informed employees about the closure plan as early as February 2024.

“We were shocked by the decision, but at the same time, we appreciate management for notifying us well in advance before production completely halts in June 2025. This has given us about a year and a half to prepare,” Dedi said in Cikarang.

He added that the decision came from Sanken’s headquarters in Japan, citing the factory's inability to meet production targets.

Workers are demanding severance payments equivalent to 60 times their monthly salaries, in accordance with labor laws, Dedi said.

“Management has shown a commitment to handling this matter properly and ensuring workers receive fair severance packages,” he noted. However, the current severance offer stands at six months' salary.

Government Clarifies Factory Closure Not Due to Business Climate
Separately, an Industry Ministry official in Jakarta confirmed that the factory closure was unrelated to Indonesia’s business environment.

“It is important to clarify that Sanken Indonesia’s decision to shut down production here is not influenced by Indonesia’s business climate, but rather a policy decision from the company’s headquarters in Japan,” said Setia Diarta, the ministry’s Director General of Metal, Machinery, Transportation, and Electronic Industries.

Setia clarified Sanken Indonesia in Cikarang is a separate entity from Sanken Argawidja in Tangerang, which manufactures home appliances such as washing machines and refrigerators.

“Sanken Indonesia specializes in producing switched-mode power supply (SMPS) units, with an annual capacity of 3.95 million units, and transformers, with a capacity of 4.32 million units. These components are supplied to the automotive and electronics industries,” Setia explained.

According to him, Sanken Indonesia stopped receiving technological and design updates after Sanken Electric sold its SMPS and transformer division to another Japanese company.

“The factory has been experiencing financial losses because Sanken Indonesia continues producing items that are no longer part of Sanken Electric’s core business. The company has now shifted its focus to the semiconductor industry,” Setia added.