Making plywood in Indonesia — founding Kutai Timber Indonesia (1970)

From dependence on imported logs to owning the resource: the first overseas plant

The heart of this decision can be seen in the switch from a position that merely depended on imported logs to one that held resources and production on the ground. Building a mill in a market where demand for plywood scarcely existed looks reckless if judged only by near-term returns; what carried the business through was the ability to honour commitments made to the government while shifting output to domestic demand as local needs changed.

The Kutai experience passed on into MDF production in New Zealand in 1984 and particleboard in Indonesia in 1990, and became the first step toward an overseas production system for wood-panel products. Setting up manufacturing where the resource is and growing the business alongside local demand was, one can see, the first move in turning Sumitomo Forestry from a timber trading house into a manufacturer with production bases of its own abroad.