In the early 1990’s Korean manufacturing giant Samick began moving its production base to Indonesia. Today, Samick, at its production compound outside Bogor, 90 miles south of Jakarta, produces about 90% of the guitars made in Indonesia under various names including Gibson and Fender models. As a rule of thumb, Indonesian made guitars are generally the lowest price models with the better ones coming from Korea.

What attracted firms like Samick, Yamaha, and Kawai to invest in Indonesia was a combination of a stable workforce, nearby access to 80% of the materials that go into pianos and guitars, a stable currency linked to the U.S. dollar, and most-favored nation status with the U.S., a designation that allows Indonesian-produced products to come into the U.S. free of all duties.

Samick is the world’s largest producer of stringed instruments and has a huge presence in Indonesia producing half a million copies annually (total guitar production in Indonesia was 600,000 in 2002). It is a major manufacturer for a number of well-known brands, including low-end models for Fender and Gibson brands.

The rising standard of living in Korea in the 90's led to increased wage and production costs, and the musical instrument industry began to look to new, lower-cost markets. In 1992, Samick opened a $30 million, 430,000-square-meter plant in Bogor, Indonesia. This large-scale plant was initially comprised of six wood processing mills, a sawmill, a veneer board mill, seasoning facilities, and various other additional facilities on approximately 40000 acres. The new subsidiary, PT Samick Indonesia, began operation in 1993.

The Indonesian subsidiary gradually took over production of the company's entry-level instruments, beginning with acoustic guitars in 1993. By 1995, the facility had gained sufficient expertise to begin production of electric guitars as well, followed by upright pianos in 1996 and grand piano production in 1998. By the beginning of the new century, the Bogor site was producing some 15,000 pianos and 500,000 guitars each year, while Samick focused its Korean manufacturing capacity on higher end products. These, however, often featured wooden components produced by the Bogor plant. So you are likely to get Indonesian input on any Samick produced guitar made at any of its factories in the world.

Local Indonesian plywood such as Pine (Pinus spp), Agathis, Nyatoh (Palaquium spp), Meranti (Shorea spp) are used in the production of the back part of acoustic guitars with and average consumption of 4,800M³ per year and solid wood of Mahagony (Swietenia spp.) for electric guitars. They normally use local Makassar Ebony (Diospyros spp.) and imported Spruce (Picea spp) or Alder (Alnus spp) for top board of acoustic guitar. One company utilizes Spruce (Picea spp) at about 357 M³ per year for the front/top board of acoustic guitars which come in from their other manufacturing facilities in Taiwan. Occasionally, based on requests, imported veneers are used for coating the top part of acoustic guitars, including the rosettes, mostly Cherry (Prunus spp), Oak (Quercus spp). Local wood Sonokeling (Polyathia spp.) and imported U.S. or Canadian Maple (Acer spp) wood are particularly used for the neck of both guitar types. An average consumption of U.S. and Canadian Maple (Acer spp) lumber for guitars is about 1,474 M³ per year. ((USDA GAIN Report 2002))

The Samick facility in Indonesia could best be described as a small city. The walled compound covers 50 acres and has four million square feet of manufacturing space in 11 buildings. That manufacturing space is large enough to house 88 football fields. The plant even has two restaurants, housing for visiting Korean engineers, tennis courts, and a driving range. Samick put up its first factory in Indonesia in 1993, investing about $30 million to begin producing acoustic guitars. Since then, myriad new investments and products have followed. In 1995 the company began producing electric guitars. Twelve months later a line was established for upright pianos. And in 1998 Samick produced the first grand piano ever built in Indonesia.

The company's Indonesian factory has 3,000 workers who have been with the company for an average of eight years. All but one of the team of 16 factory managers has been with the factory since it first opened. "We're not talking about assembling toys or stitching together sneakers," notes Samick Indonesia Managing Director S.M. Park. "The musical instruments we craft are highly complex, extremely difficult to produce, and require a workforce with great skills." Worker turnover spells disaster for manufacturers like Samick that produce complex products backed by long-term warranties. "In China it's very common to lose half of your factory workers every year," Park adds. "They are very quick to seize on higher wages and move to factories that have better amenities. Many factories even have to guarantee housing or they can't keep the workers." Workers in Indonesia, he says, are much less prone to move from job to job. "Our customers wonder why we are able to put a satin finish on our pianos like no one else. The reason is basic: The manager who runs our finishing department has been with us since we opened and knows all the problems you can encounter with finishes. He also has a team of workers who understand the problems as well." ((entrepreneur.com Jan 2008))