American Firms Prepare for the Worst in Indonesia

As Indonesia’s capital city deteriorated further Thursday and anti-government protesters closed the roads to Jakarta’s airport and seaport, Mattel, Arco, Hewlett-Packard, Citibank and other beleaguered U.S. firms began closing their plants and offices, evacuating personnel and making contingency plans to move operations elsewhere.

And while U.S. executives expressed hope that they will be able to resume business in Indonesia shortly, the escalating protests and street violence have sparked an exodus of foreign talent and capital from an economy that was already in tatters.

Indonesia experts agreed that progress on the economic front will not occur until there is a resolution of the political drama unfolding on Jakarta’s streets, which have become a battleground for the military and protesters demanding an end to President Suharto’s three decades in power.

“The politics are driving the economics at the moment,” said professor Donald Emmerson, an Indonesia specialist at the University of Wisconsin-Madison.

The State Department has advised U.S. citizens not to travel to Indonesia, including the resort island of Bali, on nonessential business.

U.S. energy firms are among the largest foreign employers in Indonesia, which is rich in oil and natural gas, but most of their operations are in isolated areas far from the urban strife.

Still, Arco decided Thursday to evacuate 320 foreign workers and their families from Indonesia, said spokesman Al Greenstein in Los Angeles. The remainder of its 2,500 employees, including the head of its Indonesian subsidiary, will remain in the country.

El Segundo-based Mattel, which operates two factories about 45 minutes outside of Jakarta, told its 7,000 employees to stay home Thursday after buses carrying employees home the previous night were forced to turn back because the toll highway was blocked by military troops and protesters.

Although Mattel hopes to resume operations again on Monday, it has also made plans to shift production of some toys, including its Barbie doll and various Disney products, to plants in another country if the situation in Indonesia worsens dramatically.

Of great concern to U.S. manufacturers with plants in Indonesia was the closure Thursday of the main highways to the Jakarta airport and the Tanjung Priok seaport, the country’s two major international gateways.

A prolonged port shutdown would interrupt shipments of millions of dollars in consumer goods bound for the United States as well as inbound raw materials needed by Indonesian manufacturers to run their factories.

Sea-Land Services, the giant ocean shipping line, temporarily closed its Jakarta offices Thursday. Gary Wollenhaupt, a Sea-Land spokesman, said the situation was “too fluid” to determine how long the port might be affected and whether his company would be forced to divert ships to other ports.

“Right now, we can’t move cargo in or out [of the port],” he said.

The violence brought much of the Indonesian economy to a screeching halt. On Thursday, the Bank of Indonesia shut down its money-clearing operations, making it difficult for other banks to continue doing business.

Citibank temporarily closed its six offices in Indonesia, three of which are in Jakarta. Chase Manhattan Bank sent the 150 employees of its Jakarta office home, though it planned to reopen today with a skeleton staff.

Hewlett-Packard, which employs 150 people in a sales and distribution joint venture in Jakarta, has closed its office “until some of the unrest in the street disappears,” said Bob Whitworth, a company spokesman.

Fluor Corp., the Irvine-based engineering and construction services company, also closed its Jakarta office and offered to evacuate the families of its 13 non-Indonesian employees there. The office employs 170.

Unocal Corp. of El Segundo, which employs 1,400 people in Indonesia, said there have been no disruptions to its operations.

* MOB SCENE: Rampaging mobs pushed Jakarta to the edge of anarchy. A1

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Times staff writer Nancy Rivera Brooks contributed to this article.