THE recent inaugural roundtable on the rubber glove industry has provided a deeper insight into the game plan of the nation’s top rubber glove players to stay competitive and still reign as the world’s largest producers of the product.
Malaysian manufacturers account for about 60% of global demand. The major players include Top Glove Corp Bhd, Supermax Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Holdings Bhd.
Even though industry players’ production costs are set to escalate further following the minimum wage policy and the expected removal of subsidies on natural gas by the Government, many are undeterred and will continue with their expansion programme locally and abroad.
On the other hand, the current low prices of natural rubber the main raw material in rubber glove making are enabling local producers to ramp up their production to meet the continued strong world demand.
Over the past six months, prices of the commodity had declined to a low of RM6.32 a kg from a high of RM8 in February.
Some quarters say the beauty of the rubber glove industry is that it is a recession-proof industry and players can easily pass their incremental costs to the consumers.
More importantly, rubber glove manufacturing has always been a “volume game” where the players with the biggest capacities will win. It is all about the economies of scale, according to industry players.
For example, the world’s largest rubber glove manufacturer Top Glove already has 22 factories (16 in Malaysia, four in Thailand, two in China) and 442 glove production lines, with a capacity for 38.5 billion pieces per year.
It is now looking at investing a whopping RM3bil over the next 15 years in expanding and upgrading its production capacity as well as on research and development and the upstream and downstream activities.
Top Glove is also among the few rubber glove companies seeking to own rubber plantations. Early last year, it announced plans to invest RM160mil in rubber cultivation on 8,000ha in Cambodia. Over time, the venture is targeted to secure 20% of the group’s latex supply requirement.
Second largest producer Supermax will have 11 factories by next year with a combined production capacity of 21.6 billion gloves a year.
The group’s latest proposal is to assess whether to set up a new glove plant in South America to capitalise on the region’s duty-free status. Supermax’s expansion in South America is pivotal to grow the group’s business in the Americas, which account for about 55% of the glove manufacturer’s business.
On the domestic front, the local rubber glove industry is facing an acute labour shortage problem similar to those in the oil palm plantation industry.
This has led to the Malaysian Rubber Glove Manufacturers Association (Margma) revising downwards its initial export forecast this year from RM13bil to RM11.5bil.
Margma president Lim Kwee Shyan had said that the labour shortage issue was hampering the industry’s export growth as “our members are facing difficulty in finding workers to man the production lines in the newly expanded factories”.
However despite the obstacles in the form of labour shortage, a cut in natural gas subsidies and the mininum wage policy, the domestic rubber glove industry is expected to record strong exports this year on rising healthcare concerns especially in emerging countries like China, India and Latin America.
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