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Various industries that are reliant on high performance and quality rubbers are advancing at a past pace. Today, opportunities and challenges, alike, are shaping up innovations in leading industries such as automotive and tyres, and Sri Lanka is paving the way for a larger share of the sector, says Angelica Buan in this report.
World growth on a high; China to lead
The global total rubber consumption is forecast to increase by 2.7% for the next five-year period (2018- 22). Total rubber consumption in Asia is forecast to increase by 3.2% whilst Europe’s total rubber consumption is forecast to be up 1.8% and others by 1.5% during the next five-year period.
Asia consumes around 64% of rubber produced and a third of the global rubber usage is attributed by China.
According to Singapore-based International Rubber Study Group (IRSG)’s Secretary-General Salvatore Pinizzotto, “China is shifting its growth pattern from a robust growth to that of a moderate and sustained pattern with the focus on consumption growth than investment. The rebalancing of economic activities in China, with a slowdown expected in the future years, will have a spill over effect to other economies.”
China’s rubber consumption is expected to grow by 3.7% during the next five year period (2018-22). Economic cooperation and trade policies such as the One Belt One Road in China and the South Asian Economic Cooperation (SASEC) will encourage new investments to keep a sustained growth in rubber usage in China, adds Pinizzotto.
Disruptive trends to influence sector
Technology disruption necessitates the implementation of new changes and innovations over time and for longer-term efficiency gains. Current disruptive technologies such as robotics, artificial intelligence, virtual reality, 3D printing, and the Internet of things (Industry 4.0) are impacting new business models, and are applicable to the rubber and automotive industry too.
The automotive industry will undergo a profound transformation and its potential impacts to transportation mode and environment, and its effects on energy and cost saving in the long-run is a strategic game change.
Pinizzotto says the future of mobility is connected autonomous electric vehicle fleet including shifts in vehicle ownership. Instead of individual traditional ownership, shared mobility platforms offer access to variety of vehicles.
“Passenger car OEMS are investing in technology as well as ride sharing platforms. Sharing mobility and transport data are helpful to develop better business models to raise productivity. Intelligent and powerful software is the key element in the future tyre industry.” Tyres will communicate with the control system of an autonomous vehicle, sensing road and weather conditions and adapting to them. As the mobility landscape changes with the adoption of the disruptive transformations, there is a call for a closer partnership in the ecosystem to move forward. There will be changes in tyre requirements and the future tyre will be customised tyres.
In terms of sustainability, Pinizzotto says the Sustainable Natural Rubber Initiative (SNR-i), developed under the frame-work of the IRSG as a voluntary and collaborative industry initiative, has so far seen 48 companies/organisations completing the self-declaration process. “The self-declared registrants as leading industry players account for around 50% of the global processed and consumed volume,” he added.
Sri Lanka, an upcoming rubber hub
Sri Lanka, the host country of IRSG’s World Rubber Summit conference (held in early May this year), is the world’s eighth largest natural rubber producing country and currently the seventh largest rubber exporter, according to Sri Lanka Export Development Board (EDB).
Prabash Subasinghe, Managing Director of Sri Lanka-headquartered tyre maker Global Rubber Industries (GRI), says that since consumption for natural rubber continues to rise in the country, the industry needs to increase production and output efficiencies via continuous R&D and innovation in the machines and technologies utilised.
“This increase in global trade and demand for natural rubber is on account of fast growing economies, and the largest pull by demand in the natural rubber industry is for tyres,” he furthered. According to the EDB, Sri Lanka’s tyre manufacturers supply about 20% of the global solid tyre demand.
Tyres are Sri Lanka’s strong-performing product, and its solid tyres, hold 30% of the global market share. Subasinghe reiterated, citing that developments in infrastructure and agriculture sectors are impacting demand for tyres.
“Infrastructure developments largely impact many sectors of the economy including demand for tyres. For instance, the demand for construction machines increases with the development of infrastructure, which will, in turn, lead to increased demand for specialty tyres for this segment, likewise, investments in the mining industry are increasing, thus creating demand for large and ultra-large radials for mining equipment and construction machinery is also growing rapidly. “
In RJA’s dialogue with Subasinghe, who is also the Chairperson of the Sri Lanka Association of Manufacturers & Exporters of Rubber Products (SLAMERP), he explained that the rubber industry of Sri Lanka has made a tremendous contribution to the country.
“The turnover of Sri Lanka’s rubber industry currently stands at approximately US$1 billion. In 2017, rubber product exports were estimated at US$855 million, or a year on year growth of approximately 11%.” Its rubber sector, which accounts for 153,000 tonnes/year of natural rubber output, is poised to becoming a US$4 billion/year industry by 2025, as underscored in the Rubber Industry Master Plan 2017-2026.
The industry road map details how Sri Lanka is taking steps to increase local rubber production to 300,000 tonnes/year; and reach national rubber plantation yield to 1,700 kg/ha per year by 2045, citing a few of the agenda.
Subasinghe explained that almost 65% of the rubber plantations in Sri Lanka are owned by small business holders, he said. “Sri Lanka is not simply a natural rubber producer, but a nation that successfully produces increasing quantities and higher quality of natural rubber. This gives GRI utmost confidence in its source of high quality raw material.”
On another note, the nation’s alliance with major markets such as China is expected to boost local tyre and rubber sectors.
Subasinghe commented: Initiatives like China’s One Belt, One Road has the potential to be perhaps the world’s largest platform for regional collaboration, international trade and hence global development; and as GRI constitutes towards the goal of continuous innovation and excellence, we welcome Chinese investment in Sri Lanka . We believe that the significant development in infrastructure will lead to increased opportunities in the specialty tyre segment both locally and with Chinese companies. This project will also reflect on Sri Lanka’s desire to obtain a “hub” status. Today, the centre of gravity of the rubber industry has shifted steadily from growing rubber to value added product manufacturing, and this indicates a prodigious promise and a bright future for the country’s rubber industry.
Meanwhile, in January this year, the company started up its US$40 million facility in Sri Lanka to produce radial agriculture tyres.
“We will be focusing on the US$25 billion speciality tyre industry that is poised to grow year-on-year, owing to the rise in demand for construction and mining machines, along with the growing demand for agricultural equipment. GRI has therefore initiated its next strategic move to further expand and diversify its roots in the vibrant agriculture and construction industries, thereby effectively specialising in the playing field of the production of all off road specialty tyres,” he said. Subasinghe furthered: “We understand the importance and implications of major technological shifts in our industry – the prevalence of IoT (Internet of Things), the opportunity that machine learning or AI (Artificial Intelligence), Augmented Reality and Virtual Reality can provide in making better decisions.”
Looking to the future, GRI says it will embark on an even more ambitious and exponential innovation programmes, to assist the Sri Lankan rubber market to move up a notch ahead in the region.