Malaysian OEM glove manufacturer and global supplier Hartalega Holdings is investing RM900 million (US$210.26 million) to build three new plants by 2020 in order to keep up with rising global demand as fast developing economies such as China and India increase the use of rubber gloves in the clinical as well as in the industrial and household segments.
The move is in line with other Malaysian glove makers including Top Glove, the world’s largest natural rubber glove producer, which are ramping up capacity to meet a steadily expanding market.
Malaysia, which supplies more than half of the global demand of natural rubber and synthetic gloves, dominate the market.
Hartalega’s investment drive is part of its eight-year Next Generation Complex project began in 2013 and is expected to lift its annual capacity to an estimated 42 billion pieces. Hartalega is currently in the midst of building six manufacturing facilities for an estimated RM2.26 billion. According to the latest annual report, the company could produce up to 23 billion pieces a year.
Rival manufacturer Top Glove is also building new factories to raise production capacity and has sought to acquire smaller rivals in an ambitious bid to capture 30% global market share from the current level of about 25%. The company currently cranks out as many as 48 billion pieces of gloves annually from 30 factories.
Hartalega’s Line 1 of Plant 4, the first plant under the ongoing expansion exercise, has been commissioned this month, Managing Director KuanMun Leong said at a news conference in Kuala Lumpur after the company’s annual shareholders’ meeting. Each of the 12 production lines will go on stream every month, he said.
“Plant 4 will give us an additional capacity of 4.6 billion pieces,” Kuan said. Under the Next Generation Complex project, the new plants are expected to raise the company’s total production lines to 72 from 37, he said.
Meanwhile, the company aims to cut human labor to two workers for every million pieces after it achieves full automation at its plants, Kuan said.
Several Malaysian companies have for decades relied on cheap migrant workers to toil at factories and plantations, but stringent labor laws and higher minimum wage rates are now driving costs higher and pushing the corporates towards automation.
Meanwhile, Hartalega expects raw material costs to rise on supply crunch, which it plans to pass on to consumers, its Chairman Kuan Kam Hon said.
The company’s net profit in the fiscal first quarter nearly doubled to RM96.39 million, mainly due to an increase in sales volume and higher average selling price. Quarterly revenue rose 49.6% year-on-year to RM601.04 million.