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The world’s largest producer of rubber gloves is getting a hold of competition, wage hikes and volatile currency, with capacity expansions through automation and the impending embrace of Industry 4.0
A climate of challenge
Late last year, the Malaysian gloves industry forecast a bullish domestic and global market at the beginning of 2017, which it had anticipated would favour the local-based glove makers. Malaysia, the world’s fifth largest producer of natural rubber, accounts for about 60% of the global output of rubber gloves. Yet, during the early months of 2017, events took a turn for the worse, and the sector found itself pressed with tight materials supply and price hikes of raw materials, such as nitrile (NBR) and natural rubber (NR).
The Malaysian Rubber Glove Manufacturers Association (Margma) confirmed that the prices of rubbers went up by more than 55%. Therefore, glove prices had to be adjusted to as much as 15% to buffer profit margins.
Nevertheless, the sector has gradually recovered. In August, Malaysia’s exports picked up. During the period, the country also exported to more than 195 countries; and rubber gloves accounted for 73% to RM13.3 billion of the RM18.2 billion value of rubber product exports for the year, according to Deputy Minister of Plantation Industries and Commodities, Datuk Datu Nasrun Datu Mansur.
In the first half of 2017, export of rubber gloves jumped 25% to RM7.95 billion against RM5.28 billion over the same period last year, according to Datuk Seri Mah Siew Keong, Minister of the Plantation Industries and Commodities ministry, adding that the sector expected to clinch a fullyear export sales value of RM16 billion, or a 20% increase, compared to RM13.28 billion posted for the full year of 2016.
In September, Malaysia reportedly exported RM19.1 billion of rubber during the first seven months of the year. Mah projected that rubber exports could potentially cross RM27 billion this year on account of a fireball global demand. On the other hand, this development urges for more efficient manufacturing and production process.
Glove makers pump more investments into factories and R&D Malaysia’s
Malaysia’s leading glove makers have responded to the auspicious climate for the rubber gloves market by expanding capacities and facilities, as well as investing more into R&D.
Shah Alam-headquartered Top Glove, the world’s largest rubber glove manufacturer with a production capacity of nearly 52 billion gloves/ year from its 55 production lines and 32 factories, has targeted the opening of three factories in Klang by end of 2018, to serve an anticipated increase in global demand between 6% to 8% annually. The first facility (Factory 39) started operations in May with 4.4 billion gloves/year; while Factory 31 is starting in November with a capacity of 2.8 billion units/year; and Factory 32 will kick off in December 2018 with a capacity of 4.8 billion gloves/ year.
Hartalega, a major player in nitrile gloves, is completing its RM2.2 billion-Integrated Glove Manufacturing Complex (NGC) in Sepang. The facility will comprise six factories installed with 72 production lines that can produce more than 28 billion gloves/year. All the six NGC plants are geared to be fully commissioned by 2021. Its current plant in Bestari Jaya has a capacity of 14 billion pieces/year. Hartalega expects an increased production capacity by 27 billion pieces in the first quarter of 2018.
Supermax, which exports to more than 155 countries worldwide and accounts for 12% of the global requirement for latex examination gloves, has expanded its product offerings to include the manufacture of contact lenses. The company has earmarked an estimated RM2.4 billion on capital expenditure over the next 15 years for its glove and contact lens manufacturing operations. It also expects to increase its glove manufacturing capacity to 45 billion pieces from the current 24 billion pieces.
Klang-based Kossan Rubber Industries, which currently produces some 22 billion gloves/year, has pumped up its R&D activities. In 2016, it launched a breakthrough “low derma” synthetic gloves technology to “eliminate allergy-causing
accelerators in the glove-making process, while maintaining superior tensile strength, flexibility and sensitivity of the gloves,” according to Kossan Founder/CEO, Lim Kuang Sia.
Kossan claimed the title as the first glove manufacturer in the world to have “low dermatitis potential” in gloves, which was granted by the US Food and Drug Administration (FDA). For this technology, Kossan has been cited as the Global Medical Gloves Technology Innovation Company of the Year at the 2017 Frost & Sullivan Asia-Pacific Best Practices Awards held recently in Singapore.
Against the backdrop of the private sector working towards pumping up capacity, the government, likewise, has included the rubber gloves industries among its economic priorities. The National Key Economic Areas roadmap aims to boost Malaysia’s market share of rubber gloves to 65% by 2020.
Automation and Industry 4.0, a way forward
While prospects continue to look up for the rubber gloves industry, it is evident that it is not spared from competition and volatilities. How does Malaysia maintain its edge as the world’s chief rubber gloves producer? What it needs is to keep at the ever growing global demands, and one method to ensure this is by automation and through technologically advanced modalities, Mah suggested.
Implementing the Industry 4.0 concept, also known as the Fourth Industrial Revolution, means synergistic advantage from the confluence of “cyber-physical systems, the Internet of Things (IoT), cloud computing and cognitive computing,” he said recently in a local newspaper opinion piece, adding that “Industry 4.0 can help to alleviate productivity challenges both in the upstream and downstream of the rubber industry.”
In the rubber agriculture sector, Mah relayed of the on-going trial of the Automated Rubber Tapping System (ARTS), which mechanises timed tapping, latex collection and bulking to increase yield, with data crunching of gram per tree per tapping (GTT).
The government has been supportive in configuring Malaysia’s development through technologies. In 2016, Prime Minister Dato’ Sri Najib Razak unveiled the Transformasi Nasional 50 – or TN 50, which is a national development framework for Malaysia through 2050. Mah mentioned that the Industry 4.0 is an enabler to achieving the goal of this initiative.
He added that local glove manufacturers are in fact starting to tap into the Industry 4.0 concept, which is already gaining ground elsewhere in the world, via automated systems. “Medical glove, catheter and condom manufacturers are investing to automate many processes along their production lines,” he said.
To push this idea, the government has offered tax incentives to labour-intensive industries to adopt automation in their production, in light with the ballooning minimum wage rate for workers. Automation was projected to up profits by 20%. Too, industry proponents such as the International Trade and Industry Ministry (MITI) hoped that the proposed 2018 national budget will provide more incentives and mechanisms supporting the Industry 4.0.
Accelerating production in a cost and time efficient way is a common pursuit among local glove makers. It can also cushion the sector from setbacks of the fluctuating currency.
Apart from Hartalega, which has adopted automation, particularly in its upcoming NGC complex, Kossan said that it is also going in that direction. By 2020, it would have automated its factories, it said. The move would be more cost-beneficial, since automation is depending less on a precarious manufacturing component – labour.
It can avert reliance on both domestic and foreign workers. This was also echoed by Mah, who had stated that automation in rubber glove production lines can “moderate the requirement for foreign labour.”
Kossan CEO Lim has said before, “We are working on the automation of our new plant while the old lines will be revamped to improve efficiency. Our internal target is to complete the automation of our plants by 2020.”
Kossan’s plant in Jalan Meru, Klang, for example, already features automated high-speed dipping technology. It has a capacity of 3 billion gloves/year, and therefore, it is expected to increase the company’s capacity by 13.6% to 25 billion gloves/year. Kossan is also reportedly undertaking innovation and adopting robotics in its manufacturing processes.
Top Glove, meanwhile, is entering the sexual wellness business with an investment of RM75 million for the first phase of its condom production beginning August 2018. The move is meant to increase the company’s market share to 30% in 2020 from 25%; as well as to cut through the competition in the local market, according to the company’s Executive Chairman, Tan Sri Dr Lim Wee Chai.
Top Glove is also increasing automation in its facilities. Lim said that automation has already staved off about 34% of its human labour requirement, or a reduction of more than 2,000 workers, in the previous years.
Treading along the same path is Supermax, which has unfurled its automation plans in its factories and plants.
Mah stressed that investments in automation can place the industry in a competitive footing, globally. He noted that more productivity enhancements can be achieved with greater deployment of Industry 4.0 systems in the rubber industry, and specifically, the rubber gloves sector.
Mah said that the realisation of Industry 4.0 in Malaysia is achievable, with the embedding of sensing, computing and communicating systems in vehicles, drones and other machinery.
He also referred to how the Global Positioning System (GPS) has become commonplace, with the deployment of such systems for annual crops planted on plains far easier than executing the same for perennial crops planted on more undulating terrains, such as oil palm and rubber.
“With proper focus, collaboration and allocation of resources, nothing is impossible,” he enthused.