Emulsion polymers and nitrile latex manufacturer Synthomer, which has two plants in Malaysia, is expanding its business against the back of challenging times. Said Derick Whyte, Executive Vice-President of Synthomer in Asia, “Last year, with a growth of 8 to 10%, was a year with inspiring growth. We are expecting the momentum to build up this year.”
In its half year results, ending June 2016, group revenue of the UK-headquartered firm was slightly down (1.8%) compared to the same period in 2015. However, Asia (and the rest of the world) stood out with a 19% increase in the operating profit, compared to 2015. But Whyte paints a cautious mood for the year.
“We expect average unit margins in our nitriles business to soften as new nitrile production capacity is brought on line in the second half of the year, even though the ringgit has strengthened, resulting in similar volumes and average unit margins for the year as a whole, compared to 2015.”
Against this cautious optimism, Whyte, who was speaking to RJA at the International Rubber Glove Conference and Exhibition (IRGCE), held in Kuala Lumpur recently, said the firm is in the final stages of a RM250 to RM300 million expansion to bring capacity up to 400,000 tonnes/year. This is up from the 320,000 tonnes it currently produces, making it one of the leading suppliers of nitrile latex in the region.
“We will have the capacity ready and look at adding it on as and when demand grows,” he said.
Meanwhile, the Malaysian Rubber Glove Manufacturers Association (Margma) is positive about the rubber glove industry’s growth in Malaysia.
“It is essentially home grown and has charted impressive growth for the past 20 years. Global demand for rubber gloves is expected to rise by 10% from 192.9 billion gloves in 2015 to 212.2 billion gloves in 2016. Malaysia is expected to supply 63% of this global demand,” said Margma President, Denis Low Jau Foo, at the launch of IRGCE.
Pandemics that occur in the region usually pave the way for further growth of the glove sector, the most recent being the onset of the Zika virus, which is transmitted by the Aedes mosquito.
Thus, all the above should hold Synthomer in good stead.
Synthomer’s initial investment in the nitrile latex plant in Malaysia was made back in 2002 at the Kluang site in Johor. The initial investment of RM128 million for Phase 1 was followed by subsequent expansions in Phases 2 to 5 costing an additional RM130 million and bringing the nameplate capacity to approximately 120,000 tonnes.
In 2011, Synthomer acquired Polymer Latex GmbH, and along with that came the Pasir Gudang NBR plant, which had been in operation since 2009. A range of additional investments have been made including the relocation of its NBR R&D and Innovation activities from Europe.
“Along with further operational improvements, the acquisition and upgrading of two butadiene Spheres in Pasir Gudang port has brought Synthomer’s total investment in NBR in Malaysia to approximately RM900 million, with 320,000 tonnes of nameplate capacity,” explained Whyte.
Synthomer is also able to offer benefits like a short supply chain. “We are able to offer responsive and fast delivery times, measured in days rather than weeks. Our customers here in Malaysia enjoy the benefits of having the world’s leading nitrile latex manufacturer in their domestic market, able to quickly react to our customers ever changing needs. Besides being close to our customers, a key element is the technical team for customers. In support of this customer focused culture we have a well-respected technical services team which is highly responsive to our customers’ operational challenges both in Malaysia, Southeast Asia and around the world,” said Whyte.
In terms of innovations, Synthomer has over the past three years launched the Gen 3 and Gen 4 products, which were developed to meet the needs of thinner film, low glove weight medical examination gloves.
“We have seen great success for these new materials with Gen 3 and 4 products now exceeding 80% of our total volume output here in Malaysia.”
Meanwhile, Synthomer, which exports globally, is expecting the next wave of growth to come from developing countries.
With the world population estimated at 7.4 billion, average usage of gloves is 29 pieces per person; and per capita consumption of gloves is 150 pieces in the US and Europe, compared to 6 in developing countries, according to recent information presented by the world’s largest glove manufacturer Top Glove.
“Per capita consumption of gloves is still low in countries like China and India. We will be able to tap the growing demand in developing countries in the future,” said Whyte.
“China has developed its PVC glove market but not its latex glove market. We expect it to increase in the future,” he added.
Synthomer’s origins date back to a production site in Harlow, UK, constructed in 1952. Today, Synthomer is a FTSE 250-listed company headquartered in the UK with more than £1 billion sales. Following global expansion and strategic acquisitions, the company employs 2,750 people with manufacturing plants, technology centres and sales offices in Europe, Middle East, Asia and the US. In Asia, Besides its plants in Malaysia, it also operates service centres in Thailand, Vietnam and China.