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Facing bio-terrorism threats, the Malaysian way

SPREADING WINGS: World’s largest rubber glove manufacturer, Top Glove, in Malaysia is eying Chinese markets for future expansion.

Kochi: By this year end, one pair of gloves out of the four in use in the world would have come out of a Malaysian glove manufacturer. The global glove industry, growing at 10 per cent annually, would be using up 12.3 billion pieces per annum and Top Glove, the Malaysian company, expects to corner a 25 % market share.

Giving an overview of the industry which is recession-proof and has a host of opportunities in the face of growing bio-terrorism threats, SARS, bird flu, Anthrax etc., K.M. Lee, executive director of the world’s largest rubber glove manufacturer, Top Glove Corporation BHD, says he has 760 clients in 180 countries. The major consumers are the U.S. and Europe which consume 30 per cent each.

Latin America has 10 per cent market share, followed by Australasia and the Middle East with eight per cent and six per cent respectively. (No single biggest customer constituted more than five per cent of this company’s turnover.)

The rest of the world uses up 16 per cent of the gloves made globally. In Third World countries where “re-use” of gloves is rampant, the market is picking up only gradually.

Gloves are a must in healthcare and food and services industry and this is a key industry driver.

Opportunities for efficient players to expand are good in a fragmented market (Malaysia alone has more than 40 domestic players), he says. Multi-National Companies are not expanding, and brand name producers are also increasingly seeking to outsource, Mr. Lee points out.

Top Glove, which has 12 factories in Malaysia, two each in Thailand and China (making synthetic gloves out of PVC), and two latex concentrate plants in Thailand, manufactures the full range of glove products.

The Malaysian factories have 248 glove lines with an annual capacity to make 21.50 billion pieces. Top Glove currently is manufacturing 28.02 billion pieces with China and Thailand accounting for more than three billion pieces each annually.

By August next year the total glove production capacity would be increased by 7.92 billion pieces in its 20 factories.

He says that the company was able to pass on majority of latex cost increases to customers.

Ongoing internal cost improvement and efficiency measures are in place to offset cost increases. Upstream production to provide greater control over latex supply is also well on place.

The key strength of the company is that it is making a disposable product. Benefit of economies of scale is there for Top Glove as the global leader with the largest production capacity.

It is a one-stop glove sourcing centre to create a captive market from a wide product range. Product quality and international accreditations are added strength.

The company is well-diversified in terms of glove product range (13 types), countries of manufacturing (three), countries of export (180) and a huge client base (760).

It has strong in-house technical expertise and adaptability to meet market requirements.

Mr. Lee claims that his company has successfully faced the business challenges in latex supply and prices, labour availability, Forex exposures (minimised through usage of Forex hedging tools), energy cost (by depending on diverse energy sources such as natural gas, coal and biomass), and Protein allergy (advance technology substantially reduces allergy concerns, and offering customers a variety of powder-free or synthetic gloves).

On future growth, he says his company has plans for both vertical and horizontal growth. Moving down stream to get closer to the customers via setting up of more overseas marketing offices, and moving up stream by setting up own latex concentrate plants are the vertical growth plan.

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