KLANG, Malaysia—Growing demand for rubber latex and nitrile gloves is behind Top Glove Corp. Bhd.'s major expansion plans.
The firm said it is building three factories in Malaysia and adding 88 production lines at new and existing plants in Thailand and Malaysia. Most of the lines are being installed at the new production facilities, but 24 are going in at existing plants, eight at one site and 16 at the other.
The additional plants and lines will boost the glove maker's annual production capacity by 25 percent to about 41.3 billion pieces of gloves by May 2011, when the expansion project is expected to be completed, and give it 20 production facilities with 459 lines, according to Executive Director Lim Cheong Guan.
The cost of Top Glove's expansion project was estimated at more than $25 million.
Two of the new plants will be located near Top Glove's headquarters in Klang while the other is being built in Ipoh, Malaysia.
The factories will produce both rubber latex and nitrile gloves.
Expanding work force
About 2,750 additional production workers are expected to be hired by May 2011. An assortment of machinery and other equipment will be purchased, including dipping lines, thermo oil heaters, steam boilers, tumbler machines, air compressors and weigh bridges.
The recent oil spill in the Gulf of Mexico has spurred some of the growing demand for more gloves, Lim said, but the increased need is the result of a greater hygiene and cleanliness awareness resulting from the emergence of pandemics such as the H1N1 flu virus, SARS and bird flu.
“We expect annual demand for rubber gloves to grow on an average rate of between 8 percent and 10 percent,” Lim said. “By the end of this year, rubber gloves consumption is expected to reach an estimate of 150 billion pieces.”
Key growth drivers now and in the future include the increasing need for medical gloves as a form of protection, particularly in the health care industry, he said. “There is also rising awareness in health care and hygiene in nonmedical sectors, especially in developed as well as in developing countries.”
In addition, he said, demand for rubber gloves is also high in nations with an aging population where it is common to use gloves in handling those who are more susceptible to life threatening diseases.
Stricter health regulations in developed nations have created a greater necessity for gloves “while countries like Latin America also are moving toward adopting more stringent health care regulation and hygiene awareness,” he said. “More importantly, there are opportunities in large untapped markets such as India and China, which are embarking on a 10-year health care revamp.”
'Undisputed global leader'
Top Glove has grown rapidly since it began operating with one factory and three production lines in 1991. Lim claimed it “is now the undisputed global leader in the natural rubber glove market.”
But the firm won't rest on its laurels, he said, and will strive even harder to capture a larger share of the market.
The company, which exports to more than 180 countries, has a solid base in Asia and is growing in both Latin America and North America, a spokeswoman said. About 28 percent of its sales are in North America, she said, while 21 percent are in Latin America. Sales in the U.S. are growing slowly, principally in the nonmedical sectors such as food and security, she said.
Lim largely attributed Top Glove's success “to our visionary founder and chairman, Tan Sri Dato Sri Lim Wee Chai, who has built a strong foundation for the group and has the foresight to bring it to the next level. He knew the rubber glove industry offers huge growth opportunities and endless possibilities.”
The glove industry is relatively resilient to economic downturns, Lim said, and because the company offers high-quality gloves at affordable prices, it consistently receives high-volume orders, giving it the advantage of economies of scale.
Top Glove did not acquire any companies or plants in the last year, but in the recent past it purchased three factories in Malaysia and Thailand.
“We prefer to grow organically, via the construction of new plants and putting in additional lines,” Lim said, but added the company is constantly on the lookout for merger and acquisition opportunities.
Reports out of Malaysia said Top Glove is in talks with several small regional glove companies in Thailand, Indonesia and Malaysia, but the firm is still evaluating the prospects.
There are other possible areas of growth, Lim said. “In order to move upstream, we are also sourcing for rubber plantations in the region.”