More than meets the eye: Multiple challenges await rubber glove debutants

EVEN as the Malaysian glove sector has seen many new entrants – especially among penny stock companies which diversified into the perceived to be ‘lucrative’ industry at the height of the COVID-19 pandemic last year – none has actually begun production.

While a number of the new entrants are expected to begin production from May onwards, the Malaysian Rubber Glove Manufacturing Association (MARGMA) shared that receiving various certifications (ie FDA for the US market, CE for the European market and PMDA for the Japanese market) will require one to two months and can only happen after production begins.

“While it may still take a few more months for newer entrants to start selling, MARGMA estimate that new Malaysian entrants will add between 6.5 billion and 10 billion pieces of production capacity per annum this year,” projected Hong Leong Investment Bank (HLIB) Research analyst Gan Huan Wen in a rubber glove sector update.

HLIB Research has recently met with MARGMA president Dr Supramaniam Shanmugam who shared his views on some pertinent issues related to the rubber glove industry.

This aside, the recruitment of new foreign workers is still currently prohibited given the current pandemic situation.

In this regard, MARGMA estimates that the Malaysian glove industry requires an additional 25,000 workers (in addition to the estimated existing manpower of 71,800) in order to meet current glove demand.

Contrary to popular belief, MARMGA shared that the glove industry is a highly automated industry. Note that in the most advanced factories, it requires just 1.7 workers (down from 9.7 in 2008) to produce one million pieces of gloves per month.

“They estimate that the lack of labour had resulted in an export loss of circa RM8.5 bil in 2020,” revealed HLIB Research.

(Editor’s Note: While robotic arms have replaced human workers in pulling gloves off moulds and counting gloves, workers are still needed at the end of the glove-making process to pack gloves in boxes.)

While MARMGA expects the shortage in disposable glove supply to last until 2Q 2022, it also anticipates average selling prices (ASPs) to decline before that.

“In the post pandemic landscape, MARGMA expects it to result in a new normal, resulting in increased hygiene awareness around the world and higher glove use in general,” noted HLIB Research.

“MARMGA compared COVID-19 to the AIDS epidemic in the 1980s when glove adoption accelerated, particularly by healthcare workers in order to avoid direct contact with open wounds. All in all, MARGMA expect ASPs to be 40-60% higher than pre-pandemic levels.”

Elsewhere, MARGMA estimates global disposable glove supply to increase by about 22% to 420 billion pieces per annum in 2021.

“MARGMA remains sceptical of the mooted 85-100 billion increase in production capacity from China by 2023,” HLIB Research pointed out.

“Furthermore, MARGMA reckons even if rapid capacity expansion in China materialises, the increased supply will likely be moped up by the domestic China market from heightened hygiene awareness from the COVID-19 outbreak.”

During the pre-pandemic period (2019), China’s annual glove use per capita of just six pieces lagged behind its developed market peers (150/100 pieces in US/EU per capita). – April 6, 2021


Photo credit: Bloomberg

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