KUALA LUMPUR (July 13): Top Glove Corp Bhd, the world's largest glove maker, is set to build two factories every year to keep pace with global demand for rubber gloves amid increased usage in the medical industry and heightened hygiene awareness among people due to the Covid-19 pandemic.

According to chairman Tan Sri Lim Wee Chai, it currently has 45 factories, of which 34 are glove factories with 700 production lines that have the capacity to make a total of 78.7 billion pieces of gloves per annum.

The rest are two latex concentrate plants, three chemical factories, a glove former (mould) factory, two packaging material factories, a dental dam factory, a condom factory, and a face mask factory.

Of the 45 factories, 40 are located in Malaysia, four in Thailand, and one in China. A new factory is being set up in Vietnam, which is expected to come on stream in September, he said.

"We will continue to build about two factories every year to ensure we are well-positioned to cater to the growing global glove demand," he told Bernama in an exclusive interview.

He said Top Glove also remains open to mergers and acquisitions (M&A), joint ventures, and diversification opportunities.

"We expand during the good times and prepare for rainy days. The glove industry is an international business and there is competition. Survival in the business is like participating in the Olympics; you need to remain fit to compete or you will be phased out."

As for demand, Lim said pre-Covid-19 global glove demand was growing 8% to 10% per annum, driven by strong market fundamentals across geographies.

For 2020, Top Glove foresees a 25% growth.

"Before Covid-19, we were running at about 85% capacity. Now we are running at close to 100%," he said. Countries globally need more gloves now than before the pandemic; hence, proper planning and allocation are of utmost priority.

For instance, he said, regular customers are getting 10% extra gloves to ensure a continuous supply of the requested rubber gloves so that gloves are available in every country. While the company also sells to new customers, they are offered a spot price, which is usually higher than the regular price.

"In 2021 and post Covid-19, the rubber glove industry is expected to post an annual growth of between 12% and 15% on the back of increased usage in both the medical and non-medical sectors, as well as heightened hygiene awareness arising from the pandemic," he said.

Currently, 20% of the world's population, namely the US, European Union (EU), and Japan, account for 70% of glove usage, while the other 80% only use 30% of the gloves produced globally, which means there is an abundance of opportunities, Lim said.

He noted that gloves are an essential item in the healthcare sector, serving as a protective barrier for medical staff, with increasing demand in developing markets on the back of growing hygiene awareness.

Hence, glove demand is expected to grow both in developing countries where glove usage is relatively low as well as in developed countries, where glove usage has expanded beyond healthcare to other sectors such as food and beverages.

Going forward, Lim said Top Glove remains on track to achieve its ambitious goal to become a Fortune Global 500 company by 2040 by pursuing a bigger share of the international glove market.

"We are proud to become the world's largest manufacturer of nitrile gloves, in addition to natural rubber gloves and surgical gloves," he said, adding that to be in the Fortune Global 500 list, it would have to grow by 30 times to achieve US$35 billion (RM150 billion) sales revenue.

He said Top Glove would be investing more in technology, research, and development (R&D) as well as artificial and human intelligence in its effort to achieve the goal.

As at July 6, Top Glove was ranked the sixth-largest company on Bursa Malaysia and the 10th largest on the Singapore Exchange (SGX) in terms of market capitalization, placing it among the elite top 10 companies on both bourses.

Its share price had surged 421% to close at RM21.92 last Friday, compared with RM4.20 on Jan 2, 2020.

In a filing with Bursa Malaysia on Saturday, Top Glove said its net profit skyrocketed by 365.9% to an all-time high of RM347.9 million for the third quarter ended May 31, 2020, versus RM74.67 million for the same period last year, with revenue jumping 42% to RM1.69 billion from RM1.19 billion previously.

It attributed the extraordinary performance to unparalleled growth in sales volume on the back of the Covid-19 pandemic.

Following a meteoric rise in its monthly sales orders, it said its lead time had increased from 40 days to around 400 days, whereby orders placed now would only be delivered over a year later.

Top Glove had a humble beginning as a local business enterprise with a single factory and one glove production line in 1991.

Today, it has captured 26% of the world market share and offers a comprehensive product range, fulfilling demand in both the healthcare and non-healthcare segments. The company serves a growing network of over 2,000 customers in more than 190 countries.

Source: The Edge Markets; Bernama.

Part 1

1. Based on the article above, what are the problems faced by Top Glove?
2. Based on the above article what are the external factors that affect the increase in demand for Top Glove products.
3. Explain the threats and opportunities faced by Top Glove.
4. Suggest ONE of the methods that should be implement by Top Glove in order to compete with other countries. Justify your suggestion.
5. Suggest TWO ways for Top Glove to maximize their production and justify your suggestion.