The MCO has left rubber glove manufacturers to operate with just 50% of the original workforce
By SHAZNI ONG / Pic TMR
THE Malaysian Rubber Glove Manufacturers Association (Margma) warns of a shortage of medical gloves for the international market unless local glove makers are allowed to raise production levels now curtailed by the Movement Control Order (MCO).
The association stated the industry can easily meet the 120 million pieces required by the domestic market, but has to raise current production levels to 100% to meet the spike in orders from abroad due to the Covid-19 pandemic.
“The demand from the rest of the world is going to be very challenging as the MCO has left rubber glove manufacturers to operate with just 50% of the original workforce,” Margma president Denis Low said in a statement yesterday as the government extended the MCO to mid-April.
He added that the country is the largest producer of medical gloves in the world and feels duty-bound to ensure enough gloves are supplied to hospitals and all healthcare givers in their fight to stave off the pervasive virus.
“We expect to deliver about 225 billion pieces this year, which is about 65% of total world requirements of about 330 billion pieces,” he said. Low said the association will continue to talk to the government to allow rubber glove manufacturers to operate at 100% capacity together with support services and material suppliers.
He also said Margma has advised international buyers that they need to be disciplined in their forward sales to their own clients and to concentrate the supply to hospitals, emergency and healthcare workers.
The move by the US Customs and Border Protection (CBP) to revoke the withhold release order (WRO) for rubber gloves imported by WRP Asia Pacific Sdn Bhd is expected to have little impact on the local rubber glove makers.
The WRO, which was initially levied against the company in September 2019, is revoked based on recent information obtained by CBP showing the company is no longer producing rubber gloves under forced labour conditions.
RHB Investment Bank Bhd (RHB Research) senior research analyst Alan Lim said the research firm is neutral on the news.
“Demand is currently much higher than supply, so the additional supply from WRP should not change the demand-supply situation significantly,” he told The Malaysian Reserve (TMR) yesterday. Lim noted the lead time for gloves has increased to four months from the usual two to three months before Covid-19 emerged.
“We do not expect the resumption of supply from WRP to the US to change that in the near term. To put things into perspective, WRP’s capacity of 11 billion pieces per annum is at only about 4% of estimated global demand of 270 billion pieces per annum in 2019,” he said.
Lim added that in early-March, World Health Organisation (WHO) DG Dr Tedros Adhanom Ghebreyesus has highlighted that the personal protective equipment (PPE) industry must increase manufacturing by 40% to meet rising global demand in view of Covid-19.
“Gloves are one of the essential items of PPE. We are expecting a higher than usual demand growth of 13%-15% in 2020, compared to the usual 8%-10% growth in the past due to Covid-19,” he said.
It’s business as usual for the industry players as the ban applied to WRP only said Affin Hwang Investment Bank Bhd (Affin Hwang Capital) analyst Ng Chi Hoong.
“We understand there is strong demand for rubber gloves, as the delivery lead time has increased significantly from 15-30 days in early January to more than four months currently,” he told TMR yesterday.
On glove makers’ production impact by MCO so far, Ng noted the glove makers were listed as medical equipment manufacturers, hence, they were on the exemption list.
“I believe the exemption they (Margma) are seeking is to allow them to operate at 100%, as the government has recently asked some essential service providers to reduce operation,” he said.
Ng added that most manufacturers are currently operating beyond 90% of their utilisation rate.
“Top Glove Corp Bhd also mentioned they will try to ramp up their utilisation rate to 100% to meet demand, while Supermax Corp Bhd indicated it will put a hold on the rebuilding activities of their capacity to help meet current demand,” he said.