This article first appeared in The Edge Malaysia Weekly on November 13, 2017 - November 19, 2017

WHEN Hartalega Holdings Bhd launched its first nitrile glove in 2005, world consumption of the product was less than 5%. Today, it is more than 50%. The company is currently the world’s biggest producer of the nitrile glove, thanks to it skin-allergy prevention properties. But Hartalega is not resting on its laurels.

Managing director Kuan Mun Leong says the group is looking to set a new standard for the glove industry by introducing the world’s first non-leaching antimicrobial nitrile examination glove. According to him, the glove kills 99.99% of microorganisms on it in less than five minutes, thus reducing hospital-acquired infections (HAIs).

“Gloves are a barrier to protect the user from contamination, but the surface of the gloves can be contaminated, and they can carry microorganisms from whatever things the user has touched to patients,” Kuan explained at a press briefing last Friday.

He believes the market is ready for such a product, as studies have found that on an annual basis, HAIs results in additional costs of US$28 billion to US$45 billion in the US and €7 billion in Europe. Both are Hartalega’s markets.

“We believe our new product can help reduce HAIs, and there is no problem in terms of manufacturing it. We have run a production trial and it was very successful. Our technology is capable of adding this new feature into our gloves,” he says, adding that the product is slated to be launched in the first half of next year.

Hartalega has been developing the product over the last two years at an investment of RM25 million, according to Kuan. “It was developed with UK-based antimicrobial R&D specialist, Chemical Intelligence Ltd, which had been studying the subject for five years before our collaboration.”

“The reaction has been good so far. When we talked to hospitals or healthcare centres, their reaction was always, ‘When is it (the product development) going to be done?’. And action groups, whose members have relatives affected by HAIs, are desperate to have this product in the healthcare industry,” he adds.

However, because the glove is the first of its kind, Kuan says he is not able to quantify the potential impact it will have on Hartalega’s financial results yet. “Of course, we hope the glove industry will adopt this as a new standard … that is our aspiration. But we cannot tell how the market will react. Like when we launched the nitrile glove, we did not know that Hartalega would transform itself into the world’s largest nitrile glove manufacturer.”

Kuan says the cost of manufacturing the new product has not been finalised but assures that the final price would be “acceptable” to customers.

Should the product take off, he expects a positive financial impact as early as the coming financial year ending March 31, 2019 (FY2019).

Kuan says total production capacity will be around 25 billion pieces in FY2018, adding that the group aspires to exceed 30 billion pieces in FY2019 when Plant 5 in its Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang is fully commissioned.

“There are 12 lines in Plant 5, and we plan to commission one line per month next year,” he says.

The NGC consists of six production plants and when they are all up and running, the group’s total production could reach 42 billion pieces.

Kuan says there could be a disruption to the group’s expansion plans — foreign workers. Over the past 12 months, he says, Hartalega has been undertaking a headcount rationalisation plan that has reallocated about 700 workers from less-productive processes in its Bestari Jaya plant to the NGC. The staff count at Bestari has been reduced to 3,500 and the NGC’s workforce currently stands at 3,100.

To ensure a smooth expansion, Hartalega will need another 2,000 employees over the next two to three years.

“The progress of new intakes of workers is still slow, but at the moment, we have enough workers. Our HR is working very hard to ensure that intakes are on time and our expansion is not disrupted. But from next year, we are going to need the government’s help to expedite the intake process,” he says.

Last Friday, Hartalega’s share price closed at a record high of RM8.70, giving it a market capitalisation of RM14.36 billion. Year to date, the counter has gained 80%, or RM3.87, from just RM4.83 on Dec 29 last year.

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