PETALING JAYA (March 31): The Malaysia Rubber Glove Manufacturers Association (Margma) expects the value of glove exports to shrink despite an expected 12% to 15% annual expansion in volume this year, due to lower average selling prices (ASPs).
“Unfortunately in the glove industry, exporting more does not mean we are making more. Average selling prices (ASPs) go down so we will earn less. In this case, we will be exporting more gloves, but our export revenue goes down.
“Like last year for example, we didn't decrease a lot in terms of quantity but we increased almost double in terms of export revenue due to glove prices shot through the roof,” said Margma chief executive officer (CEO) Chan Wone Fu during a briefing on Thursday (March 31).
However, he declined to offer a specific quantum of export value for 2022, citing price volatility amid disruptions worldwide.
For this year, Margma is expecting a shortfall in the global supply of gloves by 5% to 10%, as China — the world’s second-largest manufacturer of the protective gear — contends with manufacturing disruptions caused by Covid-19 and erratic energy supply.
According to Chan, rubber glove demand for this year is expected to hit 452 billion gloves — or 14,333 pieces per second — with Malaysia anticipated to produce the lion’s share at 294 billion pieces or 65% of all gloves, followed by China at 20%, Thailand at 10% and Indonesia at 3%.
In comparison, last year Margma had projected global supply of rubber gloves to reach 420 billion pieces in 2021, some 80 billion pieces short of the projected demand of 500 billion pieces.
However, Chan believed that regulatory requirements by governments concerning glove usage would drive growth for the industry.
“This is very important in North America and Europe, whereby America takes up 35% of our production output and Europe takes up the other 30% of the output. This is followed by healthcare awareness and growing affluence which actually drive up the demand of glove usage.
“In Asia, the population growth is also giving us some advantage in terms of additional regulatory requirements for gloves,” he said.
Margma expects new min wage to raise costs by up to 2.75%
Meanwhile, there are a total of 162 factories with 2,520 installed production lines and an installed production capacity at 370 billion pieces a year, according to Chan.
This comprises Margma’s 75 ordinary members as at January this year, with them operating 75% and above in terms of utilisation rate.
According to Chan, the association’s members are currently focused on remediation fees to free foreign workers from debts, upgrading hostels for their employees, as well as the minimum wage to improve the lives of workers.
“Margma members are supportive of the RM1,500 minimum wage announced by the government.
“The increase of minimum wage from RM1,200 to RM1,500 is a significant increase of 25% over the current minimum wage.
“MARGMA estimates that the 25% increase in minimum wage will result in an overall increase in production costs between 1.42% to 2.75% depending on the profile of the workers in each respective factory,” he said.