SEPANG: Hartalega Holdings Bhd is allocating a total of RM745 million in capital expenditure over the next three years to expand production and boost adoption of Industry 4.0 technologies.
Managing director Kuan Mun Leong said the capex allows it to ramp up output from the current 34 billion pieces of gloves to 42 billion annually.
Kuan said Hartalega also aims to reduce dependency on manual workforce by 18 per cent in three years.
“We have allocated RM630 million for Plant 6 and Plant 7 at our Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang as well as RM115 million to integrate Industry 4.0 technologies for all activities related to gloves production and manufacturing, connecting to computer such as data analytic and artificial intelligent,” he said during a media visit at the NGC here yesterday.
Kuan said Hartalega would have a 10 per cent increase in capacity with the additional of 27 production lines for the Plant 6 and 7 at NGC, which will be completed in phases from 2020.
“Currently, we have a combined 60 production lines at NGC with 34 billion pieces of gloves capacities per annum.
“Our Bestari Jaya facility has 45 production lines with 12 billion pieces of gloves capacities annually,” he said, adding that Hartalega has about 85 per cent utilisation rate of the overall plants.
Kuan said the nitrile glove producer was also keen to more lands to build new facilities beyond the NGC and existing facility in Bestari Jaya, to support the continued strong demand globally.
“We expect between 8.0 per cent and 10 per cent increase in global demand for nitrile gloves yearly. We forecast about 276 billion pieces of gloves to be in demand for 2019,” he added.
Kuan said Hartalega produced about 28.5 billion pieces of gloves during the financial year ended March 31, 2019 (FY19).
Malaysia secured 63 per cent of the global supply of nitrile gloves, which stood at 256 billion pieces throughout 2018.
The company export nitrile gloves to 60 countries in regions such as the North America (54 per cent), South America (3.0 per cent, Europe (25 per cent) and Asia Pacific (18 per cent).
“We also export antimicrobial gloves to more than 20 countries and expect to get the United States Food and Drug Administration approval by mid 2020,” he said.
Kuan said Hartalega spent 11 per cent to 12 per cent of its total operating cost on labour wages annually.
Currently, Hartalega employs about 7,700 staff, most of them (70 per cent) are foreigners.
“We have internally developed the Robotic Packaging System that would be ready for installation at all plants by 2022,“ he said.
Kuan said the company’s adoption of Industry 4.0 technologies comprising three data warehouse systems such as enterprise resource planning, manufacturing execution system and internet of things for its product lines.
On another note, Kuan said Hartalega would pass down the higher production cost to customers in light of the recent hike in natural gas tariff.
“However, we believe it will not impact our margins significantly as we need to make discuss with customers in adjusting our pricing,” he said.
On July 12, Gas Malaysia Bhd reportedly increased natural gas price to RM32.74 per million British thermal units (MMBtu) for the period of July 15 to December 31, from RM32.69 per MMBtu.