The hard times for Abric


  • Business
  • Saturday, 12 Apr 2003

WHERE did it all go wrong for Abric Bhd

To answer that, one needs to take a step back and look at Abric's two main core businesses, i.e., the manufacture and marketing of security seals and its technology division, which includes the provision of e-logistics products and services. Abric produces an extensive range of security seals which is used widely in the bulk transportation and shipping industries as well as in the gaming, banking, warehousing, hotel, postal, health services and retail industries, to deter tampering.  

Abric originally had a manufacturing facility based in Shah Alam. But in December 2000, the company decided to relocate the facility to Rayong, Thailand. 

The rationale for the relocation was to strengthen the competitiveness of the manufacturing operations as a result of tax incentives and lower costs. The Rayong plant produces the entire range of security seals, which is exported to Europe, the US and the Asia Pacific region.  

Apart from the Rayong plant, Abric also has a second manufacturing plant in Sao Paulo, Brazil. The plant produces a limited range of security seals and most of the production was sold to the Mercusor and the Latin American markets.  

In pursuit of its goal to be a global manufacturer and provider of fully-integrated security sealing solutions, Abric in 1999 added e-logistics and information security products and services through e-Locked Inc. One of the components of the e-logistics business was the provision of customer relationship management (CRM) services through information and communication technology (ICT), which was developed internally. 

The problem with Abric started in late 2000, just after the technology bubble burst. The slow-down in global trade had an adverse impact on the group’s manufacturing and e-logistics businesses. 

The protracted currency crisis in South America exacerbated the situation further and affected sales. 

And although efficiency in its Rayong plant (the largest of the two plants) was improving operationally (partly aided by new contracts secured), it was difficult for it to achieve optimum economies of scale given the marked slide in demand and global trade. 

Abric's e-Logistics, meanwhile, suffered severely from the loss of confidence in US post Sept 11 as well as the prolonged liquidity crisis in South America. 

The unfavourable market conditions pushed Abric to postpone the listing of one of its subsidiary, E-Locked Inc on the Hong Kong Stock Exchange which was scheduled for late 2001. 

It can't get any worse for Arbic, can it?

 

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