Top Glove improving efficiency


  • Business
  • Tuesday, 28 Jun 2005

Top Glove executive chairman and CEO Datuk Dr Lim Wee Chai talks about improving efficiency at the group's manufacturing plant and strategy for growth. He also shares his opinion on the trends that could take place in the rubber glove industry.  

 

DATUK DR LIM WEE CHAI  

Executive Chairman/CEO 

Top Glove Corp Bhd  

 

StarBiz: How are your plans to strengthen the business coming along? 

Lim: Top Glove is in a very unique position. By having operations in three countries, we have the option of deciding where to expand based on the economic climate or investment opportunities. To strengthen our competitiveness and efficiency, we had to scrap some of our older and less efficient machines at our Factory 1 in Klang and Factory 6 in Phuket, Thailand.  

In replacement, we have added new and more advanced machines that have the capability to increase the production capacity. At the same time, the quality and production efficiency have improved due to the introduction of new technology. Going forward, we are actively working on few plans for our organic growth, which involve expansion at the downstream and upstream levels. 

Datuk Dr Lim Wee Chai

StarBiz: Are you reaping the benefits of earlier moves to better position the business?  

Lim: At the point of listing, we only had 41 lines and now we have more than 160 lines. Our massive expansion has really paid off in terms of economies of scale, better pricing and credit terms from our supplier. We have also managed to attract more customers who want to do business with a more stable, growing and dynamic organisation that is able to meet their schedule and requirements. 

StarBiz: What are the trends in the industry or economy that are having a positive impact on your business? 

Lim: Due to the competitive nature of the business, big traditional multinational glove players have not been expanding, but resorted to outsourcing from efficient glove manufacturers like Top Glove that can deliver the same quality gloves at more competitive pricing. 

The stiff competition has also resulted in marginal players leaving the industry as they cannot compete with more effective and efficient manufacturers that can deliver the same quality gloves at a better pricing and source. 

The emergence of new viruses like SARS, bird flu, Nipah virus, as well as bio-terrorism threats like anthrax have created a new wave of usage as the public is more conscious of their surroundings, take more precautions and do not expose themselves to such risks.  

Such situations have elevated the profile of gloves and contributed to higher glove usage worldwide. As a responsible corporate citizen, we wish that such things do not happen, but it is a reality and we are doing our part indirectly by ensuring the quality of our gloves is able to prevent these health workers from being infected by all these viruses. 

StarBiz: Do you foresee or expect any unfavourable occurrences or events that could impact your business in the near future? 

Lim: The challenges in the industry are always there and for us it is a healthy competition. In fact competition is one of the reasons why we are the world's largest natural rubber gloves manufacturer.  

We have to study the implications and benefits of organic growth. The management must have the ability to control the overall activities of glove manufacturing: from producing and delivering the gloves to the customers, guiding and ensuring that the company is always in the right direction with the right attitude and culture.  

It takes years to cultivate a culture and in the long term, there will be synergistic movements in the right direction. We do not believe in acquisition for the purpose of control whether in management or wanting to create a culture as this action will only look good in the short term, but over the long term will result in problems due to lack of culture enforcement. 

Cost of raw materials and fuel is our concern, as with the rising fuel prices, it will indirectly affect us. But we are prepared for things like these as we are utilising different and more efficient energy sources such as biomass, natural gas, coal and liquefied petroleum gas. As for latex supplies, we have a panel of more than 10 suppliers and we are able to pass the majority of the cost increases to our customers. Our loyal customers understand this, as they will enjoy a good pricing when the latex cost drops. 

As for the ringgit peg, we diversify our risk by operating in three countries and one successful policy we have is adopting the forward hedging of the US dollar (by six months). 

StarBiz: Moving forward, are you likely to expand your business or the scope of your business ties? 

Lim: We have a 2-way growth strategy. For vertical growth, we intend to move downstream to get closer to our customers to better support and service them by opening more marketing offices; for example our US office is to cater to our North American market and our Germany office to our European market.  

We intend to set up a marketing office in Brazil for the Latin American market soon. We are also actively looking into latex concentrate plant to cater to our operational needs. Latex makes up a substantial portion of our cost and with this plant, we would be able to have a better control over the quality and delivery of latex. 

On horizontal growth, the strategy is basically to expand our range of products to have a bigger market presence in the various categories of gloves, namely vinyl, latex and nitrile.  

With this strategy in place, we will strengthen our position as a one-stop glove-sourcing centre. The marketing department is always on the move and consistently seeking new customers and market. Our presence in China gives us a better footing to tap other opportunities or products that are synergistically related to our business strategies and products. 

StarBiz: On a personal level, what has been the happiest moment for you so far this year as a CEO of your company? 

Lim: There have been a lot of happy and great moments, but to me the happiest and most satisfying moment was achieving good result and encouraging growth. In this case, the growth is by 50% and I am proud to say that we will be working harder to ensure that we maintain it as the saying goes, “To be Number 1 is already difficult, to maintain it will be more difficult”.  

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