Power Talks feat. Hartalega

Power Talks by The Star Media - featuring Mr Kuan Mun Leong, Managing Director of Hartalega Holdings Berhad - Saturday, 21 Oct 2017

I came across the advertisement for this Power Talks a few weeks ago on The Star newspaper. Looking at Hartalega, a company which has expanded its operation in the midst of the economic downturn, intrigued me to quickly log on to the web and sign up.

I registered for two persons - just in case, somebody would want to join this geek on Saturday morning, sacrificing their morning to listen to a business leader. I went alone though. This is actually my second time attending Power Talks at Menara Star, Phileo Damansara, and one time at SeGi College which the organiser had featured Tan Sri Rafidah Aziz and other legendary women in Malaysia to inject some inspiration to the mass. The first talk I attended was by a leader in Maritime/Shipping Industry called Tan Sri G. Gnanalingam from Westports. 

I'm going to share some key take away from the Power Talks I attended today.

I arrived slightly late and during that time, Mr Kuan was already on stage, started talking about Hartalega. He started off by sharing facts and figures about Hartalega, a timeline dated from 2005 until 2015. How much the company has grown. Since I was there to know what made this company expanding in the midst of the economic downturn, his first 20 minutes of sharing answered it all.

Before we dip further, let's get to know about the company. Hartalega was the inventor of the world’s first lightweight Nitrile glove in 2005, which caused a demand shift from latex to nitrile gloves all over the globe. Needless to say, it is now the largest producer of nitrile gloves in the world, capable of manufacturing at least 27 billion gloves a year and will progressively expand to 42 billion gloves in 2020.

The Glove Industry - Malaysia is the World Leader

Malaysia is the leader in the glove industry because we are the number one manufacturer and supplier to the world's demand, mainly in the medical sector. Top Glove - a company originated from Tasek, Ipoh, Perak, went against all odds by going against the big guys from the US in supplying rubber gloves. With the abundance of rubber resource in Malaysia, of course, we can compete with the big players. And Top Gloves proved it and it remains as number one manufacturer and supplier for rubber/latex gloves.

Hartalega, on the other hand, saw the opportunity in nitrile gloves which once supplied to the automotive industry. However, back then, before Hartalega embarked on its journey to innovate and disrupt the industry, nitrile gloves were typically heavy and bulky. It was not suitable for medical use which glove market is concentrated at. Hartalega started its in-house Research and Development (R&D) back in 2002 (I think the idea started way before 2002), to come out with a solution to make nitrile gloves that are thin and lightweight, suitable for medical use and of course, brings profits to the company.

Mun Leong shared how he and his father, together with an engineer would spend time in a room and trying to come out with the solution. They tested the prototype and one day, they managed to produce a 4.7 grams nitrile glove. They actually have even successfully produced a 3.7 grams nitrile glove. They shut the windows down and locked the door of this successful prototype room to keep its secret between the four walls.

In 2005, the company launched its first full-scale production line for this 4.7 grams nitrile gloves. Despite having the best result of 3.7 grams, they launched the 4.7 grams to the market and they successfully shook the market with this revolutionary product. Within two years or so, Hartalega's competitors started to produce the same product at a lighter weight - 4.1 grams. Having the 3.7 grams success recipe in the vault, the company retaliated to that competition with this product. Today, there are nitrile gloves that weigh as light as 2.2 grams! 

It was all started with that R&D by Hartalega.

With this innovation and putting technology in place within Hartalega's business, Mun Leong acknowledged that there were a lot of things the company needs to manage during this transformation period of growth. Demand was at its peak, business was so good that a client even said to them, "I am going to fly to your factory and sit in front of your production line to make sure all gloves produced will go into my box!"

In 2009, the company experienced its fall out. Engineering in manufacturing is mainly about quality. Quality is the technical aspect and it can determine whether the company can stay competitive in the business line or not. During this fallout, Hartalega's nitrile gloves experienced quality issues. They were always producing the first batch of products with 99% good quality but, the product's quality went down to 93%. They had a catastrophic period. It lasted for 9 months until they managed to get back on track with a 99% rate of good quality nitrile gloves. There were speculations that the leadership will go down but they remained silent to it and kept on working on getting the solution.

After getting back on its feet, the leadership team had to discuss whether to sell the business or expand the business. Business was good, they passed the painful period and if they were to sell the company, this ought to be the best time. Mun Leong convinced his father, siblings and also cousins that they should expand. And they did.

They started to search for a piece of land to build a new factory in the course of the expansion plan. They looked all over South East Asia for the expansion but then decided to build the new factory in Malaysia. Mun Leong suggested a 25 acres land to his father but his father said no to it. Next was a 55 acres land, his father said that the size is ok but not the location. And one day, he showed an industrial land with a 100 acres size. The father agreed to it but having it at 95 acres only. Mun Leong was shocked! From 25 acres to almost 100 acres - are we building a township, or what? As an engineer, Mun Leong was entrusted by his father to design the new factory. He came back with 60 production lines and the father went - there is so much empty space! He redesigned it to be 72 production lines. It didn't occur to him that they are about to triple their daily production capacity. Mun Leong said, "We don't want to expand into trouble. So we redesign and restrategize the plan."

In 2015, the new factory located in Sepang was established. It has its own water treatment plant, six production factories (four of them have been commissioned, factory 5 is currently under construction and factory 6's construction will start next year) and also workers' housing area complete with basic amenities surrounding it. It is definitely a township.

Hartalega disrupted glove manufacturing industry by having technology in place. It has 93% OEE which is better than the world's benchmark - 85% and also gaining 26% nett profit out of its products sold. It has also embarked to the Internet of Things (IoT) and Mun Leong can know the status of the factories from his mobile phone. He showed us the interface at this Power Talks.

From his personal growth story with Hartalega, there are several key points that can be learnt.

1. Seek Opportunity in Low
2. Think Like The Enemy
3. Don't Expand Into Trouble
4. Take Time to Plan
5. Acknowledge Your Weaknesses, Flourish Your Strength
6. Stamina, Hardwork, Persevere, Grit, Passion
7. Life is All About Balancing Act