KUALA LUMPUR (Sept 3): Hartalega Holdings Bhd (KL:HARTA) has set aside RM250 million in capital expenditure (capex) for technological upgrades, automation and artificial intelligence (AI) across its production lines.
Hartalega, one of the world’s leading glove manufacturers, said none of the funds will be used to construct new production lines, indicating a focus on operational efficiency as they compete with the advanced technologies of Chinese companies.
Hartalega chief executive officer Kuan Mun Leong said RM235 million will be invested in production technology upgrades and scaling-up successful proof-of-concept (POC) projects, while RM15 million is for AI-driven systems.
“This capex is not for building new lines, it is purely for technology upgrades to make us more efficient, more productive and more competitive,” Kuan said during a press conference following the group’s annual general meeting on Thursday.
The tech capex drive follows an intensive 18-month internal review of the group’s processes.
Kuan said the aggressive capacity expansion by Chinese glove makers post-Covid, supported by advanced automation, resilient domestic ecosystems and deep talent pools have outpaced Malaysian facilities, prompting Hartalega to redesign its production platform.
He added that although Malaysia remains the primary source of gloves for the US because of the 100% tariffs on China products, the company cannot rely on the market as tariffs could reverse.
“What we have done is to focus on making changes that will strengthen the way we run our business going forward in the future,” said executive chairman Kuan Kam Hon.
The investment is already yielding positive results through improved operational efficiency and reduced floor manpower.
Mun Leong said automation and AI adoption had reduced headcount by 27% at Hartalega's newest Plant 9 facility, which is running at over 50,000 pieces per hour.
These technologies would be used in Plants 3 and 4, which were previously hibernated due to a downswing in demand caused by customer inventory build-up following Covid-19. Plant 3 is scheduled to be recommissioned by end of 2026, while Plant 4 by end of 2027.
Following the upgrade, Plant 3 is expected to reduce headcount by 50% alongside an 8% output increase per line.
“Having validated these technologies through POC trials, we are now rolling them out across our more than 100 production lines,” added the group CEO.
Currently, the glove-making giant operates a plant utilisation rate of above 90% across its active lines, with Plants 3 and 4 slated to add a minimum nine billion pieces in production capacity, complementing Hartalega’s current capacity of 37 billion pieces.
At noon market break on Thursday, Hartalega's shares were up half a sen, or 0.53%, at 95.5 sen, giving the group a market capitalisation of RM3.27 billion.