PETALING JAYA: Luster Industries Bhd-linked Glovconcept Sdn Bhd (GSB), a 60%-owned subsidiary of Glovmaster Sdn Bhd, which in turn is a 56%-owned subsidiary of the company, has entered into an agreement with American Nitrile LLC (AN) to provide engineering, procurement, construction and commissioning (EPCC) services as well as glove technology solutions for up to 12 glove production lines and a further estimated 72 glove production lines in the US.
The contract, valued at more than RM1 billion (based on the total estimated 84 lines), marks Luster’s maiden foray into North America. Luster is also among the first Malaysian companies to offer EPCC works for a glove manufacturing plant in the US, reaffirming the market’s confidence in the group to undertake a high-tech production facility.
A filing with Bursa Malaysia yesterday showed that GSB will undertake the designing, building and delivery of a glove manufacturing factory on a turnkey basis, with glove output of not less than 38,000 to 40,000 pieces per line, per hour. Meanwhile, AN will be responsible for the sourcing and procurement of the plant, machineries and infrastructure such as electricity and water, raw materials, workers and utility. The plant will be located in Ohio, the US.
The remaining stake in Glovmaster is held by Fortune Tac Sdn Bhd, which specialises in the glove business, from setting up to operating glove production lines.
Luster Industries deputy managing director Liang Wooi Gee said the group has taken the opportunity to tap into the US market, following the rising interest for it to reduce its reliance on Asia’s personal protective equipment (PPE), including masks, gloves and ventilators. Malaysia supplies about 68% of the world’s gloves.
This is in line with the direction of US President Joe Biden’s administration to reduce dependency and reliance on imports of PPE.
The estimated cost of around US$3.6 million or RM14.9 million per line in building the glove production plant will be borne by AN. At least 12 production lines will be placed into two separate orders, which works out to RM178.8 million in value. AN aspires to purchase from GSB up to 72 additional production lines within the first 24 months of the agreement.
GSB is entitled to a percentage of the sale proceeds from all the production lines, with a minimum entitlement of US$2 million per annum and capped at US$50 million for every 12 lines. Once all 84 production lines are running at full capacity, Luster could see earnings of up to US$350 million coming from the sales proceeds of gloves by AN.