A case for increased manufacture of Nitrile Examination Gloves
The Global Industry Report https://www.gminsights.com/industry-analysis/medical-gloves-market on the medical gloves market pegs that market for the year 2019 at more than $7.0 bn. At the CAGR (Cumulative Average Growth Rate) of 10% per year the market is expected to almost double to more than $13.5 bn by the year 2026.
The share of the expected CAGR for Nitrile gloves is 17.6%, for Surgical gloves 10.5 %, for gloves used for the e-commerce segment 11.6% & more than 7.8% is in the reusable segment.
However, these figures were estimated BEFORE the outbreak of COVID. Since, the demand for nitrile examination gloves has gone up ten-fold. The nature of the Corona virus has necessitated that examination gloves be used just once and discarded. The different communities that need to use these gloves has expanded too. We are now in a changed space regarding safety and hygiene and this change is unlikely to go away.
Given that the nitrile examination gloves segment will soon have the largest share of the market in the medical gloves market, the segment is poised to take off exponentially. Herein lies an opportunity for manufacturers to rapidly scale up existing businesses, pivot business models to take advantage of this change and reimagine new ways of production. This market sector (latex dipped goods) has continued to grow globally even during periods of recession.
The end user requires high quality, safe products and given the quantities estimated, will need them at affordable prices. We are now in an era where business adaptability to constant change in the market conditions is a necessity.
Technical Changes to the business model to drive better quality and enhance profitability & productivity
Dispersions used in the manufacture of gloves contain solid particles dispersed into the liquid (water) phase. Solid particles, especially additives like sulphur, accelerators, pigment and zinc oxide have a significantly higher density than water. The natural tendency for these materials is to settle down due to the forces of gravity. This can result in the dispersion being un-usable due to heavy sedimentation, and of course after compounding the dispersion into latex, the same natural forces apply to the solid additives now inside the compounded latex.
The technical requirements of the users of additive dispersions continue to be many and varied. The most important ones, applying to all users are: –
- Functionality: The additives should play the required role in the user’s process of converting the compounded latex into finished products with the desired properties.
- The physical properties of the dispersion must be such that the dispersion flows well when transferred either by gravity or pumping and should mix well, both prior to compounding and when compounded with latex.
- Retaining physical properties during storage.
- The natural solid sedimentation processes must be slowed down else it will result in affecting the quality of the goods and lead to high rejects. Typical problems in latex gloves from using inconsistent dispersion quality can include poor mechanical / physical properties (e.g. tensile strength), and visual pinholes, white spots, heat ageing and reduced shelf life in storage.
- In addition, especially for the SE & South Asian regions, the natural processes of sedimentation and agglomeration happen faster as the ambient temperature is higher.
The dispersion used in the making of gloves plays an important role in the quality of the product. Having too large particles or too small particles each have their own issues. Smaller than 3 to 4-micron level sometimes causes physical and sometimes chemical forces to come together as agglomerates. Viscosity of the dispersion can increase sometimes to the level where the dispersion forms a gel.
Commercial considerations to pivot the business model
It will be short sighted to only take into consideration the cost of the raw material that goes into dispersions. The notional costs associated with the entire manufacturing process should also be considered some of which are detailed below:
- Non-active ingredients cost
- Capital & maintenance cost of plant & equipment (spare part inventory included) required for dispersion manufacturing.
- Capital and running costs of laboratory & laboratory equipment required to control the quality of active ingredients.
- Cost of keeping and controlling raw materials inventories for multiple materials (outsourced dispersion can be a ‘composite’ containing several ingredients) including staff costs, factory space & financial outlay.
- Cost of the factory space utilized for the in-house dispersion making activities. This is not only the actual cost of rental / purchase but an additional ‘opportunity cost’ if the space can be more profitably used for production of the mainline product (eg. gloves)
- Cost of the labour / staff to carry out and control the production and QC
- Cost of energy (usually electricity) for the mix preparation, milling & packaging operations.
- Costs of treating effluent and disposing of wastes arising from inhouse dispersion manufacture will be reduced by the use of readymade dispersions.
- Cost of raw materials packaging waste (may require disposal in same category as chemical wastes)
- Cost of potential downtime on mainline production which is relying on the in-house dispersion
- Cost of wasted or down-graded final product if the quality consistency of the in-house dispersion is not maintained
Compared to a specialized dispersion manufacturer, the user making in-house dispersions will have a smaller scale of operation which will result in lower economies of scale and higher conversion costs.
When all of the invisible real cost factors associated with in-house dispersion manufacture are taken into account by the dispersion user, it becomes easier to see why many dispersion users are prepared to pay a raw material cost premium for buying ready made dispersions. Further, the dispersions used is for high quality latex gloves is approximately 3% of the total product being used, the rest being the rubber. It is well known that such consistency of dispersion quality is one key factor of success for producing top quality dipped latex goods.
Due to these factors, the decision to outsource additive dispersions is technically sound and makes better business sense than ever before. It is a techno commercially viable proposition.
Successful glove producers are those who can expand fast enough to meet the growth opportunities whilst locating where they can add most value in the whole of the supply chain. Focusing on their core competency will make for better business outcomes when pivoting in this market presently. Rapid expansion of operations to gain economies of scale and new customers is easier, both in practical terms (less space, less equipment to buy) and cash flow.
With the recent cases of industrial hazards while reopening of operations, e.g. chemical factory in Vizag, health and safety will be at the top of compliance and regulatory bodies. Outsourcing this to a readymade dispersion manufacturer will mean more time freed up to concentrate of product innovation and enhancement of the market.
Acknowledgements: With inputs from Paul McKavanagh,
Managing Director – Aquaspersions Malaysia