LUSTER Industries Bhd has inked an agreement to provide engineering, procurement, construction and commissioning (EPCC) for 12 rubber glove production lines in the US.
The agreement was inked between American Nitrile LLC with Glovconcept Sdn Bhd, a 60 per cent-owned unit of Glovmaster Sdn Bhd, which is in turn 56 per cent-owned by Luster.
Luster said Glovconcept 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 units per line per hour.
“The estimated cost to be borne by American Nitrile in building the glove production plant is around US$3.6 million or RM14.9 million per line,” it added.
In turn, Glovconcept is entitled to a percentage of sales proceed from the 12 production lines with a minimum of US$2 million per year.
“Glovconcept’s entitlement herein provided shall cease once an aggregate total sum of US$50 million has been duly received by Glovconcept from American Nitrile.”
Luster added that American Nitrile “aspires” to purchase up to 72 additional production lines within the next two years.
The total estimate of 84 lines including the recent agreement, while non-binding, could bring in earnings of US$350 million in total.
The company said this project marks its maiden foray into North America. It also said it is among the first Malaysian company to offer EPCC works for a glove manufacturing plant in the US.
The glove production facility will be located at 3500 Southwest Blvd/ Grove City in Ohio, US, it said.
“The Group has taken the opportunity to tap into the US market, following the rising interest in the country to reduce its reliance on Asia’s personal protective equipment (PPE), including masks, gloves and ventilators,” said Luster Deputy Managing Director Liang Wooi Gee.
“Currently, about 68 per cent of the world’s gloves supply comes from Malaysia,” Liang said.