Australia's niche champion Ansell prospers in Covid times

@AuManufacturing’s Australia’s niche champions series has focused on local manufacturers who are export leaders. But there are other business models, such as rubber glove maker Ansell which is a world leader without actually manufacturing in its home market. By Peter Roberts

Australian global niche manufacturing champions such as Ansell in rubber gloves and protective clothing beg a number of questions, such as when is an Australian manufacturer, Australian?

This is especially important a question as the company is currently undergoing a massive international expansion with its single-use protective rubber gloves and industrial protection equipment in hot demand globally.

This week the company reported earnings before interest and tax (EBIT) up 8.3 per cent to $303.6 million on revenues up 7.7 per cent to $2.24 billion.

In constant currency terms EBIT was up 34.7 per cent.

This was driven by growth in its examination and single use medical gloves business which rose 18 per cent, and a jump in sales of its chemical protective clothing which is proving so critical to frontline medical staff.

During the year the company boosted production of chemical protective clothing in China and Sri Lanka by 40 per cent, localised production in Brazil and Lithuania, and expanded its Thailand plant to boost overall glove manufacturing capacity by 35 per cent.

Ansell also buys gloves from third pa .au/ansell-acts-to-clean-up-its-labour-standards”>dubious labour standards.

As CEO Magnus Nicolin said this week: “We have built a specialist global manufacturing company, well-grounded in numerous capabilities, with a uniquely broad range of high quality, complementary personal protection products.

“…(our employees) have worked hard to optimise and expand our operations to ensure our products get to end customers.”

And here is the second question Ansell begs.

Why is there absolutely no talk, and no apparent pressure from the federal government which purports to be concerned about local production of crucial personal protective equipment (PPE), to re-establish glove production in Australia?

If Covid-19 has taught us anything, it is that absolutely critical medical supplies such as surgical and protective gloves need to be made locally, or at the very least that we need to secure our supply chains.

Yet during the height of the Covid-19 pandemic, Ansell factories in Malaysia and Sri Lanka closed for the best part of two months, disrupting supply chains.

Here we have a global niche leader – it is the undisputed leader – and we have the perfect launch pad to bring production home.

And it is not as if rubber glove manufacture has a high labour content – to the observer, dipping a mold into latex would appear to be a highly automated process (below).

The silence from Canberra is deafening.

Yet Ansell is Australian in many crucial ways.

It is listed on the ASX and majority Australian owned, and its most senior and well paid jobs are in Australia.

When Ansell first internationalised, the engineering and manufacturing systems development continued in Melbourne and, while that is unlikely to be the case today, senior company executives worldwide are Australian expatriates.

Yet every one of Ansell’s factories are overseas, particularly where perhaps it makes sense – in Malaysia where there is a long history of latex production and in its major markets such as China (Xiamen, main picture).

Ansell is the successor to one of Australia’s oldest public companies, the Dunlop Pneumatic Tyre Company of Australasia Ltd whch first listed on the stock exchange in 1899.

This later merged with a number of companies eventually becoming Pacific Dunlop, a conglomerate that was one of the country’s top 20 firms in the 1990s.

Perhaps it is the collapse of Pacific Dunlop with the withdrawal of protection that destroyed its confidence in local manufacturing.

The company’s history is certainly one of rapid and continuous offshoring in preference to focusing on creating competitive advantages in its Australian operations.

But it is never too late to try, and there has never been a better time to do it than today.

@AuManufacturing’s Australia’s niche champions series is brought to you with the support of the Innovative Manufacturing Cooperative Research Centre, and SMC Corporation.