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Making it big in the gloves market
Dipped Products Ltd (DPL), the Hayleys subsidiary that makes household and industrial rubber gloves, is one of the few companies in the island to have made it big in international markets using technological, marketing, management and financial resources available locally.

Nearly all of the country's large industries have either been in the apparel sector, which have been traditionally protected by textile quotas, multinationals or branches of foreign companies, or import substitution industries - mainly public sector corporations bank-rolled by the state.

"All these industries have had one form of protection or the other, whereas we have been in the glare of market realities from our inception," said N.G. Wickremeratne, DPL managing director.

The company, probably the fifth largest non-medical glove maker in the world, is now positioning itself to capture a bigger share of the market with the acquisition of its distributor in Italy and diversifying into the manufacture of medical gloves by setting up a plant in Thailand.

Medical gloves
"The medical gloves market is the biggest, even if the most 'commoditised' sector," said Wickremeratne. "But it is an area of growth for us and moreover, we need to set up operations in another large rubber producing country as the island's output declines."

Medical gloves account for about 80 percent of the world market in volume and 60 percent in value. According to the SATRA Technology Centre, an industry research outfit in the United Kingdom, the total world gloves market is estimated to be worth around $16 billion at the retail level, though at ex-factory prices the value is several-fold less. DPL has about a five-percent share of the non-medical gloves market - worth about half a billion dollars at ex-factory prices.

DPL recently bought a controlling stake in ICO Guanti Spa of Genoa, Italy, its largest distributor in Europe, which has been closely associated with it for 22 years and accounts for about 15 percent of DPL sales. It also has got approval for an investment of Rs. 250 million in a medical examination gloves plant in Thailand.

The DPL group employs more than 500 people at its three plants in Kottawa and Weliweriya in Gampaha, makes over 40 different product categories in some 230 versions and has an annual output of over 100 million pairs of gloves.

Marketing director J.A.G. Anandarajah, who counts over 20 years with the company, says DPL gloves are sold to some of the prime retail and industrial distributors worldwide. Leading brand names such as Tesco and Safeway can be seen displayed at the group's warehouses in Kottawa. Industrial gloves are packed for the likes of Semperit, the former Austrian tyre manufacturer who distributes the firm's products in Germany and Scandinavia.

Three billion rupee turnover
With the acquisition of Kelani Valley Plantations, DPL now has an annual turnover of almost three billion rupees of which glove manufacturing accounts for more than 60 percent. Last year, profit before tax was Rs. 225 million.

The company had hardly any protection when it started. It was helped in the early years by the introduction of the duty rebate schemes and the Export Development Incentive Scheme, which was a government grant for re-investment in the early 1980s.

Wickremeratne recalls the time in the 1970s when he "stood outside the Industries Ministry almost daily" trying to get the approval of bureaucrats for the innumerable activities the company had to seek government permission in those days of state controls. "It was one of the skills of a young executive at that time," he remarked with a smile, though he was quick to point out that at no stage of the growth of the company did it require the improper influence of public officials.

Wickremeratne has been with the firm since its inception as a joint venture between Hayleys and Richard Peiris and Company. He came to Colombo from the Chas P. Hayley office in Galle in 1975 to be given the project file for the gloves manufacturing project.

"I realised later that this may have been one of the corniest projects to start at that time because every nut and every bolt not made in Sri Lanka required a licence to import," he recalled. "This is an industry that requires you to get down things virtually the next day. So if the government had not changed and the economy liberalised in 1977 during our start-up we would have been dead."

Like most pioneering ventures, the company had to face many difficulties at the start. It took DPL almost 30 months to make a product that could be exported. Nobody was willing to give technical or commercially sensitive information. Or else the price of raw materials was too high and the price of the finished product too low because quality was not up to international standards. However, after much trial and error the company gradually acquired the know-how to make rubber gloves.

Know-how
DPL started operations in December 1977 but it was only by May 1980 that it began making money. It was about time too, as the firm had lost about 60 percent of its capital by then.

DPL then took the bold step of increasing capacity by nearly four-fold. It also automated large parts of the production line, increased its speed and begun running virtually round-the-clock.

Since then it has been regularly expanding its operations and setting up new subsidiaries, partly to get tax concessions offered by the government and get around rigid labour laws.

The first dipping plant set up in Kottawa on December 7, 1977 is still in operation alongside the newer production lines that are automated and controlled by a computer system designed in-house.

In the early 1990s, DPL made use of the opportunities thrown up by the privatisation of the plantations sector by buying Kelani Valley Plantations to secure a source of rubber.

Despite the prolonged slump in rubber prices, DPL is satisfied with the acquisition, being confident not only of the core industries of tea and rubber but of other value that it can realise. It now owns practically all the land around Nuwara Eliya with potential for tourism while the plantations have huge timber reserves.

Latex gloves
Manufacture of gloves from latex is a "complicated, very strictly controlled process that has to be run round-the-clock," said Rohan Soysa, who was attached to the firm as factory manager from the time its construction started. He came from the joint venture partner Richard Peiris and Company and is now DPL's operations director. "The problem is to keep the latex compound from changing its physical properties which will change the end-product," Soysa said.

Production is stopped only for a few days of the year, mainly during the time of the Sinhala and Tamil New Year and on May Day.

"Meticulous care and attention has to be put into the operation," said Soysa. "It needs well-trained, dedicated people."

Both the centrifuging and the glove manufacturing operations consume a lot of water. Until DPL perfected wastewater treatment technology after much trial and error, it had problems in discharging effluents and had to face the wrath of farmers in the neighbourhood and local authorities who had even taken the company to court.

Today lush green paddy fields lie next door to the factory where a large reservoir, the latest addition to an elaborate effluent treatment process, allows the company to re-use a large part of its processed water. The technology was developed by the firm's own scientists and engineers.

The group's development in product innovation and processes has been spearheaded by its technical team led by Dr. Sunil Fernando, DPL technical director and the former head of rubber technology at the Rubber Research Institute. The firm now designs and builds its manufacturing lines as well as developing the chemical engineering processes that are needed for production. "One of the major challenges we faced in the 1990s was to overcome the threat of latex allergies from natural rubber products and develop high performance gloves for barrier protection against chemical and mechanical hazards," said Fernando. DPL says it is a preferred employer for the chemists, engineers and management professionals coming out of the universities and other professional institutions.

A few workers who joined the firm at its inception are still with the company, one rising to junior executive level and others being made supervisors.

"There is no barrier for people to rise - it depends on their drive and initiative," Soysa said.

One employee, D. Gunapala, has been with the factory for 25 years. Starting as a manual labourer on a salary of seven rupees a day he is now a production supervisor. Gunapala recalls how they "struggled for months" to produce a glove. "We had no experience in making gloves at that time and succeeded only after many trials."

Many workers are from the surrounding villages or are now living in the area, having bought land in the neighbourhood after joining DPL.

While price has been a key factor in DPL's ability to compete with bigger, more established Western firms, Wickremeratne said: "We're competing not only on price but in quality as well." He points out that being in the protective gear business, DPL would not be successful if it did not maintain quality standards acceptable to sophisticated Western markets. "Our strategy is to offer low cost, high quality products. However, none of this would be possible if not for the fact that we have been able to retain the commitment of high-calibre professionals throughout the life of the company."

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