Hartalega has announced the decommissioning of its Bestari Jaya facility which consists of 4 production plants with 40 production lines.
The rubber glove maker said this was part of the 5-Year Strategic Plan aimed at reinforcing business resilience and long-term sustainability, the group is undertaking a series of operational rationalisation measures to improve its competitiveness in view of the current challenging operating landscape. The shutdown will also see it consolidating its business in its Next Generation Integrated Glove Manufacturing Complex in Sepang.
The decommissioning exercise is expected to be completed by end-2023.
Hartalega in a statement said the decision was difficult yet necessary to ensure the company will be able to weather the tough market landscape. With a period of approximately six months for the decommissioning to be completed, the Company has put in place measures to support affected employees, which include but are not limited to, opportunities for redeployment to the NGC facility for relevant roles Competitive severance packages Engaging with affected employees to provide outplacement support during the six-month period HR Helpdesk to address any employee concerns and queries HR assistance and counseling for affected employees
The group if of view that the it is more strategic and viable in the long term to consolidate operations at the NGC facility. Compared with its state-of-the-art production lines at the NGC facility, the Bestari Jaya facility is less efficient and restricted by older technology, as well as generating higher energy and labour cost, in addition to higher maintenance costs due to the age of the facility.
Taking a longer-term view, the NGC facility also has the capacity for future expansion, as the Group continues to progress strategically in line with prevailing market supply and demand dynamics.
Following the decommissioning exercise, the Company expects to recognise an impairment loss of RM347 million for FY2023, and further provision for retrenchment costs and contract obligation expenses amounting to a total of approximately RM70 million for FY2024.
