The impending closure of the Goodyear Tire and Rubber factory in Shah Alam has stirred up public concerns. Goodyear announced that this was part of its “Goodyear Forward corporate restructuring program, aimed at delivering $1 billion in cost reductions by 2025.” However, with over 500 workers impacted by this decision, the Parliamentary Special Select Committee on International Relations and Trade (chaired by Member of Parliament for Subang Jaya YB Wong Chen), met to discuss the company’s decision and the landscape of foreign direct investments in the country.

Alongside MITI, MIDA and other experts, our principal, Khor Yu Leng, was invited to shed some light on downstream problems in Malaysia that affect the automobile industry, such as Goodyear and factors behind their decision to close the Shah Alam factory.

Yu Leng started with an overview of rubber trade trends and domestic consumption over the past few years. She highlighted a significant drop in rubber glove latex use, which was down to 219,000 in 2023 from 402,000 in 2020, while tyres & tubes (from natural rubber) use were down to 26,000 from 33,000. From reports, it appears that China has taken the lead recently in global glove manufacturing.

Exports were 1.2 million tonnes (70:30 compound/mixed:natural rubber), almost entirely to China while imports were at 1 million tonnes, 70% from Thailand and Côte D’Ivoire. Yu Leng debunked narratives on shortages in rubber supply affecting downstream manufacturers in Malaysia, stating that imports are used to fill in the gaps.

She proceeded to display satellite imagery of tyre manufacturers’ plants in Malaysia, including Goodyear’s, for an understanding of their relative sizes and locations. Interestingly, Goodyear’s Shah Alam plant appeared to be layered with solar panels, which invited questions from members of the select committee.

Yu Leng proceeded to draw comparisons between the Thai and Malaysian rubber cities located in Hat Yai and Kedah, respectively. She cited the presence of major companies like Micheline, Schlumberger and Malaysian condom manufacturer Karex-Innolatex at the Thai rubber city, along with better connectivity to ports than the rubber city in Kedah. Malaysia’s motor vehicle production was also only a third of Thailand’s in 2022 due to a lack of competitiveness, an over-reliance on the domestic market and shortages of skilled workers, amongst other factors. Yu Leng also shared insights from rubber suppliers on vehicle sales, competition in the tyre sector from China producers, margins and costs, and shifts in natural rubber supplies.

At the end of her presentation, Yu Leng briefly shared on labour issues plaguing the rubber industry in Malaysia. From DOSM statistics, it seems that 14 percent of our workforce is made up of foreign workers (some say this should be doubled), with international NGOs alleging that there are 200,000 victims of modern slavery in Malaysia. Yu Leng underscored the millions in labour reparations paid out by companies such as TopGlove, Goodyear and ATA-Dyson, and also shared her preliminary calculations on other wage costs, such as transport and housing, that should be borne by glovemakers.

She also highlighted a few instances of new policy thinking on labour, including former Sabah chief minister Harris Salleh’s suggestion to extend the duration of foreign worker permits from one to 15 years. Yu Leng added that this extension should come with a family-based approach, ensuring that children of foreign workers have access to healthcare and education. Additionally, the Plantations and Commodities Minister recently suggested making oil palm harvesting a specialist job to enhance youth involvement in the industry and in hopes of solving labour shortages. She then referred to reports citing 192,655 “excess workers” from manufacturing & services, but plantations fear hiring on “forced labour” concerns.

Upon the adjournment of the hearing, members of the select committee held a press conference at Parliament to sum up their findings. Yu Leng was also invited to share her insights with members of the press. View the full press conference here.

Reported by Nithiyah Tamilwanan (research@segi-enam.com) | 25 March 2024