Lee Rubber Factory

Lee Rubber Factory, October 2011

PAYA TERUBONG, PENANG – The last remaining rubber factory on the island, the Lee Rubber Co Pte Ltd in Paya Terubong, is due to close down early in 2012, after operating for 50 years. A large group of PHT members were given a rare chance on 2 October of a guided tour through the production plant, together with a fascinating illustrated presentation on the A-to-Z of the rubber business by Mr Ooi Boon Chye, the Lee Rubber Group Quality Assurance Manager of 43 years’ service.
The factory is closing due to Company plans to consolidate production in the Company’s several other mainland factories, situated closer to sources of raw rubber material. Raw rubber is no longer produced in commercial quantities on Penang Island and the raw material for the Penang factory is now being transported in entirely from sources outside the island.

Located in the Paya Terubong Valley, the factory with its blue roof can be seen to the left (east) side of the road as you travel south up the valley, just below the high-rise clusters at the top end of the valley. The factory was originally built in 1954-5 by another rubber company and was acquired in 1970, being then the largest rubber factory in Penang, by Lee Rubber which moved here from Lee’s earlier Penang factory located in Ghaut Lebuh Noordin, Georgetown.

The founder of Lee Rubber Company was the Singaporean entrepreneur and philanthropist Lee Kong Chiang (1893-1967), who built his first rubber factory in Muar, Johor in 1927. His company grew rapidly into a multi-million dollar rubber business and expanded extensively into pineapple plantations and canning. The well-known Lee Rubber building in Art deco style in central KL, close to the old central market, dates from the early days of the business in the 1930s .

Lee Rubber subsequently expanded into further sectors, notably banking (OCBC Bank) and real estate development, and the Lee Rubber Group’s portfolio today also includes palm oil production, edible oil products and biscuit production. In rubber, Lee Rubber Company remains a processor and does not own or operate rubber plantations itself.

During the growth of the rubber business Lee Rubber established production plants in a number of locations in peninsular Malaya and in Indonesia. Today, Lee Rubber accounts for a significant portion of the entire Malaysia rubber output. The Group remains incorporated in Singapore and under the control of the founding family.

PHT is extremely thankful to My Ooi Boon Chye for his presentation, as well as to Mr Huang Thiay Sherng, the Group General Manager for Rubber, who welcomed the PHT visitors and Mr Chew Chee Beng, the Lee Rubber Penang Branch Manager, who led the factory tour. The refreshments provided by the Company at the end of the visit, including samples of the Company’s food products, were much appreciated.

A vast range of interesting points about rubber were laid out by Mr Ooi Boon Chy during his illustrated briefing. A few of these are given below.

Rubber Trees

You can recognise a rubber tree (hevea brasiliensis) by its distinctive clusters of three long leaves at the end of each branch (hanging downwards like an umbrella). The rubber tree originates from the Amazon region of Brazil and is one of several tree families which produce a white latex-like sap. and the first recorded rubber tree was planted here in 1877. Once mature (which takes a minimum of 5 years, a rubber tree is economically good for 10-20 years, thereafter declining and becoming uneconomic – although the trees may well be able to survive for as long as 100 years or more. Tree life is very much affected by the quality of tapping and the care taken in the progressive removal of sections of the tree’s outer bark.

Uses of rubber

It is believed that Christopher Columbus first brought rubber to Europe in the 1490s after seeing local inhabitants, during his travels in the Americas, playing a game with bouncing balls. However, no great uses for rubber were developed until the early 19th century after Charles Goodyear discovered the vulcanization process in 1839 (heat-treating rubber with sulphur), which renders the rubber unaffected by changes in temperature. The rapidly developing road transportation sector (tyres, inner tubes, automotive belts) subsequently became and remains the principal factor driving the demand for natural rubber. Transportation today consumes 70% of the world’s output of natural rubber and the demand from this sector looks set to expand steadily. Even with the evolution of tyre specifications to include chemical, textile and metallic ingredients, natural rubber today still accounts for 17% by weight of the typical car radial tyre and 34% of the typical truck radial tyre.

Rubber tree tapping

Rubber trees have to be tapped diagonally downwards from left to right and not right to left, in order to cut the latex-bearing veins at the optimum angle to maximise extraction of the raw latex. Tapping is very skilled work, given the objectives of maximising the capture of latex and at the same time ensuring long productive life for the tree. It has not so far proven possible to mechanise this process on any scale (although hand-held electric tapping cutter tools have been tried) and it therefore continues to depend on human skill.

Production process

Rubber in its raw latex form is usually received at the factory by truck in large bulk container loads, with the rubber in ‘cup-lump’ form – naturally coagulated into small lumps – seen here in the receiving bay at Lee Rubber Co. A multi-layer structure of middlemen and dealers is often involved in collecting the raw rubber from farmers and batching it into economic quantities for delivery to the processors, such as Lee Rubber Co. Production comprises a number of mechanical processes, including washing, blending and drying the material, before forming it into standard size slabs or sheets for delivery to the final users, principally the automotive tyre manufacturers.

Production issues

The production process involves a number of issues and challenges. Principal among those mentioned by Lee Rubber was the contamination (foreign matter and other impurities) found in the cup lumps on arrival at the processing plant. This is a perpetual problem due to lax quality standards in the early stages of the rubber collection process. Other significant issues include the environmental issues of odour and other pollution resulting from the factory process, which can become significant community issues. On the plantation side, far from it being a simple process of planting and growing tress and then harvesting the latex, considerable scientific resources are permanently dedicated to R&D in matters such as tree species and subspecies; development and testing of new and more productive clones; pests, diseases and their containment; and planning and testing of new routines, schedules and techniques for the actual tapping operations.

Rubber plantations vs oil palm plantations

The current and forecast long term trends in natural rubber prices (rising) compared with those of palm oil prices (falling) indicate that traditional plantation companies which have actively converted their planted areas from rubber to palm oil may not have made the best strategic choice.

By Brian Walling