Recently, the international tire manufacturer from Germany, Continental, has stopped its main tire manufacturing operations in Alor Setar, Kedah.
On March 7, 2024, the leading tire manufacturer from the United States (US), Goodyear Tire and Rubber Company, announced the closure of operations in the country starting June 30, 2024 and will be fully completed by the end of this year.
The largest tire company has manufactured tires for cars, light trucks for the Asia-Pacific market and motorcycle tires including in Malaysia.
The situation was announced by the President of Goodyear Asia Pacific, Nathael Madarang. The following situation made about 550 employees lose their jobs.
At the same time, the termination of the factory is closely related to the structural transformation of the global automotive industry.
Continental and Goodyear are shifting tire production to electric vehicles (EV), in addition to competing with Chinese manufacturer Sailun Tire which controls 35 percent of the global market.
The termination of the factory has reflected the difficult reality of competition in the global economy that requires urgent action.
Economic analyst Dr Mohamad Khair Afham said the absence of the factory clearly has a short-term impact, but it opens up opportunities for the industry's transformation towards a high-value economy.
Khair commented that Malaysia's success depends on its ability to leverage existing assets and accelerate technological trends.
Investments worth RM2.3 billion from Chinese companies such as Shandong Linglong in Kedah Rubber City prove that Malaysia is still relevant as a global rubber hub.
Khair added that the country's geostrategic advantages as an ASEAN logistics center, coupled with a complete rubber infrastructure network from farms to factories.
Furthermore, Malaysia, as the world's fifth largest natural rubber producer, is no exception to the change in multinational corporate strategies.
The country's rubber industry has contributed 0.7 percent to the Gross Domestic Product (GDP).
However, the country is facing two-way pressure, namely a decline in demand for natural rubber and investments in technology that have not reached a scale that can compensate for the loss.
He commented that in the 1970s to 1990s, factories in Malaysia lacked technological readiness.
Meanwhile, China and neighboring Thailand have renewable energy resources and a complete, fully automated system.
Continental's factory based in Rayong, Thailand is able to reduce energy costs by 40 percent compared to Malaysia relying on a conventional electricity grid.
