Rubber, the Tree of economic development
Posted on January 27th, 2021

Rohan Abeygunawardena ACMA, CGMA.

When I was a kid while helping with homework, my mother told ‘’look at this eraser, it is made in England, but do you know this is made out of rubber from our country?’’ That was in early sixties. Then in mid-sixties my father showed me a newspaper heading ‘’Soviet Union to build a Tyre factory in Kelaniya.’’ Since I was fascinated by motorcars, although our family couldn’t afford one, I thought ‘’how nice if I get an opportunity to work in that factory.’’

I got that opportunity. In March 1982 I was appointed as the Cost Accountant at Sri Lanka Tyre Corporation (SLT). As a cost accountant my work cannot be limited to a routing deskwork. I had to interact with all the technical personnel such as technologists, engineering, marketing etc. I had to get their inputs to prepare the Annual Budget, monthly progress reports and costing of products and processes that were under my purview. These officers were very knowledgeable and competent and majority of them were trained in Russia and German Democratic Republic (GDR) as East Germany was then called. I learnt from them the tyre manufacturing process from A to Z. I also learnt about Rubber plantation and Industry in Sri Lanka from which the main raw material, sheet rubber was procured. 

According to statistics published by Rubber Research Institute (RRI) about 133,000 MT of rubber were produced in Sri Lanka in 1980. If my memory serves me right, only about 15% or 19,000 MT of rubber was locally used and the balance was exported in raw form. Out of the local use about 8% was consumed by SLT to manufacture pneumatic tyres and tubes. Other manufacturers used the balance 7% in tyre re-treading, toys, mattresses, floor tiles, carpets etc. During the period I was at SLT, the technical experts were experimenting to produce Radial Tyres in collaboration with BFGoodrich of USA. Radial tyres compared to cross ply tyres have a longer tread life, better steering characteristics, and less rolling resistance, which improves fuel economy. Bearcat of Ireland, the largest solid tyre manufacturer of the world at the time provided solid tyre manufacturing technology to SLT to produce and export their brand.These are typical examples of a Sri Lankan public sector institution reaping the benefits of the open economy introduced in 1977.

SLT, the first tyre factory in Sri Lanka was privatised in early nineties and it is now called Ceat Kelani International Tyres Pvt Ltd. It consist 2 plants, Ceat Kelani International Tyres and Associated Ceat Kelani Radials.

During last 40 years rubber based industries have grown by leaps and bounds in Sri Lanka. Mainly a private sector driven industry in the country it consist of a few large scale manufacturers as well as many small and medium scale manufactures. Sri Lanka has become one of the largest producers of solid tyres and latex gloves in the world.  In addition to that Sri Lanka also produce pneumatic tyres, rubber flooring, mats, automobile components, sealing rings, rubber bands, straps, hoses and hot water bottles for the export market. The rubber based manufacturing industry is the most important value added industry in the country with over 50% value addition.

On the 14January 2021 the phase 1 of the largest tyre factory in South Asia Ferentino Tyre Corporation (Pvt) Limited, was opened by the President Gotabaya Rajapaksa in Horana. It is reported that, US$ 250 million state-of-the-art European technology modern tyre factory situated in a 50 acre property is expected to export 80% of its production of cross ply and radial tyres and earn much needed foreign exchange for the country. The second phase of the project will be commissioned in March 22. The project will create 3,000 direct employment.

A Chinese firm Shandong Haohua Tire Co. Limited has decided to establish a manufacturing facility within the premises of Hambantota international harbour due to the high quality natural rubber available in the country and the strategic location to ship efficiently to the South Asia, Middle East and Africa. The investment is US 300 million. The factory that will be in a 121 acre space in the Hambantota Port industrial zone is expected to employ 2,000 workers and export 9 million tyres in the first phase.

Rubber is the most important agro based industrial raw material produced in Sri Lanka. The country facing near starvation in early fifties was rescued by ‘’Rubber Rice Pact’’ signed between Sri Lanka and China under which former received rice at lower than world market price while rubber was sold to latter at a slightly higher price than the world market. The pact was wound up in late seventies as it was no longer needed when Sri Lanka achieved near self-sufficiency in rice when accelerated Mahavali Programme was implemented.

Our scientist should be commended for their research work utilising every part of rubber tree for producing value added products. The seeds are converted to oil to be used as an accelerator in vulcanisation process, seed shell (RSS) uses as precursor for preparing activated carbon, rubber wood chemically treated and furniture is made and remnants are collected and used to make plywood, tree leaves are a good fertilizer for the rubber plant itself. Today rubber tree could be considered as a ‘’Tree of economic development’’ like the coconut tree that was called ‘’Tree of Life’’.

The demand for rubber will increase in the country when above mentioned tyre factories achieve full production capacity. This 140 year rubber plantation industry is consist of large plantations managed by well established companies as well as many small holders. Tragedy is production has dropped from 133 MT in 1980 to 83 MT by 2018. The local demand from manufactures of rubber based products at present is about 70 MT and some of them are compelled to import natural rubber. Though local use of natural rubber has increased compared to early eighties still there is room for improvement.

While land area under rubber plantation has come down from 171,126 Hectares in 1982 to 125,645 Hectares by 2010 (source RRI) contributed to drop in production, main reason is productivity. Our yield in 2018 was only 774 kg per Hectare whereas Cambodia had a yield of 1,090 kg per Hectare. According to an article published in Daily News of 7 December 2019 by Dr. L.M. Tillekeratne, former Executive Director of RRI titled ‘’Impact of declining Rubber production to the economy,’’ Cambodians followed the recommendations of Sri Lankans. He further said that the RRISL scientists helped improving rubber plantations in Myanmar and Cambodia to overtake total rubber production in Sri Lanka in less than a decade.

It is a good time for all stakeholders to get together and review Sri Lanka’s Rubber Industry Master Plan 2017-2026 and find solutions faced by Rubber Plantations to achieve what RRI scientists achieved elsewhere. Remember ‘’Sri Lankans got the talent.’’

Rohan Abeygunawardena ACMA, CGMA.

One Response to “Rubber, the Tree of economic development”

  1. Nimal Says:

    I remember in late 50s US used to release rubber stockpiles in to the open market to keep the prices down.Couple of years ago I went to a rubber estate owned by the Arpico group, well maintained just like during the colonial days.I wonder why Arpico is not manufacturing tyres?

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