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Funding Delivered on Australia Manufacturing Investment

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Australia’s manufacturing industry is already starting to see the benefits of increased funding to the sector with the Government announcing that $26 million of distributions have already been made from the $400m Industry Growth Program. Minister for Industry and Science Ed Husic released a rundown of the recipient manufacturing businesses, which run the gamut from high tech industries such as robotics and medical manufacturing to more traditional sectors such as agriculture and defence. Distributions ranged from amounts in the multimillion dollars, such as the $4.3m given to Cauldron Molecules, a biomanufacturing firm dealing in animal feed, to smaller numbers such as the $231,000 given to cybersecurity firm Brandsec.

Most recently, funding was released to the Advanced Manufacturing Growth Centre (AMGC) and Ausbiotech, both industry bodies entrusted with allocating funding to individual businesses such as mining plant and equipment Australia. “It’s terrific to mark this milestone and see vital funding out the door and onto the factory floor of these terrific Aussie businesses, ensuring more things are made right here,” said the Minister. “I’m pleased to see AMGC and Ausbiotech join the IGP stable of Industry Partner Organisations, with their expertise supporting Aussie manufacturers to realise their potential. We’re serious about backing local know-how, that’s why we’re ensuring growing businesses have the support they need to increase our manufacturing capability and leverage the benefits offered by local steel companies in Australia.”

Grants are given through two streams: one aimed at start-ups and one at more established heavy steel fabrication companies. The Early-Stage Commercialisation grants will match funding already raised to the value of $250,000 to help new manufacturing businesses to get off the ground, while the Commercialisation and Growth grants strand looks to help already existing companies to create prototypes and ultimately get products to market.

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Momenta Leads Investment in Composabl

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Momenta, the leading Industrial Impact ® venture capital firm, has led the seed round for Composabl, a trailblazing company at the forefront of industrial AI and autonomy. Momenta’s investment, along with the participation of other notable investors such as Ridgeline Ventures, Exposition Capital, and Hannah Gray Ventures, will drive advancements in industrial processes (e.g. pipe fabrication) and aligns with Momenta’s commitment to entrepreneurs and leaders improving industrial operations and outcomes. Composabl’s unique approach to autonomous AI represents a step change in industrial process capabilities and will drive advancements and efficiency for automation in intralogistics. Built for industrial process engineers, not data scientists, Composabl helps create real-time process optimization AI agents, driving toward autonomous operations. Momenta’s investment will provide Composabl with the resources and support needed to accelerate the growth of its platform and market presence.

“We wanted a lead investor who understands industrial, not just the market opportunity, but the market, the companies, the culture of industrials, and the impact on society. That’s Momenta.”, said Kence Anderson, CEO of Composabl. “Industrials make and move the goods we use every day; they are technical and savvy, but they are often misunderstood by big tech and startups and venture capital because they are not software companies.” Co-founded by Kence Anderson, formerly a director at Microsoft for Autonomous AI and recent author of the acclaimed O’Reilly book Designing Autonomous AI, Composabl is on a mission to help industrial corporations with the following objective:

“Create, deploy, and monitor industrial-strength autonomous agents that perceive and act in real-time with expert-like decision-making, enabling them to make real-life decisions for complex, high-value cyber-physical systems.”

Composabl is the sixteenth company receiving investment from Momenta’s Digital Industry Fund III, anchored by Advantech, the world leader in digital industrial solutions. This is also the first company to receive investment from Momenta’s Digital Industry Fund IV, anchored by Rockwell Automation, the world’s largest company dedicated to industrial automation and digital transformation (including digitization of prefab workflows). “Composabl’s dedication to empowering engineers with AI building blocks and its focus on creating trustworthy Industrial AI agents aligns with our vision for the Agentic future of industrial technology,” said Michael Dolbec, Managing Partner of Momenta.

“We are observing an inflection point in industrial automation – the evolution from programmable compute surfaces to systems that self-learn and self-adapt within dynamic environments – from automation to autonomy,” said Jordan Reynolds, VP, Artificial Intelligence and Autonomy, at Rockwell Automation. “Composabl aligns with Rockwell’s vision of creating the future of industrial operations by equipping our customers with a standardized set of tools, processes, and interfaces to manage the transition to industrial autonomy.” Jerry O’Gorman, VP at Advantech IIOT division, stated, “We are pleased to support this investment in Composabl. Our leading role in edge computing and IoT solutions gives us a deep appreciation for the value of industrial AI and autonomy and, thus, the potential for AI-powered optimization solutions such as optimizing performance with asset resilience. We see a tremendous opportunity to collaborate with Composabl to co-create solutions to address the huge investment in manufacturing facilities, especially in North America and steel fabrication Australia.”

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Financing for Manufacturing Growth

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Many Australian manufacturers seeking growth in their manufacturing businesses look towards business financing. There are multiple financing option and suitability is determined by considering stage of business and trajectory, industry sector, business model, macroeconomic variables, and cost-effective automation requirements. Today, the owners of manufacturing firms can no longer be unacquainted with terms like financial modeling, projections, cash flow and leverage since these factors provide a view towards the firm’s future roadmap. So, what are the various funding options available to manufacturers? Let’s find out more in this blog.

 Lender-Based Financing

  • Financing through a bank lender: Bank lenders rely on the ‘five Cs’ of Credit (capital, capacity, collateral, character, and conditions) to determine if a potential borrower is capable of servicing and repaying a loan.
  • Financing through a non-bank lender: These lenders tend to be more specialized, flexible, and willing to take on different levels of risk. They also tend to finance for certain specified requirements, such as invoice finance, trade finance, and equipment finance.
  • Financing from savings, mortgage extension or loans: Financing through personal savings, a mortgage extension or a loan allows the business to avoid the complexities that come with spending other people’s money and allows the owner to retain equity. Also, a personal loan will probably come with a lower interest rate, as it’s likely the bank will secure the lending against the owner’s personal assets.

Investor-Based and Public Financing

  • Financing provided by investors: These may include ‘angel’ investors, private equity, or venture capital. Angel investors typically assume a greater risk than other funders, with the expectation of a high return. Private equity investors actively seek to enhance a business’s profitability and operations and seek a profitable exit through either a sale or public listing. Venture capital investors provide private equity funding together with a strategic focus to the business.
  • Crowd-sourced funding: Crowdfunding or crowd-sourced funding — where a heavy steel fabrication company raises money from a crowd of investors through a licensed online platform — is popular in certain sectors such as technology. The most common model is equity-based, crowd-sourced funding through which a company issues shares to a crowd of investors in exchange for their funds and in return, the investors gain some part-ownership of the manufacturing business.
  • Employee buy-in: Allowing an employee or employees to buy into the manufacturing business could be part of an effective succession plan. It is important to consider whether the owner can work effectively with these employees as part of a team. Unwinding this arrangement can be difficult and unsettling for the firm.
  • Grants and incentives: This includes grants available from government agencies that could fund growth, exporting or research and development. With the benefits of using local Australian steel companies becoming more apparent, financing should grow at a similar rate. The application process can be time-consuming and competitive and professional assistance may come in handy when getting approvals for grants.

Closing Words

Ensuring the growth of a manufacturing firm into diverse areas such as pipe fabrication is the owner’s responsibility and this includes financial stability. Juggling the demand of business stakeholders while putting the firm on a road towards expansion is a tough role to play, however the owners of Australian manufacturing firms’ need to be able to adapt themselves to the ever-changing market conditions. In recent times, financial advisory services have been playing an increasingly important part in providing insights into various funding streams available to manufacturers. However, it is essential for the owners to be empowered to make important decisions in this regard – after all, success usually comes to those who are too busy to be looking for it!

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Investing in Oil and Gas

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Commodities are a great source of investment and many investors have traded in potatoes, soya, gold, silver etc. over the decades. Some of the major commodity exchanges are the New York Mercantile Exchange (NYMEX) and the Chicago Mercantile Exchange (CME) with the Commodities Futures Trading Commission (CFTC) providing regulatory oversight in this regard. Energy sector investments are also very large as investors look to invest in oil markets and capitalize on energy price fluctuations.  Different investment vehicles in the oil and gas sector are available to cater to investors’ preferences and risk appetite. So, what are some of these investment vehicles? Let’s find out more in this blog.

Exchange Traded Funds

Greater exposure to the price of oil can be gained through an energy-sector exchange-traded fund (ETF) or exchange-traded note (ETN), which typically invests in oil futures contracts rather than energy stocks. Several sector mutual funds that invest mainly in energy-related stocks are available like the iShares Global Energy Sector Index Fund (IXC), and energy-sector mutual funds, like the T. Rowe Price New Era Fund (PRNEX). These energy-specific ETFs and mutual funds invest solely in oil stocks and oil services companies and come with lower risk. Because oil prices are largely uncorrelated to stock market returns or the direction of the U.S. dollar, these products follow the price of oil more closely than energy stocks and can serve as a hedge and a portfolio diversifier.

Options and Futures

One can also invest in crude oil options, which are contracts that give the option holder the right (but not the obligation) to buy or sell securities at a fixed price. These securities are derivatives which have oil or other oil-related product as the underlying asset whose movements determine the possibility of option exercise. Investing in crude oil options limits the potential for loss and may help protect against adverse commodity price movements.

Crude oil futures are traded on the NYMEX and the CME and are the most actively traded futures contract for a physical commodity. They are popular as they possess strong liquidity and price transparency. Crude oil futures provide individual investors an investment avenue in a vital commodity market. However, crude oil futures are leveraged which increases their risk as compared to other investments. Crude oil investment also impacts the metal fabrication industry due to existing interdependencies.

Risks of Investing

Risks of Investing

There are many risks which need to be taken into consideration in the context of investment in the crude oil markets. Some of these risks are highlighted as follows: –

Risk of Loss – Futures contracts are leveraged or “margined,” which means one may be liable for losses above the initial deposit. Risk tolerance, investment experience and securities knowledge should be gauged prior to investment in crude oil futures.

Volatile Market – The crude oil market is subject to periods of high volatility, and over time, oil prices have fluctuated significantly. For example, during the 2020 recession, the price of West Texas Intermediate (WTI) tumbled. At the start of February 2020, the price was $50.06 per barrel. On April 20, 2020, it closed at -$36.98 per barrel.

False Information – Some brokers and firms claim that crude oil investments soar during and after natural disasters. This claim has no real backing, and natural disasters don’t necessarily increase the chances of profiting in commodity futures or options trades based on crude oil. Manipulation of the oil market is also a very real scenario.

Final Thoughts

Investments in oil and gas are exciting, especially since it is a globally connected market which impacts nearly all economies globally. However, the ever-changing geopolitical and economic factors mean that the oil market can also lead to large losses in case of incorrect or short-sighted investments. Risks need to be understood and taken into account while investing in the energy industry and measures should be taken to ensure losses are limited. There is a difference between hedging and speculation – in the case of oil markets, speculation is a definite no-no!

© K999 Engineering & Construction Co. Ltd. 2023