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Australian technology goes to the US

ROBERTGOTTLIEBSEN

Theenormous US investment incentives for carbon reduction and defence relatedtechnologies is attracting Australia companies with world class technology tothrust into the US.

Andthe US is particularly anxious to foster technologies being developed in smallerentrepreneurial enterprises----where most of Australia’s new technology comesfrom.

Accordingly,we will see more efforts being directed across the Pacific because the US isbecoming akin to a giant vacuum sucking in ideas and Australian entrepreneurialenterprises.

InThe Weekend Australian my colleague Paul Kelly detailed how the US incentives ---totalling around $US1trillion ($1.56tn) and endorsed by both Democrats and Republicans --- were not only transforming the US but would have a major long term impact on Australia.

TodayI want to illustrate the trend by highlighting two companies (one listed andthe other unlisted) that are capitalised below $20m and have rolled up theirsleeves and are now in the thick of the US excitement and productivity drive.

Backin Australia, tragically, we have the powerful so-called minister for“employment” dedicating himself to passing legislation designed to lowerproductivity and encourage enterprises to consider going abroad despite theobvious risks.

Butsometimes the migration takes place because that’s where the technology marketexists. And so the listed AML3D is taking its 3D technology to the US nuclearsubmarine industry and last week obtained a second contract showing that theAmericans recognise its skills.

Iintroduced AML3D to readers last February under the heading “Australian Minnowscores nuclear subs role” so today I will start with the private company,Exergenics, where the major shareholders are identical twin brothers Iain andTim Stewart plus outside shareholders. Exergenics focuses on improvingcommercial buildings’ air conditioning efficiency. Given the US is the worldcapital of enormous towers on the surface it would seem hard for Australiantechnology to break into the market for what is a fundamental service foroffice blocks.

Thecooling and heating of most offices towers involves reticulating water aroundthe building.

Whenwe look down on buildings we often see cooling towers on the roof. But theengine room of temperature control is usually in the chiller/boiler room.

Themanufacturers and marketers of these systems have made giant strides inimproving the efficiencies of the plants. Iain and Tim Stewart don’t compete inthat space but rather have developed software systems that improve theoperations and the flexibility of these plants. As a result, offices use lesspower which lowers emissions and saves money. This usually qualifies theexercise for US government help.

Theworking from home boom has also provided a surprise impetus to demand forExergetics’ software services.

Manyof the air conditioning systems are designed to heat or cool the totalbuilding. But with more people working at home, vacant space was being cooledor heated. Exergetic software enabled much greater flexibility in the areas tobe covered.

Thetechnology derives from Iain Stewart’s University of Melbourne 2016 researchwork into commercial air-conditioning energy efficiency. His base customer wasthe University of Melbourne and was followed by Monash University, Mirvac andthe CSIRO. Exergenics just completed a $2m capital raising to fund its USexpansion with a public listing a long-term ambition.

AML3Dduplicates the Exergetics US technology experience but applies it tosubmarines. AML3D was chosen by the US Navy because nowhere else in the worldcould the US obtain specialised 3D printing technology where they could buy theactual printing plant systems and incorporate them into their supply chain — akey part of the future of manufacturing.

Toillustrate the attraction of using Australian technology (although the initialpurchase consideration was small at $1m), the US Navy broke from its normal paymentpattern and paid a substantial percentage upfront deposit, realising that suchaction was required to enable the Australian company to be certain of beingable to fund manufacture of the first plant.

Lastweek AML3D signed a $2m contract to develop and metal 3D print a replacementcomponent used in US Navy submarines, again with a substantial payment upfront. This high demand component is no longer available from traditional USmanufacturers, creating an opportunity to demonstrate the ability of AML3D’smanufacturing technology to overcome supply chain constraints impacting USNavy’s submarine industrial base.

In the years ahead, many smaller Australian enterprises will followAML3D and Exergetics. Some will succeed and others will fail. But all will beinspired by the success of the West Australian burns technology,which was highlighted after the 2002 Bali bombings. The US has now embraced the Australian technology as its burns standard treatment. It now not only has FDA approval to be introduced across America, but also approvals extended to soft tissue injuries.