Bonus: Australia’s future industries – Advanced Manufacturing | Stake

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How are you going? Alec: [00:00:31] I'm very good. Bryce great to be back here for our third and final installment, our partnership with Stake, talking about Australia's future industries. Staking your claim to the future with stake. We've touched on mining. About Australia and their economy without mining. Yes, I talked about farming. Yes. And some of the new precision agriculture, new technology coming down the pike there. This third instalment also focussed on new technology, an industry that had left Australia's shores and may be coming back in some ways shape or form. We're talking about advanced manufacturing. Bryce: [00:01:16] We are talking about advanced manufacturing. This is one that I'm really excited about. I don't know why I wouldn't have just been looking forward to this one time. Yeah, maybe it's because we've been in retail and. Anyway, let's. Let's get to it. Bryce: [00:01:31] This is thanks to stake, you can stake your claim to the future. We're celebrating the launch of the ASX offering with stake to complement their US offering as well. So this is the third and final series, as you said, Ren, and we're going to be taking a look at what has happened to manufacturing here in Australia over the last few decades. Why what the state of manufacturing currently looks like here in Australia. And then touching on the reshoring of manufacturing and manufacturing 4.0. So in the past few decades have seen an exodus of manufacturing from Australia textiles, auto makers, steel. They've all left our shores for the lower energy costs and cheaper labour of our Asian neighbours and we are not alone. The US and Europe have seen a similar multi-decade decline in manufacturing in Australia. We are world class at digging our resources out of the ground, which we covered in our last episode, but rank near lost at manufacturing these resources into finished products. But this is changing. Alec: [00:02:37] That's right. The promise of advanced manufacturing is reducing costs, bringing manufacturing closer to the end consumer, and bringing a manufacturing industry back to our shores. So that's what we're going to explore in this episode, will be explaining what it means. Some of the Australian companies that are on the forefront of the industry looking at some overseas case studies where the industries are a little bit more developed. But ultimately we'll be asking the question does Australia have manufacturing in its future or is it just a government pipe dream that one day we'll be able to bring manufacturing back to our shores? So a big episode, not as clear cut as farming and mining, but I'm excited to get into that. But let's set the scene with what did happen, because manufacturing used to be a major part of our economy of a number of Western economies. Obviously, it was in an era of more trade protection, more tariffs, less global trade. But manufacturing then left our shores and the shores of many Western nations. So to put some numbers to it, in Australia in the 1970s, manufacturing was 40% of GDP, a. Bryce: [00:03:47] Pretty big share. 40%. Alec: [00:03:48] Of GDP. Yeah, today, 6%. Bryce: [00:03:52] A huge decline. Alec: [00:03:53] Huge declines, decline even more recently. So 2000, 2001 manufacturing accounted for 48% of exports today. 16%, So there's been a multi-decade decline, but it's been a pretty steep decline in our lifetime and we've seen some of the industries that have died, we've seen the news stories, we've heard about it. What are some of the ones that stand out for you? Bryce: [00:04:18] I clearly remember when Holden shut down automotive. Manufacturing has been a big one here in Australia, very political. So we've seen Mitsubishi leaving in 2008. We see Ford move offshore. In 2006 16, the very last Holden car manufactured, 2007 ten and Toyota also left then as well. So a big one there. But also textiles has been a big one. It was an industry that used to employ 125,000 people in the eighties, significant to clients, less than 50,000 now. So yeah, some pretty big industries that we've lost over short. Alec: [00:04:58] Now, this stat was from an article about a new government body, so I don't think it's exact, but I think it's rough. But apparently in Australia 20% of what we consume is produced domestically, 80% is imported. Couldn't find that stuff anywhere else but. I figured it was in the IFR in talking about a government body. So that gives you a sense of, you know, wave and like, this isn't. In a world of global trade, in a world of comparative advantage and specialisation. Australia, the US, Europe, they don't have an advantage in manufacturing. No, especially high scale, low cost manufacturing. And so that all got offshored a lot to China and now to Vietnam and and some of the surrounding countries. But it isn't just an Australian story, as we've been saying. In the early 1950s, the US accounted for 40% of the world's manufactured goods. They were the manufacturing powerhouse. Today they account for 18%. So again, it's not nothing. It's a bit less than a fifth of the world. It's just the change that has been so felt. Australia still has a manufacturing industry. The US is still one of the biggest manufacturers in the world. It's not about an absolute zero. It's just that changes, you know, hundreds and thousands of jobs in Australia, millions of jobs in the US. And that is felt. Bryce: [00:06:26] Yeah. Which is why you had Trump standing up there wanting to bring all these manufacturers back in, trying to incentivise them to come back. It's a very political industry. Alec: [00:06:36] Not so much in Australia, but kind of in Australia, but especially in America because of where the votes are and where manufacturing used to be. Yeah. Michigan, Ohio, Pennsylvania. Those are the states that Trump won the election on the back of. And those were those states, the Rust Belt states that lost manufacturing. And when we speak about losing manufacturing, we speak about that manufacturing going somewhere. And Bryce, where did it go? Bryce: [00:07:05] Well, the biggest beneficiary, no surprises here. China. Alec: [00:07:08] I thought I could get you to say China in Trump's voice, because we were. Just saying that Trump is not going to go there. Bryce: [00:07:15] Did countries contemplate, oh. I'm going to go there? You're right. So from 2000 to 2009, China's exports increased nearly fivefold to 1.2 trillion USD, and their share of world trade rose from 3.9% to 9.7%. But as you said, no surprises. It's not new news. They're the now dominant force in the world of manufacturing at the moment. Alec: [00:07:40] So China now accounts for 20% of the world's manufacturing output, which is more than the US, but not that much more than us. And again, it's not about the absolute numbers. It's about the change that has been really felt. That's, I guess, the history. And as we keep saying, manufacturing remains a part of our economy, just a small part of our economy. So let's focus in on Australia and talk about what it looks like today. Manufacturing still employs just under a million Australians. It's Australia's seventh largest industry in terms of employment and it's sixth largest in terms of output. It accounts for 11% of annual export earnings. So like pretty legit. But and here's the but when you think about manufacturing, what do you think of. Bryce: [00:08:33] You know, long lines of automated machinery, textiles, automation or to. Alec: [00:08:39] Stop, say, automation of terrible. Products? You think of anything like. Bryce: [00:08:44] Cars, anything that's steel, anything that's made in a massive factory. All the toys over in China, you know. Alec: [00:08:53] Manufacturing, manufacturing, like there's. Bryce: [00:08:55] Plenty of things that are manufactured. But I. Alec: [00:08:58] I think for the episode. You know. There are. Plenty of things that manufacture. Yeah, but look, you're right. Like when people think of manufacturing, they think of that consumables. Yeah, yeah, yeah. That taking, like raw resources, taking, you know, cotton and turning them into clothes or toys, taking steel and turning it into cars and, you know, stuff like that and making kitchen appliances. Yeah, yeah. Making those kind of consumer facing goods that are then sold in retail locations around the world. IBISWorld ranked Australia's top 100 manufacturers in 2020. And I just we just pulled the top ten because the top ten are not those kind of manufacturers. And so when we think about manufacturing in Australia today, the long and the short of it is they're not toymakers. Bryce: [00:09:56] No, they're not toy makers. They don't make camping gear or kettles. They're heavily into resources, which is not a surprise. The number one manufacturer in Australia, according to IBIS, is Caltex. Alec: [00:10:08] Yeah, this is an Aussie saying these are the top manufacturers. This is just like a snapshot of some of the. Big employers and big producers in Australia. Yeah. Bryce: [00:10:16] Caltex Resources. Fonterra. Big food producer. BP Australia. Perth Mint. It's an interesting one. Gold. Viva Energy. ExxonMobil. Amcor. BlueScope Steel. CSL. It's an interesting one too to fit in there as well. I would not have classified them in manufacturing if if someone was to ask. Yeah, I definitely. Alec: [00:10:40] It's it's like the one close out list and then. Bryce: [00:10:43] And then busy. Busy for sure. Alec: [00:10:45] You look there, there's what, four or five resource companies. Yeah. Caltex, BP, Viva Exxon. There's a couple of packaging companies, Amcor and Vizzy. It's pretty race like it's still basically just an extension of the resource industry. Yeah, yeah, yeah. Bryce: [00:11:04] Big employers from memory. The construction industry in Australia, one of the largest as well, is like 1.2 million employees. And hey, we've got manufacturing at one. So it's, it's definitely. Yeah. Still a big part of Australia. Alec: [00:11:20] Yeah. Yeah, yeah. So I guess to put a bow on the point of manufacturing in Australia is still quite resource exposed rather than like that real like value added manufacturing. I mean they're obviously adding value by turning like oil into petroleum, like that's still value add don't get me wrong. Oh you know gold. I mean. Bryce: [00:11:43] Into. Alec: [00:11:43] Turning gold into. Yeah, exactly. Yeah. Or gold bullion, you know, all that stuff that we keep in our office. No, we don't. But Harvard, they have an atlas of economic complexity and they rank the OECD in terms of economic complexity, which really means diversity of the economy and the research intensity of its exports. So, you know, like how they turning raw materials into complex products. What do you think Australia ranks now? They say they. Bryce: [00:12:16] Are pretty. Alec: [00:12:17] Low. Yeah, yeah. Lower. The lowest. The lowest. No way. Yeah. Bryce: [00:12:23] Well that's because. Yeah, I guess we're not we as I said, we're adding value but we're not turning gold into. Alec: [00:12:33] Yeah. I mean you just go, you go down the list, you know, like iron ore, our biggest export. Yeah, well it's Australia's steel industry like we mentioned BlueScope there, but we're not making steel and we're definitely not making cars out of that steel that is done overseas and there's nothing wrong with that. Well, we're not saying there's anything wrong with that, but the government, successive governments say there's something wrong with that because they're trying to revive this industry. Bryce: [00:12:57] Well, speaking of reviving Ren, let's now turn and have a look at what companies are doing to bring some of their manufacturing back home, otherwise known as reshoring. Alec: [00:13:09] It's the opposite of offshore. The opposite. Bryce: [00:13:11] Yes. So reshoring essentially is bringing back your manufacturing to your domestic location. And we've seen economies like Germany, Switzerland, Korea and Japan all leading the way on this front. However, it's not about, you know, bringing back that low cost mass production. We just are not going to be out to compete against countries that have that ability. It's about smart specialisation in global markets. Alec: [00:13:41] And Korea is about industrial protection and chaebols. But let's not get into that. So. Kearney to an annual reshoring index looking at US manufacturers and you know they've obviously led the way in terms of offshoring to Mexico, to China, to all around the world. But in 2021, 79% of US executives surveyed, oh sorry, who have operations in China that were surveyed are already moving part of the operations back to the US or plan to do so in the next three years. On top of that, 79%, another 15% are evaluating similar moves. Now America really saw manufacturing employment low in 2020 ten post JF say a lot of offshoring. That was really the low ebb for them. Obviously the car industry almost collapsed before Obama's emergency loans during the GFC, but between 2010 and 2018 we saw a bit of a recovery in keeping with this whole reshoring index. The US is saying over 757,000 manufacturing jobs added and credit where credit's due to both Obama and then Trump were really focussed on reviving American manufacturing and there was an Australian right at the core of that who we will touch on later because he is now right at the core of the Australian push to do the same thing, but also in Europe was saying. I reshoring. And there's a lot of textiles, a lot of fashion. Manufacturing is returning to Europe and a lot of this has been driven by cost. There's a stat we came across where denim produced in Turkey is actually 3% cheaper than denim produced in China. Now, when considering transport and also import costs, Europe loves a bit of protection. Yes. Are still and. Also factoring in time and you know fast fashion is the name of the game, especially a lot of those European names you know the Zara's and isosceles and you know those like fast fashion retailers appreciate sources listed in London, isn't it? Bryce: [00:15:55] Good question. Can quickly look at that while you capture it. Alec: [00:15:57] So I'm pretty sure it is. And so factoring in cost and time. A lot of fashion manufacturers are moving closer to their customer. So that's just one example. We've got to hasten our examples as we go. The long and the short of it is after decades of offshoring, we're seeing a slight move of the needle back to reshoring. Bryce: [00:16:19] Yeah, well, the Boston Consulting Group have surveyed American manufacturing companies with sales over 1,000,000,037%, as you just mentioned there, and said they were planning or actively considering shifting facilities from China to America. Why? Well, they've given reasons for labour costs, quality of product, ease of doing business and proximity to customer. Now, all of those factors, you can argue, were why they moved offshore in the first place. Labour costs, quality of product, ease of doing business maybe not so much proximity to customer, but you could argue that those factors are now starting to shift the other way. But what is the story here then? Alec: [00:16:55] Well, yeah, I think the point there is that, you know, they're saying quality of product, ease of doing business and proximity to customer. Other reasons are coming back, but they went in eyes wide open about those three factors. The factor that has really changed is cost and in particular labour cost. This is a story of cost differential and if you imagine a chart in the eighties, in the nineties, the difference in cost between, you know, a developed country and a developing country was massive. And over the decades, those costs have converged. And in the developing world, that's a story of labour rights and wage increases. So the International Labour Organisation have noted that real wages in Asia rose by 7.5% a year between 2000 and 2008. In China in particular, between 2000 and 2005, the average Chinese worker, average Chinese factory worker saw a pay rise of 10% a year and then between 2005 and 2010 that increased to 19% a year. So on one hand in the developing world we're saying wages increase. And then on the other hand, in the developed world we're seeing technology improve productivity, which is improving per unit cost. So there's also been a number of short term factors that have supercharged this trade wars, unstable supply chains, all of that stuff. Also, a pressure to move closer to home, to be closer to the customer as we move away from mass production and towards, you know, customer and bespoke and individualised production. But really, this is a cost story. And so I think where we want to turn now is for Australia, that technology story of increased productivity and costs coming down and what that could mean to revive our toy manufacturing industry. Bryce: [00:18:56] So again, when we're talking about reducing costs, there are a couple of key terms that we need to quickly address. So industry 4.0, this is the current trend of automation in manufacturing technologies. We've got Internet of Things, which we've all heard about and discussed a bit on the show. And that's just where everything is connected to sensors these days and and software and connects us to understand more about and then 3D printing, which I'm excited to chat about. This is where we are literally printing physical objects through mass layers and layering material. So it's a pretty phenomenal thing to watch. I would recommend jumping on YouTube and having a look at it. So this all comes together in what we call a smart factory. So you've got existing industrial assets that we're attaching sensors to, you know, possibly in the form of drones. Then there's new industrial assets. We spoke about 3D printers, for example. These all come together to form a huge connected digital cloud, I guess. And then there's plenty of AI going on that helps with predicting not only maintenance and cybersecurity, but developing applications and all sorts of things. So these factories are now becoming state of the art, helping drive down all of these costs that are going into manufacturing. Alec: [00:20:13] Yeah. I think if people got lost in the terminology there, the long and the short of it is machinery. Robotics are doing a lot of the jobs that people used to do. Replacing human labour with machines. And then we are programming them with, you know, AI and machine learning algorithms to get smarter and get more efficient. And the new factory is not a hundred people in an assembly line. It's one person overseeing 100 robotic arms on an assembly line. And so that is the, I guess, the story that is playing out here, and that is how on shoring is going to be able to happen. And these developed nations will be able to compete on price with developing nations. So that's the story in the long and the short of it. And the promise of advanced manufacturing of industry 4.0 is pretty incredible. So automation in the textile industry is expected to cut production times by 70% for simple designs. You know, a lot of the clothes you wear price and 40% for more complicated pieces. PricewaterhouseCoopers in Germany predict that Germany will have digitised 80% of their value chains by 2020, which will increase productivity in manufacturing by 18%. If you want a case study of the leading advanced manufacturing country, it is Germany, like Germany is where you need to look. And speaking of Germany, Siemens, they are on the forefront of this that one of their board members was quoted as saying, Thanks to digitisation, the rollout time of new products can be cut by 25 to 50%. Engineering costs can be reduced by up to 30%, and energy savings increased by 70%. So when you think about the story of manufacturing leaving the West, a lot of it, especially in Australia, was high labour costs and high energy costs. And Siemens that quote the you can say how labour gets more productive, they reduce energy consumption. That's the story that's playing out here. And the question is, can Australia capitalise on it? But before, let's rip through a few global case studies to give you a sense of how this playing out in real time and Bryce we can't do any episode here without talking about Elon Musk and Tesla. And I guess the big question is with every other carmaker looking to offshore, you know, Ford, GM, all of those American carmakers went to Mexico and elsewhere. Have you ever wondered how Tesla can make cars in America? Bryce: [00:22:48] I know why they can make cars in America. Alec: [00:22:51] All right. Well, Tony. Bryce: [00:22:52] Alan's Gigafactory incredibly impressive. I saw an amazing video the other day on YouTube of a drone flying through the Gigafactory. And it's it's really, really impressive. Alec: [00:23:04] The largest the. World's largest enclosed structure, apparently. It's crazy. Yeah. Bryce: [00:23:09] Solar powered as well. Semi-Automated. It makes batteries, churns them out, capable of making enough cells for more than half a million Tesla cars a year. Yeah, I would recommend trying to find this video. I might try and put in the show notes. It really encapsulates this smart factory. Yes. There's hardly a person in there. Yeah. Alec: [00:23:27] Just the amount of robotics like I know the alien to Iron Man analogy is overdone, but the amount of robotics in that is how you need to start thinking about the Gigafactory. Yeah, yeah. So that's one another. I think probably the most famous example of reshoring is Adidas, the spade factories. So in 2016, Adidas established their first robotic shoe manufacturing factory in Germany, and then they opened a second one in Atlanta in 2017. And this was robotic from end to end, it was only going to produce a fraction of the shoes. I think they could produce like a million a year and a data cell, like over 300 million pairs of shoes a year in April 2020. And this is this is where this story has a lot of question marks over it. Adidas actually announced it was ceasing all production at its spade factories. They tested it for a couple of years and then they obviously weren't enough or they weren't happy with it. Also, COVID had hit at that stage and so they ceased all production at those factories. But a data source is often looked at as one of the leaders in this reshoring movement. Bryce: [00:24:39] Yeah, McLaren ran. They returned to UK in 2017. They opened a £50 million manufacturing plant in Sheffield, creating over 200 jobs in car making. In general in the UK it's been a sector that they've painstakingly rebuilt as other industries have shrunk. It's risen from 4.8% share of UK manufacturers in 1990 to just shy of 10% in 2016, according to the Office of National Statistics. So bringing it back home. Alec: [00:25:09] And I think that's the story they are. Know, the UK had a similar story to Australia, to America. Carmaking left the country and the U.K., unlike Australia, has a lot more car makers. Rolls-Royce McLaren actually actually have a legacy that many. And so this story of car manufacturing returning to the UK or growing in the UK, again, investments like this, that's sort of what Australia can only hope to. One we may see in our future when we talk about what Australia's future manufacturing could look like. There's one more example that I want to give. It's not quite in manufacturing, but I think it probably best illustrates the incorporation of robotics and how much more efficient these facilities can become. Amazon. So they built Kiva Systems. I'm actually not sure when they bought them, but probably like a decade ago now. Here's some of the numbers. So after incorporating Cave's robots into their warehouses, it cut the standard time it took to find and pack items for shipment from 60 to 75 minutes to 15 days. So if we're talking about productivity pack. Yeah, yeah. It also meant that warehouses could hold 50% more inventory because robots were more nimble than human counterparts on forklifts. So if you're thinking about just space efficiency, when something like that might mean another manufacturing line can go in a factory because you can be more efficient with space. And it also cut operating costs by 20%. Bryce: [00:26:49] Significant savings on all fronts there. Alec: [00:26:52] Yeah. So that's that's obviously retail rather than manufacturing. But I think it just is a nice, easy illustration of the impact that robotics can have. And so I guess these are some of the early examples of companies building their futures back in their home countries. You know, Adidas returning to Germany after so many years, not making anything there. Hmm. That's a pretty incredible story for Germany. And so now let's turn to Australia, because this episode is all about companies building Australia's future and our opportunity to stake our claim to Australia's future. So for us, we've got excited about automation. We've got excited about industry 4.0. Yes. Is it just something that the Europeans and Americans are doing? Bryce: [00:27:40] It's not Ren. That's good news. Australia does have some ambition in this space. In 2020, Scott Morrison established a taskforce chaired by former Dow CEO Andrew Liveris. Now you said a couple of minutes ago that there's a guy who was central to the Obama and Trump push to bring manufacturing onshore. And this was a guy who wrote the policy for both of those US presidents. Alec: [00:28:04] Yeah. In 2011, Obama tapped him on the shoulder and asked him to lead his taskforce to do exactly what Scomo has done here. And then in 2016, when Trump was elected, Trump again tapped him on the shoulders to do it. So Dow, one of the biggest manufacturers in America, probably the world. And he is an Australian. Yeah. And so Scomo has asked him in 2020 to do the same thing and we wait and say. Bryce: [00:28:28] Yeah, so he's at the centre of rebuilding and rein or building the policy to rebuild and reinvest. Manufacturing capabilities here in Australia and the CSIRO have said that over the next 20 years Australia's manufacturing industry will evolve into a highly integrated, collaborative and export focussed ecosystem that provides high value customised solutions within global value chains. Alec: [00:28:53] So the reason. I included that quote is because it's just buzzwords silly and like. It's just not. Bryce: [00:28:59] It's very utopian. Alec: [00:29:00] To say anything here. Alec: [00:29:02] So Australia has the Advanced Manufacturing Growth Centre, which is a government body looking to invest in this stuff. They have a modern manufacturing strategy and what Andrew Liveris and these government bodies have been speaking about is similar to what we've spoken about. We're never going to be cost competitive with China on large scale, low cost, mass produced widgets. And that's not where the government sees our future. They see it in this highly specialised, highly technical, advanced manufacturing. And so as we turn to the listed companies on the ASX, that's reflected there. You're not saying manufacturing as we probably used to think about it, we're saying the next iteration of manufacturers. So the Australian Government's been all in for a while, though successive governments have tried to bring manufacturing back to our shores or tried to keep it on our shores. Bryce: [00:29:56] But look, Scomo doesn't pick up a hose. They're not on the tolls. Let's take a look at some of the companies that are staking their claim to the future. This episode is thanks to steak and there are plenty of listed companies on. The assets that are really starting to play in the future of manufacturing. Alec: [00:30:16] Yeah thanks to stake and now because they have ASX brokerage. These companies are all available to purchase on stake. We should be very clear here though that we're not saying these are the companies to go and purchase. We haven't done the work to know if they're good investments. What we have done is just try to find a snapshot of companies that are in the advanced manufacturing space. And we should be very clear that in the same way that Adidas shut down their Germany and Atlanta factories, they're, you know, they're fully automated factories. There's no guarantee that this is the future. These are the companies trying and working day in and day out to try and make our future. So it's an important caveat that we're here to give you information, not give stock tips. Look, a lot of these companies I hadn't heard of before. I'm going to hazard a guess that Bryce hadn't heard of before as well. Bryce: [00:31:13] Well, a lot of them, their market cap, it's it's at the end of the. Alec: [00:31:17] Day, I spend a lot of time. I think I think the point of this episode is to expose people to new companies, not to tell them what to invest in. So we just want to make that very clear in this episode and in all of our episodes. But with that being said, Bryce, you were touching on market cap and that was probably a standout for me as well. So why don't you start there? Bryce: [00:31:40] So I think out of the list I know I've heard of four, but yeah, the market caps for these companies, there's only a couple that are over 100 million and then there's only a couple that are in the billions. But we're talking at about an end of the market. These is incredibly small. So I think, again, to your to your disclaimer and just just keep that in mind. Alec: [00:32:00] There's two companies that everyone will have heard of. Yeah, there's one company that everyone, every ASX retail investor I feel has a brief dalliance with and then gets burned by it. But yeah, the majority of them are small and pretty unknown, so we're excited to talk about them because I mean, it's cool what they're trying to do more than anything else. So Bryce, I don't know if we've done this alphabetically, but we start with a couple of eyes, so why don't you kick us off? Bryce: [00:32:28] All right. The first one is a Miro. Miro International. The ticker is three day a day. And you are correct if you guess that the ticker is representative of what they do. 3D printing is the name of the game. They describe it as manufacturing, large format, complex components in metal with laser based additive manufacturing processes, a.k.a. 3D printing. So they've come out of Monash University and with a market cap of $58 million. Alec: [00:32:58] So that Monash University thing is a thread. I think it's worth keeping in mind because a number of these companies came out of university partnerships or CSIRO research and that is an echo of what we heard in the last to staking your claim to the future episodes, the CSIRO goes. Live to. University partnerships worth. Bryce: [00:33:22] Stake a claim the CSIRO. Alec: [00:33:23] If we want to stake our claim to the future and become a powerhouse of innovation and technology, those two institutions need more love from business, from government, university partnerships, CSIRO partnerships. I would love to see what the Market Cup of the companies that have come out of the CSIRO are worth speaking of companies that have come out of the CSIRO. Have you heard of Tigh Tomic? I have Triple T, yeah. It's actually a $39 million market cap, the world's largest and fastest metal additive manufacturing process, metal additive additive manufacturing being 3D printing. Yeah, that's pretty cool. Largest and fastest, surprisingly, have a $39 million market cap, but this technology was developed jointly with the CSIRO, CSIRO. Bryce: [00:34:11] There you go. So a company in the picks and shovels space of 3D printing is Aurora Labs. Now, I say that because they actually develop the components that go into 3D metal printers and associated technologies. Alec: [00:34:26] Again, $12 million market cap. We're seeing a lot of smaller companies here, another small or a bit bigger, a company that was called Robo three day and changed their name to STEM. If ISF one, they make desktop 3D printers for classrooms. So it's like educational. Like if you want to learn how to programme a 3D printer and you know, use it, they make stuff, which is cool. I wish they had this at my school. Yeah, well. Bryce: [00:34:58] I was just thinking we could get one for the office. I don't know what we'd print. Alec: [00:35:01] We should. We should print them. That's actually pretty close to that. I actually don't know how much they cost. I'm only a price, but. Yeah, yeah. And I'm actually reading a note here that. They may actually be called swap holdings now as W. Do your own research on that as well as the stock but $151 million market cap. The next two companies are the two that I reckon everyone will have heard of. Oh, sorry. Next three companies. Yeah. And then we'll through the day. So why don't you talk about the three companies that everyone will have heard of, and then I'll talk about the company that everyone has a brief dalliance with. Bryce: [00:35:38] Sure. So you've got Altium IOU. They design 3D printed circuit boards, $4.25 billion market cap. Then there's Wisetech Global who have a $14 billion market cap. The ticker is WTC and they provide software solutions for logistics. They have a global footprint. And then there's APPEN. APEC's $810 billion market cap have been absolutely slammed of light and they provide or improve data for artificial intelligence. Alec: [00:36:09] So it's interesting. I wouldn't have thought Wisetech Global and appen fit in this episode. Like Appen provide data that, you know, the Googles and the Facebooks of the world use to train their AI. And I guess maybe they also. Bryce: [00:36:23] I guess if you look at a value chain, perhaps they feed into that. Alec: [00:36:28] Yes. Bryce: [00:36:29] These were the go smart factories. Alec: [00:36:31] And then wisetech the A software platform for logistics businesses. I guess part of that uses robotics. So again, the value chain, I guess you'd call it Altium Design, 3D printed circuit boards. I feel like that fits in a little bit nature. But you're right, there's plenty of ways to look at this trend. Yeah. Mm hmm. Bryce: [00:36:53] Alright, well, what's the one that everyone has a bit of, a bit of a dabble in and then. Alec: [00:36:57] Yeah, that's hard. I feel like we often make a joke here at Equity Mates that it's a rite of passage for Australian retail investors to lose their shirt on a mining spec, you know. But I feel like a lot of people have also fallen in love with fast brick robotics. ASX Ticker FBR. Yes, it's actually now just called FBR and it's you watch the video of what this. So they have invented the first automated bricklayer and there's videos on YouTube of basically a machine laying bricks perfectly flush and building a house that way. And you're like, Oh my God, this is the future. And then the stock never does anything. And I will put my hand up and say I had a brief dalliance with the stock and didn't make any money. I think you can probably put your hand up and say this. Alec: [00:37:48] I don't think I've ever bought it really. Bryce: [00:37:49] I was super tempted. I remember it was a big thing for us at uni. Alec: [00:37:53] Yeah, yeah, yeah. Bryce: [00:37:54] Honestly, I can't remember if I did. It was incredibly. Alec: [00:37:56] Brief. Yeah. Bryce: [00:37:58] Yeah. I'll have to look check my transaction history. Alec: [00:38:00] But yeah, look, I think there is no denying the technology is cool. Yeah, it makes a great YouTube video. Bryce: [00:38:07] I think it's just surprising it. Yeah, I haven't seen it in real life. Alec: [00:38:10] No. Yeah. And Bryce hangs out at a lot of residential home construction. Sites. Bryce: [00:38:17] Are and we'll we're moving into the definitely the smaller end of the market Katie big a technology emerging from the CSIRO. The ticker is Katie Jay $65 million market cap and from what I understand, definitely outside my circle of competence here, but they have a technology that reduces welds that take hours to just minutes by still retaining the quality. Alec: [00:38:43] Yeah, a bunch of acronyms in there that we don't know. G GTA Technology, Conventional Tillage Processes. Yeah, so we're going to put our hand up and say we don't know. A few others are Quickstep Holdings Q HL $48 million market cap, another small company but not as small as the final trade. We're going to talk about a global manufacturer of composite solutions for the defence and commercial aerospace and advanced industry sectors. Bryce: [00:39:11] And then we've got. Alec: [00:39:12] Freight. Bryce: [00:39:12] A metal forge, ASX is three AMF. Now this is a $5 million market cap and they provide a range of 3D printing services for supply chains to make it more efficient, green and flexible, giving these companies that take on the services somewhat of a competitive advantage, I guess. Alec: [00:39:29] And then final $110 million market cap, another small company EML three D ticker AL three and they combine a deep understanding of state of the art, welding, science, robotics, automation and materials engineering and proprietary software to produce an automated 3D printing system operating in a free form environment. So I think that's a that's a snapshot of some of the ASX listed companies involved in this space. Any key takeaways from you? Bryce: [00:40:00] Bryce Well, I think the key takeaway similar to that of the agricultural episode and the mining episode is that there are plenty of companies on the smaller end of the market. That, you know, we haven't heard of. And we love talking about companies that we haven't heard of before that are really staking their claim to the future and involved in these industries that we hope Australia are really going to become dominant players in. So definitely ones for me to kind of keep a track of and good to see that CSIRO is involved in some way. Alec: [00:40:32] A good first good take away. I think for me the key thing is a lot of these companies are small, but when I think about the future of the industry, it's it's not just going to come from Australia. So, you know, while I was at Coles in Europe, Woollies automation for warehousing and logistics was a big trend that we were both sort of witnessing firsthand. And it's not just Australian companies that these Australian retail giants were partnering with for our online stores. Coles partnered with Ocado, which is a UK based retailer or technology provider. Now they're listed in the UK and then for our automated day sales, our distribution centres, it was a German company whose name escapes me now, and I think that is probably going to be if we think about what Australia as advanced manufacturing industry looks like in the future, a lot of these big manufacturers coming back on shore won't be just confined to Australian technology, so these guys will all have a role to play. But you know, the great thing with so many of these online brokers now, steak included, is that you also get access to the US market and other big markets where there are a bunch of other advanced manufacturing, 3D printing, Internet of Things, industry 4.0 stocks. So I think this is a great jumping off point, but the opportunity set is so big because this is not just an Australian trend, this is a global trend that we're watching. Bryce: [00:42:05] Absolutely. So thank you so much to state for the support of the last three episodes. We've really enjoyed unpacking the industries that are staking their claim to the future. Ren I've done a bit of Googling. It looks like 3D printers for the office start from about 650 bucks and then head up into the tens and tens of thousands. Alec: [00:42:25] So they won't. Want to be a 3D printer sponsor. If they can be the exclusive 3D. Printer provider for Equity Mates and we'll work out a deal. Hit us up. That's it. But Bryce, we did say in the introduction would finish with the big question does Australia have an advanced manufacturing feature or is it all just a political pipe dream? Bryce: [00:42:47] We have an advanced manufacturing future, I guess is my answer, right. So I head to Heller steak dot com to find out more about their 3D ASX brokerage, their US offerings as well and everything else that they do. And stake your claim to the future with Steak Ran. It's been an absolute pleasure and we'll pick it up next week. Alec: [00:43:08] Sounds good.