18 minute read
AMTIL FORUMS
from AMT JUN/JUL 2022
by AMTIL
Unlocking international opportunities for your manufacturing business
Yuri Schneider shares three tips to help ensure your manufacturing business is set up to secure the finance it needs to succeed in export markets.
At Export Finance Australia, our team is committed to supporting Australian businesses to succeed in global markets. Whether you need additional working capital to send bulk stock to your export markets or are looking to increase the supply of your inputs, we can help your business to reach new international horizons. Here are our three top tips to prepare your business for when you need finance. 1. Engage early
If you know when you’re likely to need additional finance, liaise with your financier to start the process early. Communicating early with your lender is key to ensuring you can access the finance you need. This might simply be a conversation to discuss the contracts you have coming up or what challenges you are navigating – it can all help establish the foundation for a streamlined process. Your business is likely to need different financial instruments throughout its export journey. Having these conversations can also facilitate a collaborative approach to building the right products for you. As an example, if you’ve got confirmed contracts, purchase orders or off take, we could provide finance for stock build up. Reaching out last minute places additional stress on your business and can sometimes mean your finance is not available as early as you might need it.
Case study: tna solutions
Our customer, tna solutions (tna) is a food processing and packaging technology solutions provider with a presence in more than 120 countries. To launch a new, complete manufacturing line including processing, distribution and packaging systems, producing french fries, wedges and hash browns, tna required additional working capital, Erwin Mulders, CFO of tna explained. “In the past we’ve used our own funds for big projects like this and that has its limitations. By working with Export Finance Australia, we could use our own operational working capital for existing needs.” Saxon Robinson, tna’s Chief Marketing Officer, added that tna is an ideal match for Export Finance Australia. “It’s quite rare that you come across a business that started in Australia and has taken on the world – and succeeded. We're proud of our accomplishments. There's a nice synergy between our profile and the services that Export Finance Australia offers.” For Erwin and his colleagues, they see this as the starting point of a longer-term relationship between tna and Export Finance Australia. 2. Be financially organised
Knowing what support you need and ensuring you have all of your financial information up to date puts your business in a strong position to secure funding when it’s most needed. Take the time to do your cash flow forecasting and make sure you know your real financial position. Without this information, your application could be delayed. Supply chain challenges continue to stretch waiting times for supplies and shipping times for deliveries. Having had those early conversations with your lender, being able to take the next step and begin an application as soon as the need arises will place you in a strong position.
Case study: Atomos
Our customer, Atomos, is a global video technology company delivering award-winning, simple to use monitor-recorder content creation products. With most of Atomos’ video monitor components manufactured overseas, there’s a 16-week lead time between paying manufacturers and making sales. Atomos Chief Financial Officer, James Cody said, “We needed a loan facility so we could borrow against customer orders – to help fund our working capital.” Our facility allowed Atomos to keep up with its products’ supply and demand. With our support, Atomos could speed up the manufacturing process and grow its business even further. After becoming a public entity trading on the ASX, James says the business’ innovative success is due to the product itself as well as the relationships it nurtured. “We wouldn't be able to make our products without the likes of Sony, Panasonic, Canon, Adobe, Apple, and Avid sharing their software processing and video capabilities with us,” he said. James is grateful for not only the support of technology partners, but also for the Export Finance Australia team and the support we provided. “In our earlier stages of growth, if we hadn't had the facility – we wouldn’t have been able to produce as much stock as we wanted to.” 3. Understand your export markets
Knowing the ins and outs of your target markets can be challenging, but is crucial to the success of your export operations. A deep understanding of any cultural differences and how you are going to manage logistics, among many other factors, is important to be able to demonstrate when you are looking to secure finance for an export-related contract. Quite often, and particularly with travel still restricted, having people on the ground to provide you with insights and a deeper understanding of your markets can be invaluable. Strong relationships and a direct route to sell into your export market, makes securing finance for international contracts a much smoother process. Connecting with government agencies such as Austrade will facilitate introductions to contacts in your export markets.
Speak to our finance experts. We’re working with Australian manufacturers to take their innovations global. Call our experienced team on 1800 093 724 or visit our website. Yuri Schneider is the Associate Director, Business Development, VIC & TAS at Export Finance Australia. www.exportfinance.gov.au
Why patent a manufacturing process?
This question is answered by Ben Mott, who explains the process, the different types of coverage, what is patentable … and more.
Q: Why patent a manufacturing process? A: To guard against price competition.
Some advanced manufacturing processes produce innovative new products. Others make old products more efficiently. In either case: • profit margin will disappear over time if imitators can compete on price; and • competitors are likely allowed to imitate if you don’t patent. Generally speaking, in the context of Australian manufacturing, others are free to imitate your new products and processes unless you apply for patent and/or design protection. What's the difference? • patents can cover functional details of new products and processes; and • design registrations cover the appearance of new products.
Q: What about foreign competitors? A: Australian patents are infringed by unauthorised importation.
Australian patents are infringed by unauthorised activities in Australia, eg. by activities such as making, using, importing and/ or selling either a patented product or a product resulting from a patented process. That is… …an Australian patent covering a manufacturing process can be used to stop competitors importing product that is made overseas using the patented process.
Q: Is my manufacturing process patentable? A: Almost certainly, if it is new and non-obvious.
Patents have definitions of coverage known as ‘claims’. Generally speaking, a claim is invalid if it covers any technology that was publicly known before the initial patent filing date, or anything that obviously follows on from that old technology. These are key requirements for a valid patent. If you’re interested in patent protection in a long list of countries, a search for relevant old technologies would be a prudent first step. If Australia is the only country of interest, simply filing a patent application and waiting for the patent examiner’s feedback may well be the better approach. It’s a mistake to simply assume that your new and valuable developments are not patentable. The non-obviousness threshold is a low bar.
Q: What about software? A: Many software innovations are patentable.
Much has been written regarding software innovations that are not patentable, even if they are valuable, new and non-obvious. It’s a complex area of law that is evolving as courts hand down more case law. The key battle lines relate to software that is purely informational in character. Australian courts have held that innovations such as a certain method of calculating a share-price index and a ‘wizard’ to help fill in certain forms are not patentable. In the context of manufacturing processes, many software changes are clearly on the patentable side of those battle lines. New Zealand’s Patent Examination Manual explains, by way of example, that changing the computer program in a washing machine so the machine gets clothes cleaner and uses less electricity is potentially patentable. Likewise, in the manufacturing context… …a new and non-obvious software change that, for example, reduces cycle time, uses less material or results in a better product, may well be patentable.
Q: Aren’t patents expensive to enforce? A: Yes, very.
Going to court to enforce a patent is expensive, even compared to many other matters that you might take to court. On the other hand: • if a competitor infringes a valid patent, the competitor is likely to back down before the matter gets to court, to avoid similarly expensive costs in addition to penalties for infringement; and • a quality patent may well deter many competitors from producing similar products without any direct cost to you.
Q: Aren’t patents expensive to apply for? A: Yes and no.
Patenting a mechanical invention in Australia might entail an initial cost in the ballpark of $6K and a total investment over the entire 20year life of the patent in the ballpark of $35K. Any patent attorney worth their salt would be pleased to have a preliminary discussion without charge to talk through your invention, your prospects of success and the applicable costs.
Q: But patenting takes years? A: Yes, but you can use the process within a few weeks.
If you can supply your patent attorney with a quality description of your invention, your initial patent application should be filed within a few weeks. Once the application is filed, you can go public with (and/or commercially use) the invention without harming your patent rights in what you have invented to that point. Australia has a 12-month grace period that can excuse premature publication and/ or use, but it’s best not to rely on the grace period. Following the ordinary process, your Australian patent application will be examined in due course and, if you are successful, a patent will be granted on the application perhaps four or five years after the initial filing. It’s usual to let the process take this long, to defer costs amongst other advantages. If at some point during those four or five years there was an infringement, you could accelerate the process which, all going well, would lead to a granted patent within eight months or so.
Ben Mott - Patent Attorney and Mechanical Engineer with manufacturing experience. Principal, BRM Patent Attorneys www.brmpatentattorneys.com.au BRM Patent Attorneys is an experienced company of professionals dedicated to guarding Australian innovation from imitation at home and abroad, focussing on engineering-related technologies and securing the most effective IP rights for clients. BRM has extensive experience across manufacturing industries. BRM’s Principal worked for five years as a mechanical engineer before training as an attorney. Direct access to experienced professionals, clear cost forecasts, clear communication and responsiveness are hallmarks BRM.
The rise of environmental, social and governance issues in the supply chain
Andrew Hudson looks at the increasing importance of environmental, social and governance considerations and the consequences for industry.
There has previously been extensive discussion on how the supply chain is moving to include issues beyond merely moving goods from origin to destination, the cost and safety of movement, and the impediments to improving movement. Recently, that narrow focus has widened to include other issues that demonstrate that the supply chain is not isolated from other, less commercial issues. The lists of prohibited imports and exports grow every year, and Australia has recently given itself the power to introduce “thematic” sanctions. Those sanctions will not be limited to countries but can be applied to sanction the trade in goods or investment by parties believed to be involved in behaviours that the government considers unacceptable. The current conflict in Ukraine has also led to the introduction of significant global economic sanctions and additional restrictions on trade against Russia and its allies. Modern slavery
An example of corporate social responsibility (CSR) concerns in the supply chain is whether goods or services are the product of “modern slavery” or “forced labour”. In this context, the United States is active in its interdiction against such goods, with legislation enabling the seizure and destruction of goods believed to be the product of forced labour (whether wholly or in part). That lead is being followed in other jurisdictions where, regardless of legislation, companies do not want goods and services which may be the product of forced labour. Those companies are now seeking assurances from the supplier of goods and services that there is no forced labour involved in providing goods and services. Australia’s position is less intrusive in the supply chain, and our Modern Slavery Act 2018 (MSA) requires larger companies to provide annual reports on their measures against modern slavery. Still, the government has, to date, stopped short of specifically legislating against the import of goods the product of forced labour. Legislation prohibiting such imports passed through our Senate and was under consideration by our House of Representatives when the election was called, stopping the passage of the legislation. While that legislation did not pass, changes could be made following the review of the MSA this year. There is significant pressure for Australia to take more action on forced labour/modern slavery risks, especially with a report entitled “Paper Promises” evaluating the early impact of Australia’s MSA. The report found that companies are failing to comply with the mandatory reporting requirements and are failing to identify or disclose modern slavery risks. Regardless of legislative amendment in Australia, given the focus on such modern slavery/forced labour issues, it is fair to assume that companies, their officers and in-house counsel will include due diligence on such issues and seek assurances that their supply chains are free from such concerns. An evolving environment
The expansion of the CSR agenda will not stop with modern slavery/forced labour, and the agenda continues to evolve. A related term being adopted is “environmental, social and governance issues” (ESG) to include environmental sustainability, gender and human rights issues as important in the supply chain and part of the governance considerations expected of companies and those providing goods and services to those companies. In the international context, that includes negotiations for an “Environmental Goods Agreement” led by Australia at the World Trade Organisation, the OECD Guidelines for Multinational Enterprises from 2011 and the United Nations Global Compact. Further, many of Australia's Free Trade Agreements (FTAs) recently concluded include ESG issues as specific focus areas, such as in the Australia-UK FTA. The importance of ESG is now also being seen in the supply chain. For example, those providing international carriage of goods are increasingly focused on environmental concerns and solutions. These include the carbon footprint of air cargo services (and how it can be offset), cargo vessels powered by hydrogen, cargo vessels incorporating sails to reduce reliance on carbon-based fuels, and autonomous vessels run by computers incorporating artificial intelligence no longer requiring human crew. A shift towards ethical obligations
Ultimately, the supply chain and the requirements of parties in the supply chain will continue to evolve over time and shift from traditional supply-chain issues. We could anticipate that ethical considerations will also be imposed. That evolution will be driven, in part, by governments, their agencies, international organisations, as well as popular opinion, which reaches the wider policy framework. The imposition of additional obligations requires those in the supply chain to be more flexible and prepared to pivot to new technologies and practices. This will be a challenge to the drafting of relevant agreements to allow for variation to include new and desirable outcomes and who is to pay for those outcomes. Adopting such new practices will also reward those willing to invest in monitoring current and future ESG requirements. Failure to meet ESG standards, whether imposed by legislation or imposed in contractual obligations, could create real and significant problems for many in the supply chain. All companies must undertake their own due diligence to avoid failing to meet the ESG standards and potential prosecution.
Rigby Cooke’s Customs & Trade team can assist businesses with advice on all aspects of Australian and international trade and customs obligations. Andrew Hudson is Partner - Custom & Trade, Rigby Cooke Lawyers Ph +61 3 9321 7851 ahudson@rigbycooke.com.au rigbycooke.com.au
Brendan Torazzi explains Victoria’s new Environment Protection Act, business obligations and suggestions for compliance.
The Victorian State Government’s Environment Protection Act 2017 gave the Environment Protection Authority (EPA) new powers for protecting human health and the environment. As part of the update, the EPA now takes a proactive approach to protect against pollution or waste. This also means changes to the way that certain businesses operate. Under the new laws, businesses need to perform risk-based assessments for any activities that may pose a threat of harm to human health or the health of the Earth. The goal is to prevent health disasters from occurring in the first place. Here is a closer look at Victoria’s new environment protection laws and how they apply to businesses. What is the Environment Protection Act?
The Environment Protection Act 2017 is an amendment that dramatically overhauls the existing Environment Protection Act 1970. The updates went into effect on July 1st, 2021. At this point, businesses involved in potentially hazardous activities should have the proper environmental management systems in place. Previous laws have attempted to reduce the impact of harmful materials. For example, the government banned the use of asbestos decades ago. Asbestos was used in one in three Australian buildings before the ban. Unfortunately, modern industries continue to use and produce potentially harmful materials and by-products. The new laws are designed to help reduce the impact of environmental hazards, such as: Air pollution; Industrial waste; Radiation; Contaminated land; Chemical hazards. To help minimise the effects of these hazards, the EPA introduced the Environment Protection Amendment Act 2018. The act granted the EPA new powers, including the ability of an environmental regulator to penalise businesses that fail to comply with the new laws. You may face fines and/or jail time for violating the laws. At the heart of the new environmental protection legislation is the General Environmental Duty (GED). The GED is comparable to the duty of employers under the Occupational Health & Safety Act. Employers must provide and maintain a reasonably safe work environment. As with the OHS Act, the environment protection laws require businesses to assess risks and develop specific risk management plans. You need to identify potential environmental risks and then implement steps to minimise those risks. Who needs to comply with the new EPA laws?
Any business that engages in hazardous activities needs to identify and mitigate potential risks. Businesses in the following industries are more likely to need to pay close attention to the new laws: • Agriculture • Construction • Infrastructure • Manufacturing • Energy & petroleum industries • Waste and recycling The GED requires all businesses in Victoria to understand and minimise risks from pollution and waste. You need to take reasonable, proactive steps and employ adequate environmental management practices. Your obligations increase with the size of your operations. For example, a small business may need to undergo a basic compliance inspection. However, a medium or large business may need to follow specific industry guidance and can expect more detailed inspections.
How to comply with the Environment Protection Amendment Act
No matter the size of your business, you should still take steps to reduce your impact on the environment. Here are the typical steps involved in complying with the EPA laws: 1. Arrange an environmental audit 2. Create an environmental management system 3. Track and report your environmental impact 4. Review all applicable government requirements Licenses/permits are also needed for certain operations. For example, if a business activity may affect an area of national significance.
1. Arrange an environmental audit
The first step in complying with the EPA laws is to schedule an environmental audit. An EPA officer can assess your business and subsequent audits provide a way to monitor your progress. For example, you can use your initial audit to set the benchmark for measuring improvements and setbacks.
2. Create an environmental management system
After assessing your environmental impact, you should develop a detailed environmental management system (EMS).
Management systems provide clear instructions for you and your employees to follow for minimising potential hazards.
The EMS should identify all areas of your business operations that may harm the environment. It should also include operational and emergency procedures for dealing with potential hazards.
3. Track and report your environmental impact
Continue to track and report your environmental impact.
Depending on your industry and type of operations, you may need to report energy usage, greenhouse gas emissions, natural resource management monitoring, and more. Reporting is typically voluntary but may be mandatory for certain industries.
4. Review all applicable government requirements
Along with Victoria’s new environment protection laws, you need to comply with all applicable government requirements.
This includes national, state, and local laws and industry standards. As a business owner, it is your responsibility to understand which laws apply to you. Environmental protection is a priority for the government. The latest Victorian environmental laws aim to reduce the impact of pollution or waste. If your business engages in activities that may pose a threat to humans or the environment, take the time to implement the necessary risk management systems.
