After I published my last blog about the US green energy market I received several emails about Australian companies
that are doing well in the traditional American energy market. One respondent advised me that BHP-Billiton, with an
office in Houston, is the largest oil driller in the Gulf of Mexico off the US southern coast. As well as companies that
produce or manage energy, there are also Australian companies that provide goods and services to the natural
resources sector in America. Here is how two successful companies are making money in this market.
Example 1: Austin Engineering Sets Up a Subsidiary in Wyoming
Austin Engineering is a publicly listed Australian company with a US subsidiary, Westech, that manufactures mining
equipment and provides repair services to the mining and oil and gas sectors. Westech manufactures custom designed
truck bodies for the largest trucks in the mining industry at its facilty in Casper, Wyoming, and also gains revenue
from the ongoing repair and mainenance of those vehicles. Westech can draw on Austin Engineering's operations in
Australia and around the world to gain economies of scale and develop profitable relationships with mining companies
and with the heavy vehicle manufacturers (e.g. Komatsu) that support the global mining industry.
Example 2: Matrix Composites & Engineering Establishes an Office in Texas
Matrix Composites & Engineering Ltd provides innovative products to the oil and gas industry around the world. It's
strength is in the application of modern materials technology, and its focus on export. Matrix has offices and agents
around the world with its US office in Houston, the home of the American oil and gas industry. By using its experience
in the Western Australian resources sector and by locating its US office close to its US customers Matrix has been
able to find new customers in the US. In recognition of this strong export focus, the CEO of Matrix was invited by AMCHAM (American Chamber of Commerce in Australia) to address its members on "Manufacturing in Australia for
the Export Market".
Lessons Learned from the Australian Resources Boom
Australian companies that service the resources sector have benefited greatly from the Australian resources boom
of the past decade. However, the extraction of natural resources is location dependent and if ore or oil is coming
out of the ground in America then that is where Australian mining product and service companies need to be.
The smart companies have invested in overseas operations as a way to take advantage of the worldwide boom
but also to hedge against changes in the demand for their products and services in Australia. Also, having
operations in more than one market can create a natural hedge against currency fluctuations because the
company is not just relying on revenue in Australian dollars.
Follow me on Twitter (@simonboylen) for more information on what Australian companies are doing in America.