The future is bright for exporters in Australia, with small business exporters more optimistic about conditions for export than they were 12 months ago.
That’s one of the key findings in Efic’s latest Exporter Sentiment Index. Of 1,205 SME exporter respondents, 41 per cent believe the economy will be better in the next 12 months than it was in the previous – with only 20 per cent thinking it will be worse.
Over half of Australian exporting SMEs (51 per cent) believe they are in a better financial position than 12 months ago, and encouragingly, over half of Australian exporting SMEs (57 per cent) are confident that they will be in a better financial position in the next 12 months – an even stronger outlook in spite of current risks to global trade flows.
This optimism is backed up by the Australian Bureau of Statistics, whose recent figures show that Australia’s exports grew by 4.2 per cent in 2016, and according to new figures released in April, Australia’s export prices are at their highest levels in eight years.
These findings are a demonstration of the exciting opportunities in export for many of Australia’s most innovative small businesses. One company which demonstrates this optimism and the strong growth opportunities available is Melbourne-based ESS Weathertech (ESS).
Victorian success story
ESS is an advanced technology company that specialises in solutions for the meteorological, oceanographic and environmental industries, as well as other specialised engineering fields, supplying to government, defence, and research, institutional, aviation industries and the private sector. They produce a diverse range of products that include satellite, radar and solar systems.
Operating for over 30 years, ESS has undertaken more than 100 projects in Australia, Asia and the Pacific.
Collaborating with many government and private corporations has allowed ESS to become a major supplier to national weather bureaus, port authorities, airports and military organisations across the region.
ESS secured a contract with a Japanese corporation that is responsible for implementing Japan’s overseas grant program. This grant program aims to promote international cooperation, and develop the Japanese and global economy, by supporting socio-economic development and economic stability in developing regions.
Under this contract, ESS was required to manufacture and install new weather forecasting equipment to improve forecasting facilities in Pakistan.
However, as ESS needed to buy components and pay for manufacturing and delivery before receiving full payment from its customer, this placed some pressure on its cashflow. This is a challenge many manufacturers face, given they are often not able to receive advance payments for their products.
While supportive of this new contract, ESS’ bank was unable to approve the additional working capital the company needed, and so it suggested ESS contact Efic to see if we had a solution.
Funding for export
Our experience and research shows that SME exporters continue to have difficulty accessing finance for their export contracts. Our Exporter Sentiment Index research found that 1 in 5 SMEs believe access to export finance will become more difficult over the next 12 months. Finding an alternative solution is critical.
Efic was able to provide ESS with an Export Contract Loan, which gave the business the additional working capital it needed to complete this contract while continuing to grow its business internationally.
“Efic’s loan allowed us to enhance our global reputation through the successful completion of this important contract,” said Colin Cookes, Owner and Chairman, ESS Weathertech.
Andrew Watson is Executive Director, Export Finance, Efic