Why I bet $1m on high tech manufacturing in America

Plus! Your invitation to come to my upcoming event Nov 9-10

Over the past few weeks, I’ve been teasing you with the details behind where I’m investing my money (and how you can invest alongside me).

I’ll give you a hint: it’s high tech manufacturing in America.

And on Nov 9-10th, I’m hosting a “by application only” event for investors interested in learning more about the huge opportunities I see hidden inside the American Manufacturing Boom.

If you haven’t been to one of my events at Oren Klaff’s West Coast Finance Center, then this is something you should definitely come see:

Here’s my Investment Thesis and
“Big Idea in 58 Words”

For investors seeking 3-5x returns on capital who are frustrated by the current market full of exotic, high-risk technologies that may take decades to pay off, Manufacturing Tech 2023 is the first event focused on domestic US-based manufacturing companies that can effectively compete from within our borders to dominate billion dollar industries in both the US and abroad.

At this event, you’ll have a chance to meet – and learn from – a group of handpicked analysts, CEOs, and investors who specialize in funding, operating and scaling Manufacturing companies that have a realistic 3-5X return target.

This event – and investment opportunity – is open to both accredited and non-accredited investors.

If you’re interested in attending the event, all you need to do is click here to email my event services team.

Once you do, they’ll ask you a couple of quick questions to make sure you’re a good fit to become

If you're still in the “hey Oren, can you tell me a bit more about this conference thing you’re doing?” bucket, todays email should help.

-Oren

 

Manufacturing Tech 2023: Investing in High Tech Manufacturing in America

Unless you’ve been living under a rock, you already know that America is looking to rapidly re-shore manufacturing and re-industrialize our economy.

For this is an area where my money can step into Alpha. Sure, I have to work hard, this is not easy or free government subsidies.

But there’s one thing in US Manufacturing that I love more than anything else:

HUGE DEMAND / LIMITED DOMESTIC SUPPLY

Construction spending related to manufacturing reached $108 billion in 2022, the highest annual total on record – more than was spent to build schools, healthcare centers or office buildings.

New factories are rising in urban cores and rural fields, desert flats and surf towns... with much of the growth coming in the high-tech fields of electric-vehicle batteries and semiconductors, national priorities backed by billions of dollars in government incentives.

That’s why it's no surprise to see investors and entrepreneurs flocking to the American Manufacturing Boom.

And if you’ve ever thought you yourself – “Hey, I wonder how I could make money on all these factories that are being built,” chances are, you’ve heard all about semiconductor factories, electric vehicle factories, and battery factories.

But here’s the “Made in America” story you haven’t heard:

If you’re looking for the best way to play the American Manufacturing Boom, the single biggest untapped investment opportunities I’ve ever discovered are hidden OUTSIDE of defense-related spending.

We all know that hundreds of billions of dollars are being invested into defense, energy, and critical infrastructure.

Although these deals may sound exciting and lucrative… because they require vast sums of capital and experience working with the government, they’re much better suited for institutional investors, and not suited for small balance investors seeking wealth creation opportunities.

At this event, we’ll explore why we believe the single biggest opportunities to profit from the American Manufacturing boom lie in consumer products that require flexibility to respond to ever changing consumer demands.

But here’s the problem with investing in domestic manufacturing of these traditional consumer goods – will consumers be willing to pay more money for American Made products?

Outside of patriotism, there is no reason to buy something that is more expensive that doesn’t provide better quality or utility, relative to its cost.

Cheap, low quality items are often cheaper to buy and replace than expensive goods built to last… especially when you consider the time value of money, rising interest rates, inflation, and the pace of technological innovation / obsolescence.

Short of outright embargos, the only way to wean people off of cheaper foreign products is to either impose tariffs on imported goods (or subsidies on domestic goods) to remove the price advantage…

Or produce domestically a product that delivers better quality – at faster delivery times – that makes up the price difference.

This dilemma is known as the Iron Triangle.

The general concept is that you can pick two of the three when making goods and services: Good. Fast. Cheap.

While it has long been believed that accomplishing all three isn't possible…

What if there was a way to effectively SOLVE this Iron Triangle and make American made goods that are higher quality, faster to deliver, and cheaper than foreign products?

And not just compete at home, but around the world, turning America once again into a manufacturing powerhouse and net exporter?

To manufacturing industry outsiders, solving the famous Iron Triangle in America looks impossible because of our high “Cost of Doing Business”...

But manufacturing finance insiders understand and invest on the basis of TWO cost factors: High Primary Costs, but low Secondary Costs.

It's no surprise that the primary costs in the US – which include compensation, real estate, utilities, taxes, and interest rates – are among the highest in the world.

The United States ranks 14th - near the bottom of the industrialized world - on primary costs. In general, you’d have to go to Switzerland, Brazil, or Japan to find higher costs than California, Texas, New York, etc.

For most corporations who consider building factories, they are typically ONLY considering the primary costs in an effort to “save money and get tax credits.”

That’s why many companies have historically decided to offshore manufacturing – they wanted it to be cheap, and to take advantage of lax labor laws and environmental protection in other countries.

For this reason, many of the companies who are looking to “reshore” or “friendshore” are looking for those same criteria domestically.

That’s why it’s no surprise to see the Manufacturing Boom largely take place in non-union states, typically in Republican controlled districts.

But tax incentives can vanish, environmental regulations can change, and whatever “math” you used on the front end could all blow up in your face.

That's why experienced operators who’ve run real manufacturing facilities know the REAL costs don't happen up front; it’s all the secondary costs that happen over the lifecycle of the asset.

Managing Secondary Costs are the key to breaking the Iron Triangle (and driving investment returns)

Secondary Costs refer to factors that impact overhead costs and the facility’s ability to operate efficiently. This includes things like quality of labor, ease of doing business, infrastructure, and risk and protections.

While the United States ranks near the bottom in terms of primary costs…

When it comes to secondary costs, there’s no better place than America.

That’s why the most successful manufacturers in the country focus on recruiting the very best talent in the market, and delivering high quality “Made in America” goods that become market leaders.

Today, America is desperately trying to close the gap on semiconductors, electric vehicles, batteries, and other critical infrastructure…

And most investors think the biggest paydays will be made in these massive global markets.

But because they’re so focused on the massive amounts of government money flooding into the sector, they’re missing out on one of the most obvious manufacturing sub-sectors that America can truly become the best at…

Retail Manufacturing

Most people think I’m crazy when I say this. After all, these are the low cost goods we’ve been trying to offshore to cheap manufacturing centers for decades.

Why would America bother reshoring retail items like garments, furniture, and construction material?

Because these are the markets that tend to change the fastest!

That’s why there is a huge opportunity to unlock value by moving manufacturing facilities WAY closer to our domestic end markets.

And thanks to new regulation, this $6 billion home goods niche is about to go through a period of disruption that will create an opportunity to completely crush our foreign competitors with an Iron Triangle breaking manufacturing facility here in America.

That’s why I’m hosting this special presentation to reveal what I believe is one of the single best opportunities I’ve ever seen in my dealmaking career.

I almost let the deal of a lifetime slip through my fingers…

Recently I announced my goal of adding $100M of market cap to my personal portfolio, but almost no one knows where that target came from.

Three years ago, I asked myself, “What if there was a way to effectively SOLVE this Iron Triangle and make American made goods that are higher quality, faster to deliver, and cheaper than foreign products?”

And then I started thinking even bigger: “Let’s not just compete at home, but around the world. Can we turn America once again into a manufacturing powerhouse and net exporter?”

An unplanned last-minute vacation to Italy and a chance meeting at the Four Seasons Milan led to an odd discovery: a 1,000 person company generating an estimated $400M revenue tucked away in a small village you’ve never heard of.

But it’s not where they are that was the difference maker, it’s what they make: a multi-million dollar high tech precision manufacturing system that has 95% market share of a $110B global market.

At the time, this 85 year old company was generating ~$500m in revenue, and they saw a huge opportunity to deploy their next generation machinery in the American market… and they asked me if I’d help them get there.

Normally, this wouldn’t be the type of deal I’d be interested in – there were a lot of things that, on the surface, made this deal look way too hard to do.

But once I talked to the management team and they showed me what they had, I couldn’t believe my eyes. This had all the ingredients of a $1bn+ deal.

This thing was like an untapped honey pot for an experienced dealmaker like me.

It had:

  • Track Record: Of all the factories in the world that make this specific home good, 95% of them buy their machinery from this company.

  • Management: The same team has been in place for 20 years

  • Talent Pool: Everyone hears about the labor shortage going on everywhere in manufacturing. This company has ZERO problem hiring new employees due to the incredible culture of Italian manufacturing.

  • IP Portfolio: The moat around their machines is so wide, it’d take you a week to sail across it in Larry Ellison’s boat.

  • Regulatory Tailwinds: And best of all, there was my favorite deal maker catalyst – new regulatory pressure threatening to force the market to change, and completely disrupting supply/demand dynamics

  • No VC Competition: While this may have changed, at the time, basically no one in traditional capital markets was interested in anything like this. So we had no cashed up competition to face off against.

So why were they talking to me if they had all of these must-have ingredients for a $1b+ deal?

Answer: They – like many of my best deals ever – struggle with putting their deal into a narrative structure that investors can understand.

For the past three years, I’ve been working with this team to build their domestic “go-to-market” strategy, arrange financing partners, build the board, in order to take advantage of a $6bn wholesale / $13bn retail opportunity here in the United States alone.

I’ve already raised the first $5m of the $40m of equity I’m planning on raising for this deal… I’ve already got the debt commitments lined up for the project financing.

The last piece of the puzzle that we need to take this deal public in the next 18-24 months? Hitting the shareholder requirements (~500 investors) in order to qualify for the Nasdaq/NYSE listing requirements.

And that’s why I’d like to invite you to step in to this syndicated financing program as a true partner in our capital stack… not the suckers at the table who are gonna get squashed on the other side.

If you want to come to this one-of-a-kind investor event where you’ll get to meet some of our other investors in this capital stack… learn about high tech manufacturing in America… see me pitch the deal… and meet members of the management team

This 2-day investor event is something you don't want to miss.

To get your tickets, all you need to do is click here to submit your application. The event is open to anyone over the age of 18, regardless of income, net worth, or nationality (with some obvious exceptions).

Once you submit your application, someone on my team will follow up with you and make sure you’re a good fit (i.e. a serious investor, not an entrepreneur or service provider looking to prospect in the room).

What Did You Think About Today's Issue?

Login or Subscribe to participate in polls.

Join the conversation

or to participate.