AL3 to help US Navy supply chain?

US Navy supply chain difficulties now front page news

Our 2024 Tech Pick of the Year, AML3D (ASX: AL3), stands to benefit as challenges in the US Navy’s supply chain take centre stage.

Recent news from major outlets has highlighted how America’s shipbuilding industry is struggling to meet critical Navy needs, turning to global players like South Korea’s Hanwha Ocean Co. for support.

We think this shift presents significant opportunities for companies like AML3D, which are well placed to help fill the gap with advanced manufacturing solutions.

Our Investment is AML3D (ASX: AL3):

We first Invested in AL3 in June 2024.

AL3 is an Australian 3D metal printing company, which has been using its proprietary technology to print components for the US Navy.

Their additive manufacturing process allows for faster, more efficient production of critical components like ship parts and aerospace structures.

In addition to industrial applications, AML3D has a key focus on providing bespoke 3D printed solutions to the US Navy.

We think this aligns perfectly with the growing demand for efficient, reliable, and cost-effective shipbuilding solutions (via Bloomberg):

“The US is heavily reliant on foreign companies for shipping, port access, and shipbuilding. As the world’s largest importer and second-largest exporter, the US shipbuilding industry accounts for less than 1% of global commercial vessels.”

(Source)

• The US shipbuilding industry has dramatically declined, with a minimal share of global production compared to China, which now builds more than 50% of the world's merchant ships.
• Hanwha Ocean Co., a South Korean powerhouse, has begun investing in US shipyards, hoping to help rebuild capacity.
• China holds 1,794 large ship orders compared to America’s five, highlighting the scale of the shortfall.
• The US government is actively seeking foreign allies to step in, with companies from South Korea and Japan leading the way.

For AL3, this dynamic presents a strategic opportunity.

With the US seeking non-Chinese foreign partners to address its severe shipbuilding shortfall, we think companies that offer cutting-edge manufacturing capabilities - especially those aligned with defence and naval supply chains (like AL3) - are well positioned for growth.

AL3’s wire additive manufacturing (WAM) technology allows for rapid, large-scale 3D printing of metal parts, making it an ideal candidate to fill the gap created by the US’s declining shipbuilding capacity.

Recent news out of AL3 - points to a growing relationship between AL3 and the US Navy.

AML3D Secures MLA with US Navy

As announced in early September, AL3 has secured a Manufacturing Licence Agreement (MLA) with the US Navy, enabling them to print specialised parts for naval vessels.

This development not only validates their technology but also paves the way for deeper collaboration with the US defence sector as the Navy seeks more reliable suppliers to address its shipbuilding deficiencies.

Read the article below to learn more:

AL3 Signs Key Agreement For US Navy Submarine Parts

What’s Next for AML3D?

US Growth Strategy

AL3 is currently undertaking a rapid “Scale Up” strategy targeting key markets in the US.

In order to execute on this strategy there are a number of key milestones for the company including:

🔲 Opening US facility in Ohio (expected to be fully operational this quarter)

🔲 More sales of ARCEMY systems in support of US Naval industrial base

🔲 Contracts for prototype parts and alloy testing for US Navy

We think AL3 is making progress on all of these fronts, so new deals, new contracts and new revenue could drop at any time.

Broader growth strategy

Having established the MLA with Blue Forge Alliance (the US Navy’s submarine industry integrator) AL3 is also looking to broaden the scope of its services into different markets:

🔲 Aerospace manufacturing deals

🔲 Oil & gas manufacturing deals

🔲 Marine manufacturing deals

🔲 Energy manufacturing deals

How does this impact our AL3 Investment Memo?

What is the macro theme?

Additive Manufacturing, a form of 3D printing, is now a key pillar of the US strategy to build resilience into its manufacturing supply chain.

Additive manufacturing is a new way in which we believe complex industry product parts will be built as the countries move to localise strategic supply chains.

Compared to traditional casting and forging, additive manufacturing is harder, better, faster, stronger.

Source: 27 June 2024 AL3 Investment Memo

The US Navy's supply chain issues and reliance on trusted foreign partners create a significant opportunity for AML3D, whose advanced 3D printing technology offers faster, scalable solutions to meet urgent defence needs.

This macro trend positions AML3D to secure more contracts and expand its role in US naval and commercial shipbuilding efforts.