Australia's biggest defence company BAE Systems won't be bidding to build new patrol boats on grounds it would not be viable to rebuild a workforce for a $600 million project it might not win.
BAE was the first company to put its hand up for the work but indicated on Tuesday the timing was all wrong.
Even if a tender was awarded in the first quarter of 2017 - and there's no guarantee BAE would win - production would not start for about a year.
Without new orders, the company anticipates that all shipbuilding activity at its yard at Williamstown, Melbourne, will end when existing projects conclude in early 2016.
"Reconstituting a workforce in 2017-2018 to produce Pacific patrol boats would not be economically viable," a company spokeswoman said.
"We continue to explore commercial and defence projects that will enable us to maintain a shipbuilding capability."
The government announced the patrol boat project in March as a lifeline for shipbuilders plummeting into the so-called "valley of death".
That's the period of years between the end of current defence shipbuilding projects and the start of new projects, when companies will have no choice but to reduce workforces.
Under the patrol boat project, the government will fund construction of 21 basic 40-metre steel-hulled vessels to be donated to Pacific nations to replace older vessels.
BAE built the original vessels between 1987 and 1997 but its recent experience is with big ships, constructing the Anzac frigates, hull modules for the air warfare destroyers and superstructure for the landing helicopter dock ships.
A number of other Australian shipbuilders have recent experience with smaller vessels.
The government didn't say whether the patrol boats would be constructed by a single shipbuilder or shared among a number of companies.
A spokesman for Defence Minister Kevin Andrews blamed the previous Labor government.
"The shipbuilding job losses that are now occurring could have been avoided had the necessary decisions been made by Labor. This is indeed Labor's valley of death," he said.
A spokesman for the minister said the defence white paper would provide increased certainty to shipbuilders by outlining future naval requirements.
The Australian Manufacturing Workers' Union blames the government.
"This government made big promises to get itself elected and has sat on their hands ever since and done nothing to give any certainty to the industry," assistant national secretary Glenn Thompson said in a statement.
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