Shipbuilder BAE Systems has laid off another 80 workers at its Melbourne yard, with fears it will completely run out of work early next year.
From a peak of 1300 workers installing superstructure on new navy amphibious ships and constructing hull blocks for air warfare destroyers, the workforce has fallen to about 800.
BAE Maritime director Bill Saltzer they were a project-based business and employee numbers had to match the needs of ongoing and upcoming projects.
He said no new naval vessel contracts had been awarded since 2008.
BAE has already delivered the first of the two large landing helicopter dock ships, HMAS Canberra, with the second, to be named HMAS Adelaide, to be handed over later this year.
It's completed all contracted hull blocks for the first two AWDs. The last eight blocks for the third AWD are now being constructed and will be progressively completed through to early next year.
"At that point, without new orders, all shipbuilding activity in Victoria will be completed," the company said.
BAE Systems and other shipbuilders are plunging into the so-called "valley of death".
That's the period of years between the end of current naval ship projects and the start of construction of new frigates and submarines. Without work, companies will have to lay off much of their workforce.
Mr Saltzer said BAE was pleased at recent statements from Prime Minister Tony Abbott and Defence Minister Kevin Andrews acknowledging the strategic importance of Australia's naval shipbuilding industry and the need for a continuous production plan.
He said the company had been advocating this position for several years to avoid workforce reductions that were now becoming necessary.
"I am proud of the continuous improvements in productivity and quality that our shipbuilders have achieved since starting production on the LHDs and AWD blocks in 2010," he said in a statement.
"We are ready to commit to even higher levels of efficiency if the government implements a naval ship procurement plan that supports continuous levels of production."
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