Newcastle shipbuilder Forgacs has warned it will have to lay off 900 workers by the middle of next year unless the government sets out a timetable for future naval projects to bridge the so-called ''valley of death''.

Forgacs chief executive Lindsay Stratton said in Canberra on Wednesday that as the welding on the major project, the navy's Air Warfare Destroyer, came to an end, the firm's shipyards would lie idle without more work. He said it would have a devastating impact on the Hunter Valley region.

''We will be closing one of our shipyards in August of this year, which is our Carrington shipyard,'' Mr Stratton said.

''A lot of those people will transfer to our main Tomago shipyard. We will begin ramping down personnel requirements at the end of this year and we close our main Tomago shipyard completely in August next year.

''We have barely 18 months before we lose 900-plus people out of our organisation.''

Forgacs is welding hull blocks on the $8 billion Air Warfare Destroyer project, which has been beset by delays that are the subject of a review announced by Defence Minister David Johnston.

The review will be led by a former secretary of the US Navy, Don Winter, and shipbuilding expert John White.

A forthcoming report by the Australian National Audit Office is also expected to make scathing findings about the efficiency of the AWD project.

The three AWDs will be the most potent warships in Australia's military history, but they face a cost blowout of about $800 million.

The government has promised to deliver a new Defence white paper by early next year that will indicate a timetable for future naval projects, but Mr Stratton said this would be too late.

He said Forgacs needed to know sooner rather than later when it could expect further work from the government such as on surface combatant ships, patrol boats and supply ships.

''Forgacs is ready, willing and able … frankly it just comes down to the timeline of decision-making.''

But in a speech on Tuesday, Mr Johnston offered a pointed warning to shipbuilders, saying: ''We have got to get mean and lean in terms of productivity in those larger areas if we are going to have enterprises that are going to service well into the future, but I also want to hold Defence organisation accountable too. Delivery on time and on budget is what we want, every dollar will be important.''

The so-called ''valley of death'' - the period between end of current shipbuilding projects and the start of new work - is threatening other companies as well. Williamstown-based BAE Systems has also said in the past it will have no choice but to lay off skilled personnel.

Australian Manufacturing Workers Union organiser Daniel Wallace criticised the handling of the matter, saying the uncertainty would put ''hundreds of Hunter families on edge tonight''.

''This uncertainty starts to create an environment where people think, 'Should I pack up now'' and can hinder future contracts,'' Mr Wallace said.

http://www.smh.com.au/federal-politi...226-33ifz.html