HARD TIMES: Forgacs workers yesterday learned the shipyards at both Carrington and Tomago could close. Picture: Simone De PeakFORGACS says it is sliding into the ‘‘valley of death’’ but the federal government has warned that it won’t be coming to the rescue of the firm and its 910 workers.
The Newcastle shipbuilder’s chief executive Lindsay Stratton said yesterday the firm would have to lay off more than 900 skilled workers in 18 months unless the federal government made a decision on future naval hardware projects.
The loss of that many jobs would be devastating for the Hunter economy, Mr Stratton said.
The scheduled Defence White Paper, due out early next year, would be too late, he said.
Mr Stratton told the Newcastle Herald last night that with the winding down of work constructing hull sections for 37 air warfare destroyers, the company planned to close its Carrington yard in August and then its Tomago yard 12 months later.
Forgacs leases the Newcastle defence shipyard (in Carrington), which doubles as the headquarters of the company formed by Hungarian refugee Stephen Forgacs more than 50 years ago.
It does, however, own its Tomago yard.
‘‘A lot of people will transfer to our main Tomago shipyard [when Carrington closes],’’ Mr Stratton said.
‘‘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.’’
Forgacs’ problem is the so-called ‘‘valley of death’’, the period between the end of current shipbuilding projects and the start of new work, when shipyards will have no choice but to lay off skilled workers.
He said two successive White Papers had spelt out the need to replace more than 40 warships and patrol boats, and Forgacs would like to ‘‘get cracking’’ on building them.
‘‘Our request of the government is no different to each of our competitors; give us clarity around when these projects might go ahead,’’ Mr Stratton said.
But Defence Minister David Johnston told a Senate estimates committee hearing yesterday the government had no money for new naval vessels and had to ‘‘rob Peter to pay Paul’’ to keep shipbuilders in work.
Senator Johnston said the government faced a deficit of $123billion and there was no money for shipbuilding projects.
He said it would not be a problem if the former Labor government had brought forward shipbuilding projects.
Before being removed from power following the 2013 election, the Labor government had moved to secure the future of Forgacs by fast-tracking the replacement of two new supply ships to alleviate concern over anticipated lack of work.
Australian Manufacturing Workers Union organiser Daniel Wallace criticised the handling of Forgacs’ announcement, saying uncertainty over jobs would put ‘‘hundreds of Hunter families on edge tonight’’.
‘‘We’re a bit dirty that they’ve taken this approach without talking with the workforce first,’’ Mr Wallace said.
‘‘This uncertainty starts to create an environment where people think ‘should I pack up now’ and can hinder future contracts.
‘‘The main thing for us at the moment is getting someone out to Forgacs to back up the announcement and talk about how they’ve come to those conclusions.’’
But Mr Stratton rejected those claims, saying what he had announced had been discussed with the workers at Carrington since December last year.
‘‘We met with our workforce and made it clear to them the blocks they are working on [at Carrington] will be completed by August this year and they will be offered the opportunity to relocate to our main shipyard at Tomago,’’ Mr Stratton said.
‘‘Tomago shipyard has a workload that extends to August 2015, so they might not know the exact date but they know roughly when it is.’’
Mr Wallace said the workforce and the union were aware of the pending ‘‘valley of death’’, but thought closing down shipbuilding yards at Carrington and Tomago was not the answer.
‘‘All these staff could leave the industry and then when the work returns in 2017 we might not have the capacity in Australia.
‘‘We need the government to come out and support the industry, bring some work forward, it will better for the nation,’’ he said.
Mr Wallace said by shedding staff, Forgacs wasn’t getting ‘‘bang for its buck’’.
‘‘They’ve spent all this money on training these workers up and now they are being thrown out the back door,’’ he said.
Forgacs’ employees leaving work yesterday afternoon said they were bound by company policy not to speak to the media.
Newcastle MP Tim Owen said he had been pushing Forgacs’ case to get some medium shipbuilding work to keep the Tomago yard afloat during the ‘‘valley of death’’. He said Forgacs was more than capable of undertaking work to replace the Armidale-class patrol boats, as well as additional block build contracts for any larger ships. The iconic Forgacs floating dock, long considered one of the key pieces of infrastructure in the Newcastle Port, was sold in 2012 after maintenance work dried up for more than two years.