Submarine builder ASC has announced it will retrench 41 staff.
The company has merged its submarine and ship building divisions.
Redundancies at the Adelaide-based firm, formerly known as the Australian Submarine Corporation, were announced on Wednesday morning.
Another 34 vacant positions were also abolished.
Chief executive Steve Ludlam said the reduction in staff numbers "while necessary was regrettable".
"Wherever possible we have taken into account attrition rates and abolished vacant positions in an effort to retain as many employees as possible, but unfortunately we could not retain everyone," he said in a statement.
ASC previously had a contract to build the Collins Class submarines.
Following the redundancies, ASC will have 1500 workers.
But it says it will need another 300 employees during the next three years to build the Hobart Class air warfare destroyers.
The destroyers are expected to enter service from about 2013.
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