Forgacs chairman Peter Burgess and apprentice Nathan Keevers placed a coin in the keel of the new boat – a gift from the Australian government to   Tonga – as a symbol of good luck for the project and the future Tongan captain and crew.

The 30-metre landing craft will be used for transporting defence equipment and personnel, disaster relief and emergency towing. It is expected to be ready  in May next year.

Shipwright Joel Pollard said he was ‘‘really stoked’’ to work on the new project.

‘‘It gives us an opportunity to really show what we can do and I hope it will open doors for more work,’’ he  said. ‘‘I know we can build a high-quality product and this could help keep the shipbuilding industry alive in Newcastle.’’

The start of the new project came a day after the Australian Manufacturing Workers Union warned that an Abbott government decision to send  naval shipbuilding work  overseas would drive the  Australian shipbuilding industry into the ‘‘valley of death’’.

The absence of a new government defence contract could cost 660 jobs,  Forgacs chief executive officer Lindsay Stratton told a senate inquiry into  the future of Australian shipbuilding, in Newcastle, on Wednesday.