The Australian Manufacturing Workers' Union has hit back at a Federal Government claim that the so-called "valley of death" in South Australian shipbuilding is over.

Defence Industries Minister Christopher Pyne today signed a deal with construction company Lendlease to build a major shipyard at Osborne, saying it will create 600 jobs at its peak.

Mr Pyne said it was the first major jobs announcement since the Air Warfare Destroyer (AWD) project was announced in 2005.

"That's 600 construction jobs. Many of those will come from the work force down at Osborne who are being laid off because of the end of the Air Warfare Destroyer program, until the [Offshore Patrol Vessels] and the Future Frigates begin," he said.

Earlier today, Mr Pyne said in a written statement that "the valley of death is over and we are now seeing an upturn in employment".

But the AMWU's acting state secretary Stuart Gordon said jobs on the AWD program were still drying up.

He said Mr Pyne had not spoken to the union about those workers getting jobs in the shipyard's construction.

"I'd like him to go out and meet the 42 employees who are going to be walking off the site in a fortnight and tell them the valley of death is over," Mr Gordon said.

"There is nothing put in place to retain these employees."

Mr Pyne said at least 60 per cent of the jobs would go to Australian workers.