Independent senator Jacqui Lambie says building the next generation of submarines overseas would be "un-Australian".

Senator Lambie toured Adelaide shipbuilder ASC along with fellow crossbencher Nick Xenophon to show her support for building submarines in South Australia.

The visit came amid uncertainty about where the Collins Class submarines would be designed and built.

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The Federal Government has been under pressure to build Australia's next fleet of submarines locally, rather than opt for an overseas design but is expected to announce a limited competition for the new generation submarine project involving firms from Japan, Germany and France in a matter of weeks.

The ASC was first contracted by the Federal Government to design and manufacture six Collins class submarines for the Royal Australian Navy almost 30 years ago. The ASC maintains the current fleet and was the preferred shipbuilder for three Australian Air Warfare Destroyers.

Senator Lambie has criticised the possibility of an overseas build.

"I think it's very bloody un-Australian of [Prime Minister] Tony Abbott to do that," Senator Lambie said.

"That's not the way forward for Australia. We need to show the rest of the world that we've got the capabilities, and we're capable."

Senator Lambie likened South Australia's industry struggles to those in her home state of Tasmania.

"Economically we're not doing well, so we need to do whatever we possibly can to make sure these trade skills stay in our states," she said.

"It's jobs growth that's an issue in South Australia and Tasmania.

"This is a great national building project that can go ahead and keep going for many, many years with the maintenance program.

"There is no reason why we can't do this. We have the skills sets. We must continue those skills for the future."

Senator Xenophon said if the Federal Government decided to build the submarines anywhere other than Australia, it would be disastrous in economic, strategic and social terms.

"If Tony Abbott decides to build the subs outside of Australia, then that would make his decision to knight Prince Philip a masterstroke," he said.

"He can't afford to not build the subs in Australia. It's $20 billion worth of jobs for the build-phase and another $60 to $80 billion in terms of maintenance."

Weakened popularity could force PM's hand: Xenophon

Senator Xenophon said he believed the Prime Minister and his office have been behind the push to build the next generation of submarines in Japan.

"The Prime Minister's position has been weakened in recent days and that's probably not a bad thing in terms of the subs being built in Australia," Senator Xenophon said.

The Federal Government is considering replacing Australia's Collins class submarines with an offshore-built fleet. ( Royal Australian Navy: Able Seaman James Whittle )

"I think it was clear that it's the Prime Minister and his office that has been driving the building of the subs overseas, in Japan.

"I think recent events have probably been a good thing, in brutal political terms for Australia, for South Australia," he said.

Senator Lambie agreed.

"He needs to make some right captain's picks and this would be a great start for the year," she said.

Senator Lambie also visited an auto-components manufacturer while in Adelaide and expressed her concerns about federal funding cuts to the automotive transformation scheme.

"It's absolutely critical that money is kept to those firms that employ 12 to 14,000 people in South Australia, 33,000 nationally, to be able to transition to other industries, to other products and processes," Senator Xenophon said.