EASTSIDE councillors fear ship-dismantling expansion plans could deter investors at nearby SA1.
Clive Lloyd and Joe Hale are objecting to Swansea Drydocks Ltd's bid to add a wet berth at their base at the city's docks.
If granted, the extension will allow the firm to temporarily store vessels and start stripping non-hazardous fixtures. The ships will then be fully dismantled in the dry dock.
The St Thomas councillors said they accepted Swansea Drydocks was creating some jobs, but felt that leisure, retail and housing developers might be less inclined to invest close by if the permit variation was approved by Environment Agency Wales (EAW).
"It just flies in the face of what we are trying to portray as the future of SA1," said Mr Lloyd, adding: "The people of Eastside have had a guts' full of heavy industry." Under-construction developments in SA1 include a £7million health centre, while Mr Lloyd said a new care home was also in the pipeline.
The planning designation of the dry dock site is "ship repairs".
Mr Hale, who like his Labour colleague became a councillor after Swansea Drydocks began operating, said he didn't think a "breakers' yard" fitted in with the aim of SA1 and Swansea becoming a centre for tourism and business.
He added: "When the original licence (for Swansea Drydocks) was agreed we where told we would see an increase in economic activity and employment in Swansea dry dock, but we have seen little evidence that this has been of significant benefit to the local community."
The Maritime Quarter Residents' Association, which covers Swansea Marina, has written a letter to the EAW about what it felt were the risks posed by Swansea Drydocks' application. It also urged the agency to be as vigilant as possible in its monitoring of the company.
A member of staff at Swansea Drydocks said its workforce of 20-plus came from the local area, and that ship repairs comprised the majority of its work.
An EAW spokeswoman said it was considering comments received as part of a public consultation into the plans.
"We will only allow a change to the permit if we are satisfied that the proposed operations will not harm local people's health or the environment," she said.
Swansea Council said it has asked that "appropriate conditions are imposed to ensure existing communities, planned communities and regeneration objectives aren't prejudiced if the EAW is minded to grant consent for the amended permit."