Third of Local Work Force Idled : Rosscomp Halts Tape-Drive Production

In a move to halt its continuing losses, Rosscomp Corp. said Monday that it has dropped production of one of its principal computer products and laid off nearly one-third of its work force in Costa Mesa.

The 3 1/2-year-old company said 17 of its 55 employees were laid off when it decided to stop making an 8-inch tape drive, a piece of computer “back-up” equipment that records on magnetic tape information that is also recorded on the computer’s disc.

The layoffs and product suspension come as Rosscomp struggles to find a place among the myriad of manufacturers of computer memory equipment. The company, which has lost $6.2 million in the last two years, is also struggling to gain its financial footing.

The latest moves, which Rosscomp President Rod Hosilyk estimated would save about $500,000 annually, come on the heels of a $220,000 loan from two principal shareholders and a recent $300,000 private stock sale to the company’s Japanese manufacturing licensee.

“We’re a start-up company and we expected losses in our first few years,” Hosilyk said. “We’re not a candidate for Chapter 11 (voluntary bankruptcy reorganization).” He added that the company is currently negotiating for a bank line of credit and another private sale of company stock.

Hosilyk said Rosscomp will continue to make its 5-inch tape drive, a smaller and more popular version of the discontinued back-up system. However, that system is made in Japan by Nippon Columbia, its licensee.

The company will also continue to make its three lines of computer controller boards. Although the move cuts the company’s product line in half, Hosilyk said it would not reduce the number of potential customers for the company.

“The two tape-drive products were getting closer and closer in what they could do, so we decided to drop the larger one,” Hosilyk said, noting that the smaller system is more in demand by its customers.