Undeterred by Possible Loss of Large Air Force Contract : Toshiba to Proceed With Laptop Production in Irvine

Toshiba America Inc. said Wednesday that the possible loss of a contract to produce more than $100 million in laptop computers for the U.S. Air Force will have no effect on its plans to begin production of the computers in Irvine next month.

John Rehfeld, vice president and general manager of Toshiba America’s information systems division, said the company’s decision to begin U.S. laptop production “will not be deaccelerated for any reason.”

Rehfeld declined to comment on reports the Pentagon is refusing to qualify Toshiba as a bidder on a pending Air Force contract for 90,000 laptop computers.

The government reportedly is awaiting the outcome of an investigation into allegations that another Toshiba unit, Toshiba Machine Co., illegally exported sensitive technology to the Soviet Union in 1983. The four computer-driven milling machines Toshiba is reported to have sold, allowed the Soviets to produce superior propellers that made their submarines more difficult to detect by the U.S. Navy.

Before the Soviet sales became an issue, Toshiba was reported to have been the favored bidder on the government’s laptop contract. The Air Force recently reopened bidding on the contract.

“There has been no official action,” Rehfeld said. “We have bid very aggressively on that contract with very strong, state of the art technical products. We have received no official contact from the government on the status of that contract.”

Rehfeld said the Irvine plant will initially produce 5,000 units per month of Toshiba’s high-end T-3100 laptop computer, which retails for about $4,700. Output from the Irvine facility is expected to satisfy existing U.S. demand for the T-3100. He said Toshiba expects to expand U.S. laptop production at some point to include other models. In addition to the T-3100, Toshiba markets two other laptop computers in America. Its total U.S. sales average about 10,000 units per month.

Toshiba said it will initially hire about 40 workers to produce laptop computers in Irvine. The facility currently employs about 500.

Although Toshiba said it had been considering U.S. production of the laptops for more than a year, it acknowledged that trade sanctions recently imposed by the Reagan Administration were a significant factor in its decision to move ahead. The sanctions, adopted in retaliation for Japanese “dumping” of computer chips in other countries, resulted in a 100% tariff on Toshiba’s imported laptop computers. That tariff is still in effect.