Toshiba to Shift Some Production Back to Japan : Computers: U.S. tariff changes prompt the move, which the company says won’t immediately cost any of the 1,800 jobs at its Irvine plant.
Toshiba America is shifting production of some of its color laptop computers back to Japan in response to recent changes in U.S. tariffs, the company said Tuesday.
While the company said the move won’t result in immediate job losses at its Irvine plant, some experts said they expect thousands of workers to lose jobs industry-wide after other U.S. computer makers follow suit.
Toshiba America, a subsidiary of Tokyo-based Toshiba Corp., will shift production of one of its color laptop computer models to Japan because tariff changes during the past seven weeks make it cheaper to assemble the lightweight computers in Japan than in the United States, said Dennis Eversole, chief financial officer for Toshiba America.
Eversole said most of Toshiba’s laptop production would remain in the United States, and he said the shift will not affect Toshiba’s 1,800-person work force in Irvine. He would not specify how much production would be relocated, but he said it was a small part of the U.S. subsidiary’s capacity of 25,000 machines a month.
But some analysts remain skeptical that Toshiba’s U.S. work force would not be affected and they criticize the Commerce Department, which sets tariffs, for driving laptop production out of the country. Andy Seybold, analyst at the market research firm Dataquest Inc. in San Jose, said the tariff change will drive thousands of jobs offshore as other computer makers follow Toshiba’s lead.
“Toshiba began manufacturing here because of tariffs, and now that the tariffs are gone, they will go back to Japan,” Seybold said. “I’m skeptical they or any other manufacturers will keep much of an operation here.”
In addition to Toshiba, Seybold said Apple Computer Inc. and International Business Machines Corp. have also decided to move production of active-matrix color laptops overseas. While Toshiba’s Eversole acknowledged that his company’s decisions about manufacturing have been affected by tariffs, Eversole denied that the Toshiba operation in Irvine would be dismantled. He said the company’s overall strategy is to build and design more of its products in the countries where they are sold.
In 1987, the U.S. Commerce Department imposed a 100% tariff on most Japanese portable computers as part of a penalty for Japan’s alleged failure to comply with a semiconductor trade agreement.
In the wake of that tariff, some Japanese manufacturers such as Toshiba America established assembly operations in the United States. By shipping the laptops in at least three parts and assembling them in the United States, the manufacturers could avoid any tariff.
But the Bush administration withdrew the tariff on portable computers on Aug. 1 after a new semiconductor pact was negotiated. About the same time, the Commerce Department ruled that the Japanese manufacturers had dumped their products here at below-market prices to the detriment of U.S. manufacturers.
The agency imposed a 62.67% tariff on Japanese-made, active-matrix liquid crystal display screens, which are used in many advanced color laptop models including one in Toshiba’s line. That tariff applies only to screens being shipped to the U.S. as components, not to screens that are already built into computers that are assembled overseas and shipped to the United States.
The new tariff on display screens gives Japanese manufacturers incentive to shift manufacturing of laptops from U.S. subsidiaries to offshore locations because the tariffs on assembled computers are now much lower, Seybold said.
Seybold said that active-matrix technology is used in barely 5% of laptop computers today but that it will account for a much larger percentage in the future.
Active-matrix screens have thousands of resistors embedded on a screen surface that determine the color of each point in the screen.
Toshiba will continue to make one of its color models, based on so-called passive-matrix display technology, in Irvine. But the company’s 17-pound color T3200SXC computer, which has an active-matrix screen, will now be made in Japan, Eversole said.
Christine Comaford, president of Corporate Computing, a Sausalito consulting firm, said that active-matrix is the leader in color laptop display technology but that the quality is still poor compared to desktop computer screens.
“Of the different technologies, active-matrix has the best potential,” Comaford said.
Cindy McCaffrey, spokeswoman for Apple in Cupertino, said the company is disappointed with the announced tariffs.
The company makes a portable version of its Macintosh line with an active matrix display, and it is also expected to announce a number of new laptops based on the technology in the near future.
“The decision could affect our future plans for manufacturing in the United States,” McCaffrey said.
