Toshiba Plans Production Shift, Cites Tariff Repeal

Toshiba America is shifting production of one of its color laptop computer models back to Japan, in response to recent changes in U.S. tariffs, the company said Tuesday.

While the company said the move won’t immediately cause job cuts at its Irvine plant, some experts said thousands of workers can be expected to lose their jobs industry-wide as other U.S. computer makers follow suit.

Toshiba America, a subsidiary of Tokyo-based Toshiba Corp., will shift the production 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 work force of 1,800 people in Irvine. He would not specify how much production would be relocated, but described it as a small part of the U.S. subsidiary’s capacity of 25,000 machines a month.

Some analysts remained skeptical that Toshiba’s U.S. employees would not be affected, and they criticized 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 and International Business Machines have also decided to move production of so-called active-matrix color laptops overseas. Toshiba’s Eversole acknowledged that his company’s decisions about manufacturing have been influenced by tariffs, but he denied that its Irvine operation 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.

Since then, 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.

The Bush Administration lifted 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.