JVC Picks Sacramento as Site for CD Plant : Electronics: The $40-million facility will be the first in the world to produce digital video discs. It will employ 1,000.

Japanese electronics giant JVC has selected Sacramento as the site for the world’s first plant built to produce a next-generation compact disc that could dramatically transform the home consumer electronics industry, according to state officials.

The $40-million digital video disc facility is expected to open in 1996 and will initially employ 250, said Julie Wright, secretary of trade and commerce. By 2000, the company plans to expand the project to $400 million and employ 1,000.

JVC has moved quickly to take advantage of the opening created last month when two feuding industry groups--one led by Toshiba Corp. and Time Warner Inc. and the other by Sony Corp. and Philips Electronics--agreed to merge their technologies for the new digital video disc into a single format.

Matsushita Industrial Electric Corp., the world’s largest electronics firm, supported the Toshiba/Time Warner alliance and owns 52% of JVC, a leading manufacturer of televisions, stereos and videocassette recorders.

The new five-inch digital video discs are expected to offer superior audio and video quality and store up to 20 times as much information as existing CDs and CD-ROMs. But the first video disc players won’t be able to record.

Tom Adams, president of Adams Media Research, a Carmel Valley consulting group, said the plant will have to incorporate a new production process since the digital video discs require a dual-layer technology in which two thin discs are bonded together.

“It’ll have to be a very high-tech plant with state-of-the art equipment,” he said.

California has benefited from a move offshore by Japanese manufacturers suffering high production costs at home due to the strength of the yen. Adams said JVC’s Sacramento facility would also benefit from its proximity to the U.S. entertainment and computer software companies that are the major customers for the product.

JVC’s plans have been kept under tight wraps, reflecting the fierce industry struggle to control the market for digital video discs, a product that could eventually replace the popular videocassette recorder and CD-ROM players.

Top JVC officials are expected to announce their company’s plans at a news conference Wednesday, organized by the Sacramento Area Commerce and Trade Organization. Al Gianini, executive director of the group, confirmed that his office was holding the press conference but would not name the company involved.

Victoria Perry, a spokeswoman for Alabama-based JVC America, said Monday she could not comment on the company’s plans. She was reached at a hotel in Sacramento.

JVC operates a joint-venture plant in Carlsbad and small offices in Irvine and Santa Clara. The company also is investing $36 million in a television plant in Tijuana.

Wright and other state officials, who made numerous trips to the company’s headquarters in Japan, said JVC considered sites in Nevada and Arizona but was swayed by Sacramento’s technology base, skilled work force and proximity to other Japanese firms.

Sacramento, a two-hour drive from Silicon Valley, is home to Hewlett-Packard and Apple Computer facilities. Japanese firms in the area include NEC, Ebara, Gekkeikan Sake Co., and California Precision Molding, a Mitsubishi subsidiary that produces CD-ROM cases.

State officials said California’s image overseas has improved since the state legislature passed measures providing tax incentives for investment in research and development and manufacturing.